Supreme Court orders Himalayan Reinsurance Company not to distribute the amount collected as share premium (with full text)

Kathmandu. The Supreme Court (SC) has issued a directive order to Himalayan Reinsurance Limited (HLIC) to keep it in a separate reserve fund without distributing the amount collected as share premium.

The Supreme Court (SC) issued the order in the name of Insurance Authority, Securities Board of Nepal and Himalayan Reinsurance Company in the name of the Supreme Court’s verdict on the issue of shares of Himalayan Relay at a premium price.

“The apex court has directed the Nepal Insurance Authority, the Securities Board of Nepal and Himalayan Reinsurance Company to make arrangements for depositing the amount collected in excess of the amount received by selling the shares at a premium price contrary to the law,” reads the full text of the verdict.

A division bench of Justices Shrikant Poudel and Manoj Sharma has written in full text of the verdict on the writ petition, “The defendants Nepal Insurance Authority (NEA) and the Securities Board of Nepal (SEBON) have jointly addressed the provision of opening a premium account and depositing the amount more than the face value of the shares received by selling the shares at a premium price contrary to the law. A directive order has been issued in the name of Insurance Authority, Securities Board of Nepal and Himalayan Reinsurance to establish a reserve fund by coordinating and coordinating with them to keep the premium amount in the fund. ‘

Section 39 Sub-section (5) of the Insurance Act, 2079 states that the mandatory reserve of the insurer and other reserve fund of the insurer and other reserve fund shall be as determined by the Nepal Insurance Authority.

This decision of the Supreme Court has also declared the issuance of shares at a premium price by the insurance companies illegal. The court also issued an order in the name of both the regulators to stop any insurance company from issuing shares at a premium price. The full text of the judgment reads, “Henceforth, an order is issued not to issue and issue shares at a premium price contrary to law.” ‘

Published by Himalayan Reinsurance in the last fiscal year 2082. The company has a share premium of Rs 3,12,27,06,316 in the revised third quarter of 2018-19.