9th November 2024, Kathmandu
The Nepal Insurance Authority (NIA) has announced stricter regulations for insurance companies regarding dividend distribution.
NIA Faces New Dividend Distribution
As part of the new measures, insurance companies must implement new guidelines before declaring any dividends. The Authority has instructed companies to comply with these new criteria and submit the necessary documents for approval.
Under the new rules, insurance companies are required to submit an audit report along with other required documents to the NIA for approval before any dividend distribution is authorized. This move is aimed at ensuring greater financial transparency and compliance with regulatory standards.
In addition to the audit report, the NIA has mandated that companies submit a long-form audit report from an external auditor before seeking approval for dividends. Companies must also provide detailed financial statements, including the Statement of Financial Position, Statement of Profit and Loss, and Statement of Other Comprehensive Income for both the fourth quarter and the annual financial reports.
Furthermore, companies will now be required to submit variance reports detailing any discrepancies in the amounts listed under each section of the financial statements. The NIA has stated that if any discrepancy exceeds 10%, companies must provide a valid explanation for the variance.
The Insurance Authority has emphasized that insurance companies will not be allowed to declare dividends without implementing the new regulatory framework. This move is expected to strengthen corporate governance and ensure a higher level of accountability in the sector.
By enforcing these stricter rules, the NIA aims to prevent financial mismanagement and improve the overall transparency of the insurance industry in Nepal.
For more: NIA Faces New Dividend Distribution
