The fate of the merger between Neco Insurance and Premier Insurance is hanging in the balance as shareholders of Neco Insurance refused to approve the union.
During Neco Insurance’s annual general meeting (AGM) yesterday, shareholders voted against the merger. In the AGM of Premier Insurance that was held a day earlier on February 3, the company’s shareholders had approved the decision.
More than half of the shareholders present at Neco’s AGM voted against the merger and demanded that the company issue bonus shares to meet the regulatory capital requirement. Both Premier Insurance and Neco Insurance had opted for a merger to reach the paid up capital of Rs 250 million.
Neco Insurance’s paid up capital as of mid-October stood at Rs 135.2 million. Thus, the company will have to issue bonus shares worth Rs 114.8 million to reach the target of Rs 250 million. However, the company’s net profit at the end of last fiscal year was Rs 37.8 million.
“Though yet to be decided, we will most probably announce a date for a special meeting to get the merger proposal approved by shareholders,” informed an executive at Neco Insurance, who did not want to be named.
“The management and board of the company are mulling over possible steps to be taken in the present scenario, but a merger is the best possible alternative for firm to increase its paid up capital,” added the official.
The two non-life insurers had formally signed a Memorandum of Understanding back in December to merge into a single insurance company — Premier Neco Insurance.
This would have been the first merger between two insurance companies in Nepal’s insurance sector.
Both companies had undertaken due diligence audits of their respective companies and decided on a share swap ratio of 100:131.5. Shareholders who hold 100 units of Neco Insurance’s share would get 100 unit shares of the new company, while Premier Insurance’s 100 units would get 131.5 unit shares of the merged entity.
Non-life insurance companies were supposed to increase their paid up capital to Rs 250 million and life insurance companies were required to increase their paid up capital to Rs 500 million by the end of mid-July, 2013. By the deadline, companies had to submit their plans to increase the capital to the insurance regulator — Insurance Board (IB). Though other companies sought to increase their capital by issuing bonus and rights shares, Neco and Premier opted for a merger.
“We are looking into the matter of disturbance in Neco Insurance’s AGM regarding the merger,” informed chairman of IB Dr Fatta Bahadur KC. “We can decide on how to proceed only after finding out the reasons for shareholders’ objections,” he said, adding that the regulator is in favour of a merger of the companies.
To aid the merger among insurance companies, the Insurance Board had even introduced the Insurance Merger Directives in July 2013. The directive also includes a clause that says that the regulator can impose a merger among companies if deemed necessary. Companies that merge are also granted various facilities and concessions according to the directive.
source: the himalayan times,5 feb 2014
LINK
During Neco Insurance’s annual general meeting (AGM) yesterday, shareholders voted against the merger. In the AGM of Premier Insurance that was held a day earlier on February 3, the company’s shareholders had approved the decision.
More than half of the shareholders present at Neco’s AGM voted against the merger and demanded that the company issue bonus shares to meet the regulatory capital requirement. Both Premier Insurance and Neco Insurance had opted for a merger to reach the paid up capital of Rs 250 million.
Neco Insurance’s paid up capital as of mid-October stood at Rs 135.2 million. Thus, the company will have to issue bonus shares worth Rs 114.8 million to reach the target of Rs 250 million. However, the company’s net profit at the end of last fiscal year was Rs 37.8 million.
“Though yet to be decided, we will most probably announce a date for a special meeting to get the merger proposal approved by shareholders,” informed an executive at Neco Insurance, who did not want to be named.
“The management and board of the company are mulling over possible steps to be taken in the present scenario, but a merger is the best possible alternative for firm to increase its paid up capital,” added the official.
The two non-life insurers had formally signed a Memorandum of Understanding back in December to merge into a single insurance company — Premier Neco Insurance.
This would have been the first merger between two insurance companies in Nepal’s insurance sector.
Both companies had undertaken due diligence audits of their respective companies and decided on a share swap ratio of 100:131.5. Shareholders who hold 100 units of Neco Insurance’s share would get 100 unit shares of the new company, while Premier Insurance’s 100 units would get 131.5 unit shares of the merged entity.
Non-life insurance companies were supposed to increase their paid up capital to Rs 250 million and life insurance companies were required to increase their paid up capital to Rs 500 million by the end of mid-July, 2013. By the deadline, companies had to submit their plans to increase the capital to the insurance regulator — Insurance Board (IB). Though other companies sought to increase their capital by issuing bonus and rights shares, Neco and Premier opted for a merger.
“We are looking into the matter of disturbance in Neco Insurance’s AGM regarding the merger,” informed chairman of IB Dr Fatta Bahadur KC. “We can decide on how to proceed only after finding out the reasons for shareholders’ objections,” he said, adding that the regulator is in favour of a merger of the companies.
To aid the merger among insurance companies, the Insurance Board had even introduced the Insurance Merger Directives in July 2013. The directive also includes a clause that says that the regulator can impose a merger among companies if deemed necessary. Companies that merge are also granted various facilities and concessions according to the directive.
source: the himalayan times,5 feb 2014
LINK
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