Why did Gurans Life Insurance amend its dividend twice? NEPSE Demands Clarification

NEPSE has demanded clarification from Gurans Life Insurance Company Limited (GLICL) for the repeated amendment of its dividend.

The company had previously proposed a 13.1015% dividend for the fiscal year 2074/75. However, Beema Samiti had instructed the company to change the dividend amount. Gurans Life Insurance Company Limited had then proposed to distribute a 10.5% of the total paid-up capital as bonus shares to its investors. Meanwhile, Rs. 51.86 lakhs was to be distributed as cash dividend for tax purposes.

However, the company did not organize its AGM and issued 100% right shares to its shareholders instead. The paid-up capital then increased to double its value from 93.85 crores to 1.87 Arba.

Hence, to keep the same amount of the dividend as bonus shares, the company had recently amended its dividend to 5.25%. The upcoming AGM will endorse this dividend. Note that this is half the dividend of the previously proposed dividend of 10.5%. This is done to compensate for the doubling of the paid-up capital. Needless to say, investors will get the same monetary amount of bonus shares.

Although difficult to understand, what the company did is logical. Nevertheless, this frequent update in its dividend certainly baffled investors. Consequently, NEPSE has requested the company to clarify the matter. Gurans Life Insurance Company is required to respond to NEPSE within three days of the issuance of the request-notice on clarification.