Section 27: Power to Refuse Prior Approval

1) Notwithstanding anything mentioned in Section 25, the Insurance authority may refuse to issue prior approval to incorporate an insurance business or open a branch in Nepal by a Foreign  insurance company in the following circumstances:

(a) If the name of the proposed insurance company is similar to the name of any previously registered insurance company.

(b) If the name of the proposed insurance company or the activities of the insurer to be carried out are found to be inappropriate or prejudicial to the public interest, good conduct, religion, ethnicity, community or traditional belief.

(c) If based on a study of the feasibility report, details, and documents, other infrastructures submitted by the proposed insurer do not provide grounds to believe that it may carry on insurance transactions in a healthy and competitive manner.

(d) If the objective of the proposed insurance company is contrary to the prevailing laws.

(e) If documents and details as provided in section 26 is not submitted.

(f) If every promoter does not undertake to subscribe to at least TEN THOUSAND shares in the proposed insurance company or if the details about the shares to be conducted are not clearly businesses in addition to the disclosed.
(g) If the proposed insurance company has not proposed to maintain share capital as per Section 36.

(h) If any of the proper has been convicted and sentenced of any offence involving insurance, banking, finance, fraud, forgery, money laundering, corruption, human trafficking, kidnapping, hostage or other similar offences involving moral turpitude and a period of 5 years has not lapsed after serving such punishment.

(i) If the proposed insurance company has included objectives of other business in addition to insurance business.

(j) If the prior approval is not to be granted as per Section 31 of the Act.

(k) If any other promoters or his family members had been blocked as per prevailing acts and three years have not lapsed after removal from such blocklist.

(l) If it is found that an investment in the proposed insurer by the single promoter or his family members or corporate body or group is fifteen percent or more of the paid-up capital.

However, this provision shall not be applicable to the shares held by the Government of Nepal or province Government or Foreign Investors.

(m) If the person or his family member is a substantial shareholder in another insurance company undertaking a similar insurance business as proposed by the insurer.

2) Notwithstanding anything mentioned in sub-section (1), the Nepal Insurance Authority shall not grant prior approval to undertake more than one insurance business at a time except for the reinsurance business.

3) In case when the Nepal Insurance Authority had denied to grant prior approval, the applicant shall be provided with reasons of refusal, in writing, within 60 days from the date of application.