Sun Nepal Life Insurance Company Limited has informed police that it would redistribute shares reserved for employees after a police investigation found irregularities in the earlier distribution.

However, the issue might not be sorted out soon as shares distributed earlier cannot be transferred until the lock-in period ends, according to Nepal Stock Exchange (NEPSE), the country’s stock market operator

The controversy surfaced after complaints were filed, alleging the company’s Chief Executive Officer (CEO) Rajkumar Aryal of appropriating a significant portion of the shares meant for employees.

Following the complaint, both the Securities Board of Nepal (SEBON), the country's stock market regulator, and the Central Investigation Bureau (CIB) of the Nepal Police launched investigations into the matter.

CIB Spokesperson Hovindra Bogati confirmed that the company has officially notified CIB of the redistribution process while admitting the issue in employee share allocation. “The company has asked to provide it with some time to rectify the error after our initial investigation confirmed irregularities," said Bogati, adding that the CIB would continue the investigation in the meantime.

The Board of Directors of Sun Nepal Life had decided to allocate 5% of the total shares — 480,000 out of 9.6 million — at Rs 100 per share to its employees.

General investors, however, were offered shares at Rs 239 per unit, after adding a Rs 139 premium per unit on the face value.

Employees filed a complaint with SEBON citing unfairness in the share distribution. The case was forwarded to the CIB.

The joint investigation by SEBON and the CIB found that CEO Aryal had retained 384,000 units of shares, or 80%, reserved for the employees in his name.

"There is no clear provision in the securities law regarding the distribution of shares reserved for employees, so the CEO was found to have acted arbitrarily," Bogati said. "To prevent a similar issue in future, a clear provision in the securities law is necessary."

But the issue might not be resolved soon as the shares distributed earlier remain under lock-in, preventing their transfer from the CEO to the employees, according to Murahari Adhikari, Information Officer at NEPSE.

"The shares can only be transferred after an agreement between the company's board of directors and employees, following a fair decision and the end of the lock-in period," Adhikari added.