Kathmandu. Nepal Insurance Authority (NEA) has sought clarification from Asian Life Insurance (LIC) on the issue of purchase of shares of City Hotels.
The NEA has started investigation into the matter after the news was published by Insurance Khabar that the insurance company had purchased 2 million units of shares by participating in the bidding in violation of the provision of Section 67 of the Insurance Act, 2079.
According to a source at the authority, Asian Life has seized documents related to participation in the bidding competition for right shares and the decision of the Board of Directors regarding the purchase of shares.
The Nepal Electricity Authority (NEA) has directed the insurance company to submit clarification within seven days. The letter has also been issued to clarify the reasons for the purchase of shares in violation of Section 67.
Asian Life buys shares of its own founder’s company in violation of Insurance Act
Shakti Kumar Golyan, the sole promoter of Asian Life, has 29.14 percent stake in the undistributed right shares of City Hotels Limited. FY 2080. According to its annual report, Golyan owns 1,803,743 shares of Asian Life, which is 5.31 percent.
Section 67 of the Insurance Act prohibits business in partnership with a primary shareholder (having more than 1 percent shareholding), director, chief executive officer or a person or organization having a financial interest of the insurer. In violation of this provision, Asian Life participated in the share bidding competition.
