Everest Insurance Company issues right shares twice in one fiscal year; what does the rule say?

Everest In...

Everest Insurance Company (EIC)  published an announcement today regarding the book closure for the upcoming 300% right share issuance. Not so long ago EIC has also issued 105% right shares to the promoters group, which has been fully subscribed but not listed in NEPSE yet.

According to the rules prescribed by SEBON, there are two provisions regarding right share issuance. One says that the company can't issue right shares more than once in one fiscal year. Similarly, the other says that while issuing right shares, the previously issued right should cross at least 180 days after listing in NEPSE.

In this case, the 300% right shares to be issued is being issued in the same fiscal year and the 105% right shares haven't been listed in the NEPSE yet.

In regards to the same, the provision also states that in case the company needs to issue right shares to meet the minimum paid-up capital requirement as mandated by the regulatory body, then the above mentioned two rules won't be applied. Thus, due to this reason, EIC is eligible to issue two rights in one fiscal year.

At the beginning of FY 2075/76 the paid-up capital of EIC stood at Rs 13.36 crore. Then, the 105% right was approved by SEBON on Kartik 04, 2075 after the adjustment of which the capital bumped to Rs 27.39 crore. Finally, the 300% right was approved by SEBON on Chaitra 27, 2075, for which the book closure has been announced on Baisakh 08, 2076. After the adjustment of 300% right shares, the capital will reach Rs 1.09 arba finally hitting the minimum capital mark.