Sun Nepal Life CEO Rajkumar Aryal arrested over alleged share allocation fraud

KATHMANDU: The Central Investigation Bureau (CIB) has arrested Rajkumar Aryal, the Chief Executive Officer of Sun Nepal Life Insurance Company, on allegations of forgery and irregularities in employee share allocation.

According to CIB officials, Aryal was taken into custody on Monday following an investigation into alleged manipulation of share distribution reserved for company employees during the firm’s public offering process.

Investigation Triggered by Regulator Report

The case came to light after the Securities Board of Nepal conducted a preliminary study into complaints regarding irregularities in employee share allocation. The board subsequently forwarded its findings to the CIB for further investigation.

CIB spokesperson Shiv Kumar Shrestha confirmed that Aryal was detained based on the regulator’s report, which pointed to discrepancies in share application documents.

Forgery Allegations in Share Application

According to the investigation report, Aryal allegedly manipulated share application forms to allocate a disproportionately higher number of shares to himself.

• Copies submitted earlier reportedly did not mention the number of shares or amount applied
• Later “original” forms included altered details showing higher allocations

The report also identified 38 suspicious cases where employees were either made to sign blank forms or had forms filled out on their behalf.

Investigators say Aryal initially secured 104,650 units of shares through the alleged manipulation, although his final holding was reduced to around 72,000 units after redistribution.

Governance Lapses and Internal Irregularities

The report further highlights serious governance failures within the company:

• No formal board decision on employee share allocation
• Inconsistent statements from company officials and issue manager Nepal SBI Capital
• Admission of procedural errors during questioning

Dissatisfied employees had earlier filed complaints with the Securities Board, prompting the investigation.

Legal Action Under Securities Law

Based on findings, Aryal could face action under provisions of the Securities Act 2063:

• Section 101(4): Submission of false information or documents (penalty up to NPR 200,000)
• Section 100 & 103: Criminal investigation for fraud-related offenses

The regulator had recommended maximum legal action and referred the case, along with evidence, to law enforcement authorities.

Background: IPO and Share Allocation Structure

Sun Nepal Life had issued shares equivalent to 30% of its issued capital (9.6 million units) to the public starting from Bhadra 32, 2080 (BS).

The allocation included:

• 10% (960,000 units) for Nepalis working abroad
• 5% (480,000 units) for mutual funds
• 5% (480,000 units) for employees

Shares were issued at a price of NPR 239 per unit, including a premium over the face value.

Wider Implications for Corporate Governance

The arrest of a sitting CEO over share allocation fraud raises serious concerns about corporate governance standards within Nepal’s financial and insurance sector.

Regulators and investigators are expected to expand scrutiny into similar cases to ensure transparency, protect investor interests, and strengthen trust in Nepal’s capital markets.