Insurance Companies No Longer Need Approval for Non-Real Estate Asset Purchases

Kathmandu – Nepal Insurance Authority has announced a new provision allowing insurance companies to purchase non-real estate fixed assets without requiring regulatory approval. However, the board has imposed stricter regulations on investments in high-risk areas.

As per the draft of the “Fixed Asset Directive 2081,” insurance companies, including life, non-life, micro, and reinsurance providers, will now have simplified procedures for non-real estate purchases. However, the purchase or construction of real estate assets will still require approval from the board.

Insurance companies must secure both preliminary and final approval for real estate transactions. These transactions must stay within 30% of the company’s net worth, calculated based on the latest audited financial statements after deducting depreciation of existing fixed assets. Revaluation surpluses will not be considered when determining the net value of fixed assets. While regulatory approval is no longer required for non-real estate fixed asset purchases, approval will still be necessary if the construction cost for such assets exceeds 2% of the company’s net worth.

For real estate transactions, companies must disclose the intended purpose, such as office use, business operations, or both. If the property is intended for dual use, the allocation of costs and percentages for each purpose must be specified.

Preliminary approval for real estate transactions will be granted based on the submission of all required documents and justifications. If no progress is made within four months of receiving preliminary approval, it will be automatically revoked. In cases where the Public Procurement Act applies, companies can request an extension with valid justifications.

Final approval must be sought after preliminary approval, with companies required to complete purchases or commence construction within two months of receiving final approval. The board has also clarified that any revaluation surplus must be excluded when calculating the net value of existing fixed assets to ensure transparency and accuracy.