Dispute Escalates Between Insurance Authority and Employees Provident Fund; EPF Claims Right to Hold Up to 25% Shares

Kathmandu — A dispute has intensified between the Nepal Insurance Authority and the Employees Provident Fund (EPF) over cross-shareholding in insurance companies, particularly concerning ownership levels that exceed the regulatory threshold.

The issue gained attention after the Auditor General’s annual report highlighted the presence of cross-holdings in insurance companies and recommended independent oversight.

The Insurance Authority identified that the EPF holds shares above the permitted limit in two insurance companies and subsequently issued a formal notice addressing the matter.

According to the Authority, the EPF owns a 22% stake in Rastriya Beema Company and a 21.61% stake in Prabhu Insurance Company.

Citing provisions of the Insurance Act, the Authority directed the concerned companies to reduce the EPF’s shareholding to within the allowed limit. Following this directive, the EPF responded with its own formal communication.

The Authority maintains that the EPF has exceeded the legal cap on shareholding and has also violated provisions by holding significant stakes in two companies of the same category. It has instructed the companies to bring their ownership structure into compliance with the Insurance Act.

In response, the EPF has argued that it is legally permitted to hold up to 25% of shares. It further contends that, as an institution established under a special law, the Employees Provident Fund Act, 2019, its governing legislation takes precedence over other laws.

Based on this interpretation, the EPF insists that it is not required to reduce its holdings in the two insurance companies.

The Insurance Authority, however, has rejected this argument, stating that the Insurance Act itself is a sector-specific special law and therefore governs all insurance-related matters. The two institutions have continued exchanging formal letters as the disagreement remains unresolved.

“The Insurance Act is a special law for the insurance sector and is the applicable legal framework in this case,” the Authority stated in its response.

Despite the Authority’s directive, both companies have yet to reduce the EPF’s shareholding, citing the Fund’s position that it is legally entitled to maintain ownership of up to 25%.