KATHMANDU: Nepal Life Insurance Company (NLG) and Life Insurance Corporation (LIC) have put up hundreds of thousands of unsold shares for auction after their rights issues failed to attract full subscription. The companies are now auctioning a total of 290,555 shares from NLG and 492,577 shares from LIC , starting Sunday and Monday, respectively. This marks a significant gap in investor participation despite the lucrative pricing and potential long-term benefits.
The rights issues were aimed at raising paid-up capital—Rs. 2.5 billion for NLG and Rs. 5 billion for LIC —to meet regulatory requirements and expand operations. Shareholders were offered rights shares at discounted rates of Rs. 100 each, compared to market prices of Rs. 1,300 for NLG and Rs. 2,000 for LIC. However, many investors did not subscribe, citing financial constraints or lack of awareness.
Decline in Share Value Post-Rights Issue
The failure to fully subscribe to the rights issue has led to a sharp decline in share value. NLG’s share price dropped to around Rs. 900 , while LIC’s fell to Rs. 1,200 after adjustments. Investors who skipped the rights issue not only missed out on additional shares but also saw their asset values diminish significantly. In contrast, those who participated retained their proportional ownership and avoided losses.
Challenges in Dividend Distribution
Beyond rights issues, many investors have also missed out on dividends due to administrative oversights. Agricultural Development Bank spokesperson Him Lal Paudyal highlighted that farmers, who were prioritized during the initial share distribution, failed to open demat accounts or bank accounts. As a result, their dividends remain unclaimed. “Even now, shareholders can claim unpaid dividends by presenting their share certificates,” he clarified.
Before demat accounts became mandatory in 2073 BS (2016 AD) , shareholders had to physically visit companies to collect dividends, which often proved costly and inconvenient. This discouraged small investors from claiming their rightful earnings. Unclaimed dividends have since been transferred to the Investor Protection Fund , but reclaiming them requires proactive engagement from investors.
Awareness Gap Among Investors
A lack of financial literacy has compounded the problem. Many shareholders holding physical certificates have not converted them into demat format, rendering them ineligible for electronic transactions. According to data from CDS & Clearing , approximately 750 million shares remain in physical form, with some certificates lost or damaged. Deputy Manager Suresh Nyapane assured that even lost certificates can be reclaimed once shares are dematerialized.
To address these issues, the Securities Board of Nepal (SEBON) has called for increased investor awareness programs. “We’ve conducted numerous campaigns, but there’s still a gap,” said SEBON spokesperson Niraj Ghimire. He urged investors to stay vigilant about their investments and update their demat and bank account details promptly.
Call for Proactive Measures
Companies are now urging shareholders to actively participate in dividend claims and rights issues. Pradeep Adhikari, head of the Office of the Company Registrar, emphasized that unclaimed dividends can be reclaimed through proper channels. Meanwhile, both NLG and LIC aim to resolve lingering issues by encouraging investors to update their accounts and participate in future offerings.
As Nepal’s financial sector continues to evolve, the challenge lies in bridging the gap between regulatory mandates and investor awareness. For now, the auction of unsold shares serves as a reminder of the importance of investor participation in shaping the country’s corporate landscape.