Find out which life insurance companies are delaying AGM and why?

ShareSansar, April 7:

Delay in holding AGM does not send out a positive message about companies and it reflects even badly in case of public limited companies. Company Registration Act requires all the companies to hold their Annual General Meeting every year.

But oddly enough, as the fiscal year 2070/2071 approaches its end, out of seven listed life insurance companies, six have not yet announced their AGM date. There are a total of nine life insurance companies, out of which the shares of Beema Sansthan, the state-run insurance company, and MetLife have not been listed yet.

While Life Insurance Corporation Nepal Limited (LICN) concluded its AGM on Falgun 20, 2071, offering 30% stock dividend, six other listed life insurance companies, namely, Nepal Life Insurance Company Limited (NLIC), Asian Life Insurance Company Limited (ALICL), National Life Insurance Company Limited (NLICL), Surya Life Insurance Company Limited (SLICL), Gurans Life Insurance Company Limited (GLICL) and Prime Life Insurance Company Limited (PLIC) have yet to announce the date for their AGM.     

In the last fiscal year, too, Life Insurance Corporation Nepal was the earliest to hold its AGM among all the life insurance companies. The other companies were late by about a year or at least six months.
Prime Life Insurance and Gurans Life Insurance have worst record in terms of AGM as they haven’t called an AGM for the last two fiscal years (2069/70 and 2070/71).

Meanwhile, of the six companies that have yet to announce AGM date, only three have proposed dividends.
For fiscal year 2070/71, Asian Life has proposed 30% dividend (28.5% bonus shares and 1.5% cash) and National Life has offered 38% dividend (30% bonus shares, 8% cash). Recently, Nepal Life Insurance Company Limited (NLIC) has also announced 68% dividend (60% bonus shares and a cash dividend of Rs 8, for tax purpose) to its shareholders.

But uncertainties about when the three companies will distribute the bonus persist as they haven’t announced their AGM date yet.

The remaining three—Prime Life Insurance, Gurans Life Insurance, Surya Life Insurance—have not even proposed dividends.  

Preparations for AGM must begin much earlier. For example, the board of directors must hold meetings to decide, among other things, how much dividends to propose for shareholders and what course of actions and strategies the company should pursue to stay profitable.

Generally, companies announce dividends they are going to offer before their AGM, and usually the notice for AGM comes three weeks ahead of the date when it is to be held.

Prime Life and Gurans Life officials said that they have already sent their balance sheets to the Insurance Board and they are awaiting the insurance sector regulator’s approval before announcing the AGM date.

However, an official at the Insurance Board (Beema Samiti) told Sharesansar that the balance sheets of both the companies were for fiscal year 2069/70, not for 2070/71, the fiscal year that just ended.

“While Gurans and Prime Life have sent their balance sheets of fiscal year 2069/70, the balance sheet of Surya Life for fiscal year 2070/71 has yet to arrive in final form,” said the official, adding, “The balance sheet of National Life had arrived recently and Nepal Life sent its balance sheet for approval on Sunday.”  

An official at Surya Life Insurance, which has not sent its balance sheet in final form, had told Sharesansar that the company’s board is yet to hold a discussion on the matter. “The board meeting is likely to take place at the end of Chait,” the official said.


So when will the AGM take place?

If there are valid reasons for the delay in holding AGM, lack of funds or profit is certainly not one of them. All insurance companies have been doing steady business and all of them posted a rise in profit for the second quarter of the fiscal year 2071/72.

For the 2nd quarter of the fiscal year 2071/72, Nepal Life Insurance topped the list as a profit making insurance company raking in a net profit of Rs. 100.32 million.

National Life Insurance Company came second as a profit maker, garnering a net profit of Rs. 78.26 million in the 2nd quarter of the current fiscal year 2071/72.

The 2nd quarter profit of other insurance companies stood as follows: Prime Life Insurance Company Rs. 46.61 million, Life Insurance Corporation Nepal Rs. 21.78 million, Surya Life Insurance Rs.15.23 million, Guras Life Insurance Rs 13.79 million, Asian Life Insurance Rs 12.38 million.

Metlife American Life Insurance Company, the non-listed insurance company, also posted a net profit of Rs 33.90 million for the period.

Given the good profit and no other apparent reason for delays, it is hard to explain why life insurance companies find it difficult to hold their AGM on time.

Going by the detail provided by the Insurance Board official about the process of approving a balance sheet, it might take few more weeks, even a month to approve the balance sheets of insurance companies whose balance sheets it received recently.   

So of the five insurance companies that have yet to announce AGM date, only Nepal Life (proposed dividend 68%) and Asian Life (30%) are likely to hold their AGM in near future. After the two companies, National Life (proposed dividend 38%) might be the next.

But there is no indication just when Prime Life Insurance, Gurans Life Insurance and Surya Life Insurance will hold their AGM or even propose dividend.

Insurance Board has the authority to fine insurance companies who delay their AGMs. The board can even cancel or refuse to renew the license of the companies. But in the history of the board, it has never taken such action against any insurance companies.