Corporate Governance Crisis: Asian Life Insurance Faces Backlash Over Illegal Share Bid
Nepal Insurance Authority Slams
4th December 2025, Kathmandu
The Asian Life Insurance Share Scandal has rocked Nepal’s financial sector, bringing corporate governance and regulatory compliance to the forefront.
Nepal Insurance Authority Slams
The Nepal Insurance Authority (NIA) has issued a sharp reprimand to Asian Life Insurance Company for a blatant attempt to acquire shares in City Hotel Limited, a business heavily controlled by the insurer’s own top promoter.
This reckless move constituted a clear violation of conflict-of-interest rules under the Insurance Act, exposing serious lapses in the company’s internal controls and board oversight.
NIA Slams ‘Ignorant’ Board Decision
Asian Life’s board had initially approved the acquisition of a significant 1.9 million shares in City Hotel, the operator of the Hyatt Centric in Tahachal, through a book-building process.
The aim was to snap up undistributed rights shares. However, this decision quickly hit a regulatory brick wall. The NIA intervened, citing the stringent Section 67 of the Insurance Act 2022.
This specific section strictly prohibits insurers from engaging in joint ventures or acquiring assets linked to their directors, family members, major shareholders, or entities where they hold financial interests. The planned transaction would have funnelled policyholder funds into a business directly benefiting a key insider.
The Blatant Conflict of Interest
The core of the issue lies with Shakti Kumar Golyan, who holds the largest promoter stake in Asian Life, controlling 5.31 percent of its shares.
Critically, Mr. Golyan also chairs the board of City Hotel and commands a massive controlling interest there. This dual role created an undeniable and unacceptable overlap that regulators quickly identified.
The law is unequivocal: insurers cannot partner with or link assets to insiders. Any pre-existing ties should have been severed within six months of the Insurance Act’s enforcement. Asian Life’s attempt to pursue this deal showed a clear disregard for these legal boundaries.
Rejection of ‘We Didn’t Know’ Excuse
In a stern letter, the NIA demanded a detailed explanation, questioning the company’s motive for pursuing a self-dealing transaction that jeopardized policyholder protections. Asian Life’s response was deeply problematic: the company claimed its board was simply unaware of the potential conflict when approving the deal, only discovering the issue after the NIA’s intervention.
Senior NIA sources confirmed the company’s baffling admission: “We reached this decision because we weren’t aware that institutional investors on both sides could clash and create a conflict of interest,” Asian Life reportedly stated.
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Regulators swiftly dismissed this excuse as utterly irresponsible. An NIA official noted, “This kind of ‘we didn’t know’ excuse simply won’t fly in a regulated industry like ours.”
The lack of awareness regarding fundamental regulatory compliance by a major financial institution signals a profound failure of corporate governance.
Swift Reversal and Regulatory Fallout
The regulatory pressure was immediate and effective. Barely after receiving the NIA’s query, Asian Life convened an emergency board meeting and promptly scrapped the entire share purchase plan. The company formally withdrew its bid for the 1.9 million shares, notifying the issue manager, Prabhu Capital Limited.
In its formal reply to the NIA, Asian Life reiterated the “lack of awareness” but emphasized its immediate withdrawal upon realization, attaching proof of the cancellation.
While the deal is now nullified, the broader implications remain. The incident highlights serious vulnerabilities in the internal control and risk management framework of Asian Life. Moreover, it exposes the risks associated with financial institutions linking assets to promoter-controlled entities, especially as City Hotel is reportedly grappling with ongoing losses.
What’s Next for Asian Life?
The Asian Life Insurance Share Scandal has put the company directly in the regulatory crosshairs. The NIA is now deliberating on its next steps. Potential actions could include:
Financial Penalties and Fines: Imposing sanctions for regulatory non-compliance.
Deeper Audits: Initiating comprehensive, deeper audits of the company’s investment practices and internal control systems.
Board-Level Changes: Demanding governance improvements or even board-level restructuring to prevent future lapses.
The regulatory body is determined to uphold the letter of the law and ensure that policyholder funds are protected from self-dealing and corporate excess.
This incident serves as a crucial warning to all financial institutions in Nepal: regulatory compliance and robust corporate governance are non-negotiable mandates. The industry must strengthen its vigilance to maintain public trust and safeguard the stability of the financial system.
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