Section 46: Restriction on sold, mortgaged, or transferred

1) The promoter of the insurance company shall not be entitled to sell or pledge any share registered under his/her ownership for at least five years from the date of incorporation of such company.

Provided that if any person had, before commencement of this act, hold shares more than the prescribed limit provided by this act, such person shall, within two years of commencement of this act, sell such excess shares.

2) Notwithstanding anything contained in sub-section (1), in case of a special circumstance due to the emergence of any obstruction or hindrance in the operation of the insurance business or the promoter shareholder is included in the blocklist as per prevailing laws, shares may be sold or brought amongst promoters by obtaining approval from the Nepal Insurance Authority.

Explanation: For the purpose of this Section, “special circumstance” means failure to hold a meeting of the Board of Directors due to lack of quorum for a consecutive period of three times or a situation of indecision because of disputes amongst Directors.

3) If the promoter of the insurance company wishes to sell or pledge the shares held in their name after five years he may sell or pledge such shares by complying the terms and conditions prescribed by the Nepal Insurance Authority.

4) The Chief Executive Officer, Auditor, Company Secretary or the person directly involved in management and account of insurer shall not buy or sell, mortgage or cause to be mortgaged, transfer or transact or give or accept as donation the securities of the concerned insurance company or of its subsidiary company in his/her name or in name of member of his/her family or a firm, company or institution under the control of such person or to any other person until he/she is in such position or until one year from the date of retirement from such position.

Provided that this sub-section shall not hinder to buy and sell securities while issuing bonus shares, rights shares or the shares allotted for employees or issuing new shares or while merging or amalgamating insurance companies in each other according to provisions made in Chapter-14 or while acquiring all assets or liabilities of one insurer by another insurer or while carrying out purchase or sale of securities with the approval of the Nepal Insurance Authority.

5) Other provisions relating to the sale or purchase or other insurer shall be as prescribed by prevailing laws.