Kathmandu. Agriculture Development Bank (ADB) has decided to buy the founder shares of Neco Insurance Company. Neco Insurance had invited applications for sale of 600,000 units of shares of the founding group at Rs 260 per share in March 2018.

Agriculture Development Bank has been declared eligible for the purchase of the shares. According to highly placed sources, the bank has bought the shares at less than Rs 260 per share. According to sources, the shares were purchased by the Agriculture Development Bank and sent to the Insurance Authority for final approval. After the insurance authority approves the purchase of the shares of the insurance company to the bank, the shares sold by Ajod Insurance will be in the name of Agriculture Development Bank.

Prior to the Agricultural Development Bank, the Employees Provident Fund had tried to buy the shares. As per the provisions of the Insurance Authority Act, 2079, the fund could not buy the shares. Not only this, the fund will not be able to buy shares of any other company.

Sub-section 3 of Section 25 of the Insurance Act, 2079 states that “no company or organized organization where a person or his family member is a fundamental shareholder shall invest more than 15 percent of the paid-up capital of the insurance company to be established pursuant to this section”. Due to this arrangement, the fund could not buy the shares of Neke. According to the provisions of this act, the fund will not be able to buy shares of not only NECO but other insurance companies.

According to the fund’s legal provisions, up to 25 percent of the paid-up capital of any listed company can be purchased. However, insurance companies will not be able to buy shares due to the insurance act. At present, the Employees Provident Fund owns 22 per cent stake in the National Insurance Company. Similarly, the fund owns 21.61 percent stake in Prabhu Insurance.

Currently, Neco Insurance owns 15 per cent of Rastriya Banijya Bank, 2.45 per cent of Investment Management Company, 0.87 per cent of Nepal Share Market and Finance, 1.35 per cent of SVR Public Pvt Ltd, 10.88 per cent of Kriti Kumari Mahato, 7.01 per cent of BK Binayak Pvt Ltd, 1.02 per cent of AG Pvt Ltd, 3.34 per cent of Krishi Bikas Bank, 8.12 per cent of Citizen Investment Fund and 8.12 per cent of Citizen Investment Fund. After the purchase of 600,000 units of shares, The Agricultural Development Bank will become the fifth largest company to own the shares.