Supreme Court Rules Himalayan Re’s Premium IPO Was Not Issued in Compliance with Law

Kathmandu — The Supreme Court of Nepal has ruled that the issuance of Himalayan Reinsurance Limited’s initial public offering (IPO) at a premium price was not carried out in accordance with the law.

In its recently published full verdict, the Court held that both the Securities Board of Nepal (SEBON) and the Nepal Insurance Authority (NIA) failed to comply with the applicable legal framework when granting approval for the premium-priced IPO.

The case was filed on November 24, 2023, by Yam Prasad Bhattarai and advocate Bhimsen Rayamajhi, who argued that Himalayan Reinsurance was not legally entitled to issue shares at a premium. They sought a court order to halt the IPO. On April 28, 2026, a joint bench of Justices Dr. Manoj Kumar Sharma and Shrikanta Poudel dismissed the writ petition but issued a series of directive orders. The Court has now released the full text of its judgment.

The verdict states that SEBON failed to fulfil its statutory responsibility before approving the public offering. The Court observed that the regulator is required to examine a company’s prospectus and supporting documents and grant approval only if the proposed issuance complies with the law and adequately protects investors’ interests. It concluded that SEBON had not discharged that responsibility in accordance with the law.

The Court further held that Himalayan Reinsurance had sought permission to issue shares at a premium in a manner inconsistent with Section 45(5) of the Insurance Act, 2022, and that SEBON nevertheless approved the issuance without ensuring compliance with the Securities Act, 2007 and the Securities Registration and Issue Regulations, 2017.

The judgment also found that the Nepal Insurance Authority had recommended the premium-priced IPO to SEBON despite the proposal being inconsistent with the applicable legal provisions.

While declining to invalidate the IPO that had already been issued, the Supreme Court directed SEBON not to approve premium-priced public offerings that are inconsistent with the law in the future.

The Court further ordered that the portion of funds raised above the face value of shares through such premium issues be deposited into a share premium account in accordance with Sections 29(2) and 29(3) of the Companies Act, 2006. Noting that Section 39 of the Insurance Act, 2022 also governs the use of such funds, the Court instructed the Nepal Insurance Authority, SEBON, and Himalayan Reinsurance to coordinate in establishing an appropriate reserve mechanism to manage the premium proceeds in compliance with the law.