Kathmandu. KATHMANDU: The Supreme Court (SC) has dismissed a writ petition filed at the Supreme Court (SC) demanding cancellation of the issuance of shares issued by Himalayan Reinsurance Company at a premium price to the general public.

The court dismissed the writ petition as the shares have already been issued and allocated.

However, insurance companies have issued directive orders to the regulatory bodies against issuing shares at a premium against the law.

Advocates Yam Prasad Bhattarai and Bhimsen Rayamajhi have filed a writ petition filed by Justice Dr. A division bench of Justices Manoj Kumar Sharma and Shreekanta Poudel issued the verdict on the writ petition filed by the Supreme Court on Tuesday.

Clause 45 (5) of the Insurance Act, 2079 has a clear legal provision that an insurer should demand only at the face value while inviting applications for the purchase of shares from the general public.

The court has held that since the Insurance Act is a special Act, the general provisions of the Companies Act and securities laws cannot be attracted to the issues barred by the Special Act.

The court has ruled that the Securities Board of Nepal and Insurance Authority of Nepal have not fulfilled their legal obligations in a lawful manner.

The court said that the regulatory bodies have approved and recommended the issuance of shares at a premium price which is contrary to the Insurance Act.

The court has ruled that the issuance and sale of shares to the public at a premium price against the law would adversely affect the investors’ confidence in the stock market and would weaken the corporate governance.

The writ petition has been scrapped, arguing that Himalayan Reinsurance has completed the entire process of issuing and allotting shares after taking approval from the regulatory bodies.

The court has issued directive orders in the name of Nepal Insurance Authority, Securities Board of Nepal and Himalayan Reinsurance.

From now on, the insurance companies should not issue or issue shares at a premium price contrary to the law, and deposit the amount received by selling the shares at the premium price as per the pre-approval by opening a separate premium account as per the provisions of the Companies Act, 2063 and Insurance Act, 2079.

The Securities Board of Nepal (SEBON) and Insurance Authority of Nepal (SEBON) have been directed to work in necessary coordination to manage the said amount as a reserve fund.