NLG Insurance Proposes Share Split, Requests Approval from Regulator

NLG Insurance Limited (NLG) has commenced preparations to execute a share split. The company has proposed dividing its shares, currently valued at Rs. 100 per unit, and has formally communicated with the Nepal Insurance Authority to seek approval for the process.

As of now, NLG Insurance's paid-up capital amounts to Rs. 1.53 Arba, comprising a total of 15,395,360 shares. Following the completion of the share split, this number is expected to increase significantly.

It is worth noting that a similar attempt by Nepal Life Insurance to conduct a share split was previously rejected, as the process had been initiated without prior consultation with the regulatory authority. In contrast, NLG Insurance has adopted a more prudent approach by engaging with the authority at the preliminary stages of the process.

NLG Insurance has proposed splitting its shares, currently valued at Rs. 100 per unit, though the specific split ratio has not been disclosed. Typically, share splits are conducted in ratios like 1:2 or 1:3, where each share is divided into two or three, increasing the total share count while reducing the per-share value proportionally.

The Companies Act 2063 provides for adjustments to share capital, allowing shares to be consolidated or divided. Section 27(2) permits reducing the face value to Rs. 50, though the Securities Registration and Issuance Regulations, 2073, require a minimum face value of Rs. 100, highlighting a regulatory inconsistency.

Share splits are often used to attract new investors by making shares more affordable and increasing liquidity. The process significantly impacts the market by optimizing share prices and expanding the investor base when executed in compliance with regulations.