Delays in Salico Share Conversion Investigation Raise Concerns Over Regulatory Inaction

Kathmandu — Concerns are mounting over the Nepal Insurance Authority’s delay in investigating a share conversion controversy involving Salico Insurance, formerly Sagarmatha General Insurance Company. A complaint alleging large-scale irregularities in the conversion of promoter shares into general shares has remained unaddressed for over five months, prompting suspicions of regulatory negligence or internal influence.

According to the written complaint filed on 14 Poush 2081, more than 20 percent of promoter shares were converted to general shares in violation of pro-rata guidelines, allegedly resulting in financial gains worth millions of rupees. The then CEO of Sagarmatha Insurance, Chunky Chhetri, has been named as a central figure in the alleged scheme.

The issue dates back to a decision made during the company’s 18th Annual General Meeting on 30 Chaitra 2079, which reduced Nepali promoter shareholding from 60% to 51% and converted the remaining 9% into general shares. The Insurance Authority approved the change, maintaining 71% promoter and 29% general shareholding.

Following a merger agreement with Lumbini General Insurance, the promoter shareholding was further reduced to 51%, and the general shareholding increased to 49%. The Authority permitted only 20% of promoter shares to be converted, keeping the remaining shares—especially those held by foreign partner Ceylinco Insurance Company of Sri Lanka—untouched.

However, a public notice issued on 11 Falgun 2080 invited shareholders to apply for share conversion, and subsequent records suggest that some promoter shares were converted at a rate exceeding the approved 20%. This disproportionate conversion enabled certain promoters to offload shares—initially valued at Rs 270 per unit—into the general market, where prices surged to Rs 722, generating significant financial advantage.

Shareholders allege that the conversion was executed contrary to the Insurance Authority’s explicit instructions and accuse the Authority of failing to uphold Sections 129 and 134 of the Insurance Act 2079, which mandate investigation and action in cases of financial irregularities and shareholder rights violations.

Despite repeated appeals and the growing discontent among shareholders, the Insurance Authority has neither launched an inquiry nor provided updates on the pending complaint. When approached for comment, spokesperson and Executive Director Sushildev Subedi did not respond.