Sun Nepal Life CEO Arrested in Previously Settled IPO Case, Raising Questions Over CIB’s Actions

Kathmandu — A controversy has emerged involving Nepal Police’s Central Investigation Bureau (CIB), raising concerns about its conduct in a case that had already been reviewed and resolved by both the Securities Board of Nepal (SEBON) and the Patan High Court.

The CIB recently arrested Sun Nepal Life CEO Rajkumar Aryal in connection with the company’s IPO share allocation, despite the fact that the issue had been investigated by SEBON and dismissed by the Patan High Court due to insufficient grounds. The move has sparked debate within the insurance sector, with many questioning whether the arrest constitutes an abuse of authority.

Sun Nepal Life issued its IPO in August 2023, offering 9.6 million shares, which represents 30 percent of its total capital of NPR 3.2 billion, to the public at a premium price. As per regulatory requirements, 5 percent of the shares, totaling 480,000 units, were reserved for employees.

During the allocation process, the company decided to include three recently hired employees who had not yet completed the required six-month tenure. To facilitate this, a portion of shares was temporarily held in the CEO’s name with the intention of transferring them later. However, those employees resigned shortly after the IPO was issued and subsequently demanded the shares. They filed a writ petition at the Patan High Court, which was dismissed in 2024. The court concluded that the employees had not met eligibility criteria and appeared to have joined the company solely to benefit from the IPO.

Following the court’s decision, the former employees lodged a complaint with SEBON. Upon review, SEBON identified that excess shares were held under the CEO’s name and instructed the company to reallocate them appropriately. CEO Aryal complied, redistributing the shares to eligible employees and reporting back to the regulator, effectively closing the matter.

Despite this, the former employees allegedly pressured SEBON to escalate the case to the CIB. Reports suggest that former Insurance Authority Chairman Surya Prasad Silwal may have been involved. Silwal had reportedly been pursuing a separate insurance-related initiative, while Aryal, in collaboration with eSewa and the Department of Foreign Employment, had developed an alternative system. Allegedly frustrated by Aryal’s lack of cooperation, Silwal is said to have supported efforts to push the case forward.

Criticism of the CIB centers on the decision to arrest Aryal in a case already dismissed by the court. Observers argue that the agency acted prematurely, as the investigation reportedly began only after the arrest. Even several days into custody, Aryal had not been formally questioned, according to sources.

There are also concerns about proportionality. Aryal was not considered a flight risk, remains employed in a public-facing role, and had not sold any of the shares in question, something he is not permitted to do while serving as CEO. Critics argue that, at most, authorities could have frozen the shares while conducting further investigation, rather than resorting to detention.

The case has prompted broader questions about potential misuse of power. Some speculate that the former employees, dissatisfied with not receiving shares, may have leveraged political connections to influence the investigation.

CIB spokesperson Senior Superintendent of Police Shiv Kumar Shrestha stated that although SEBON had conducted a preliminary review, the case was referred to the bureau for further investigation, leading to Aryal’s arrest. He added that investigators are examining claims that Aryal submitted inconsistent documents to different agencies.

As the investigation continues, the CIB has declined to disclose further details, including whether any court order was involved.