Questions over NLG public shares remain

KATHMANDU, Sept 6 - The status of the 'public shares' of NLG Insurance Company is unclear as the Security Board of Nepal (SEBON) did not allow it to enlist its shares in the Nepal Stock Exchange (NEPSE) after refusing to recognize them as 'public shares.'
National Life and General Insurance Company (NLGIC) was separated into NLG, the non-life insurance company and National Life Insurance Company (NLIC) in 2005 with the latter as the parent company. Those with public shares in the NLGIC got shares in NLIC as well as NLG.
As NLG shares were not transformed into the public shares through initial public offering (IPO), SEBON refused to recognize them as public shares.
NLG as the subsidiary company has a paid up capital of Rs. 100 million of which the promoters' own 70 percent of the shares and the public 30 percent.
Although the NLG asked the SEBON to enlist its 'public shares' in the stock market right after its formation, the SEBON has been refusing to entertain its demands.
SEBON chairman Surbir Poudel said that the so-called public shares of the NLG had no legal status.
"We have already told NLG to go for IPO through due process to get its shares enlisted in the NEPSE," he said.
Poudel said that the nature of so-called public shares resembles right shares as they were distributed to shareholders for being public shareholders of NLGIC.
The NLG itself is confused about the legal status of the existing public shares. Its chief executive officer Bijaya Shah said that they were also confused about the status of the existing public share given SEBON's refusal to permit them to enlist in the NEPSE.
He however said that the NLG would issue ordinary shares soon although the company's board has not decided yet regarding the issue. According to him, the board should decide on the size of the capital before going for issuing ordinary shares.
The Insurance Board also told the NLG board to go for IPO in a week ago. IB chairman Phatta Bahadur K.C. said that the IB told the NLG board that it would not recognise its existing shares public shares as public shares.
"But, the existing public shareholders have been questioning the status of their shares and this needs to be sorted out," he said.
According to IB, NLG's performance is not so good. Besides NLIC, Rastriya Banijya Bank and Sleek Quote Limited of the United Kingdom are its strategic stakeholders.