Rastriya Beema Company yet to convene AGM for 8 years; Last company remaining to meet minimum capital requirement

Tue, Feb 25, 2020 10:52 AM on Stock Market, Latest,

Rastriya Beema Company Limited (RBCL) is the last listed non-life insurance company that hasn't met the minimum paid-up capital requirement yet. The minimum paid-up capital requirement mandated for non-life insurance companies by Beema Samiti (Insurance Board) is Rs 1 arba.

RBCL had distributed dividend in FY 2062/63 and after that, it hasn't distributed any bonus or cash dividend. After that it organized AGM for FY 2063/64 to FY 2067/68 at once but didn't propose any dividend. The company hasn't convened any AGM for the last seven years excluding FY 2075/76. The last FY is excluded as other non-life insurance companies also haven't conducted their AGM.

The paid-up capital of RBCL stands at Rs 26.66 crore and is short by Rs 73.34 crore to meet the paid-up capital mark. Upon conversation with the information officer of the company, we were informed that the company has already finished the audit of the financial reports of five fiscal years i.e. till FY 2072/73 and has been submitted to Beema Samiti for approval. After the approval, the company will convene the AGM.

However, the decision to approve all five years' reports at once or one-by-one is in the hands of Beema Samiti. Therefore there is high possibility that the RBCL will be convening AGM this year, but will it be for one FY or five years like last time is uncertain. The officer also informed that the paid-up capital should be met by bonus shares mostly. Given the huge reserve of the company, it doesn't need to issue either the right shares or FPO. It will have to distribute bonus shares of around 275% to meet the capital requirement.

Once that is done, RBCL still needs to audit the financial reports for the last three fiscal years and convene AGM.

Capital Structure

The current capital structure of RBCL is as follows:

Government of Nepal (GoN): 47.5%
Nepal Bank Limited (NBL): 10.5%
Employees Provident Fund (EPF): 22%
General public (RBCL): 12%

The shares of GoN, NBL, and EPF are not tradeable in the market. The 8% shares listed in NEPSE as RBCLPO are the shares that were under the ownership of Nepal Rastra Bank (NRB) and had been auctioned to the general public. Therefore, in essence, 20% of the total shares are floated in the market.

This is a similar case as with NABILP. Both NABIL and NABILP were traded in the market at different prices despite being the shares of the same company. Therefore, later the NABILP was also converted into NABIL.

The price of RBCL as of Falgun 11, 2076 stands at Rs 11,680 and that of RBCLPO stands at Rs 10,200. Both the scrips belong to the same company and receive the same amount of dividend, therefore NEPSE is likely to convert RBCLPO into RBCL in the future. The PE ratio of RBCL and RBCLPO stands at 49.52 times and 43.24 times respectively.

The annualized EPS of RBCL stands at Rs 235.88 as of the second quarter of FY 2076/77. Apart from its regular business of selling insurance policies, it also has investments in Nabil bank, Nepal investment bank, Janata Bank (Currently merged with GBIME), Siddhartha bank and Nepal reinsurance company. Therefore, its earnings from dividend is also very high.