Wednesday, September 12, 2012

Nepse suspends Everest Insurance share trading

Nepal Stock Exchange (Nepse) suspended the trading of shares of Everest Insurance today after the non-life insurance company threatened to shut down its operations.
Any price-sensitive news and information related to a public limited company have to be corresponded to the stock exchange and Securities Board of Nepal (Sebon) but the company chose to disregard the rule forcing the regulator to suspend its share trading, according to the Sebon. 
Everest Insurance announced that it was planning to shut its shop blaming the latest Corporate Governance Regulation-2069 introduced by the Insurance Board last month for drying up its business prospective and clipping its wings.
The regulation has not only forbidden a director of one insurance company — be it life or non-life — from holding position in another insurance company but also prohibited the company to sell policies to entities that has the involvement of the directors.
The non-life insurance company reasoned that by forbidding insuring the firms that has the involvement of their directors, the Insurance Board has dried up its business so they have decided to throw in the towel and close the company.
However, being a public limited company with shares floated to the public, Everest Insurance cannot shut down on the whims of its directors.
Promoted by Khetan Group Everest Insurance, with a market capitalisation of Rs 329 million, has more than one million units of ordinary shares held by minority shareholders.
Rajendra Khetan is the chairman of both Everest Insurance and the Himalayan Snax – which produces Mayos instant noodles – that get paid the insurance claim from Everest Insurance before the surveyor’s final report two weks ago, forcing the regulator Insurance Board to penalize it.
along with Prem Prakash Khetan, Ratan Lal Shanghai, Birendra K Shah, Madhu Sudhan Agrawal, Om Prakash Sikaria, Prasad Gyawali, Rabi K Tibrewala and Niranjan Tibrewala as board member in the company.
The regulator had suspended its fire insurance policies from August 28 after it was found to have haphazardly paid insurance claims while failing to pay the claims of the general public at the same time.
The regulator had also asked it to furnish appropriate explanation for its conduct or else get penalised. “The company is yet to formally inform the regulator regarding their plan to close down the company,” executive director of Insurance Board Binod Aryal said, adding that Everest Insurance is willfully trying to divert the attention of the regulator from its corporate governance issues, but shutting down will also not be easy for them.

1 comment:

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