Privatization Act, 2050

Privatization Means:
Involving private sector in the management.
To sell or lease it
To transfer government ownership into public ownership, or
An act to infuse participation by any means either wholly or partially
Sec6 Publication of Notice for Privation
1. If government of Nepal deems necessary to privatize an enterprise classified for privatization, it
shall public notice to this effect in the Nepal Gazatte.
2. After publication of the notice, GoN shall determine the process of privatization according to
provision of Act.
Sec7 evaluation Process of Enterprises

1. For evaluation purpose, privatization committee shall appoint a team of national experts or joint
team of foreign and national experts if necessary.
2. The experts team shall make assessment of enterprises on the basis of assets, market price of
shares, profit and loss and potential future production, sales, profit and sales of the enterprises
Sec8 Determination of Privatization Process or Methods of Privatization
Following any or all of the process must be followed:

a. By sales of shares to,

-general public
-employee, workers, any person or company interested in management of such enterprises
b. By formation of cooperatives
c. By selling assets of the enterprises
d. By leasing out the assets of the enterprises
e. By involving private sector in management of enterprises
f. By adopting any other modality recommended by privatization committee.
Sec9 Proposal for Privatization
Sec11 Agreement to be Conducted for Privatization
1. Prior to handling over an enterprise, an agreement shall be entered to between offerer and offeree
specifying clearly the terms and conditions.
Agreement shall not be required if shares are being sold in open market, or to employees and
workers or to private sector through capital market.
2. The terms of payment to GoN in the course of privatization shall be clearly spelled out in the
agreement.
3. Time limit of transfer shall be clearly spelled out in the agreement.
 4. Terms and condition of privatization shall be published within one month from date of signing of
the agreement for the information to the public.
Sec10 Evaluation of the Proposal
1. The committee shall evaluate the proposal on the basis of following:
a. Attractive Price
b. Continuation of enterprise same as before
c. Retention of present workers and employees
d. Enhancement in the employment opportunity
e. Managerial experience
f. Expansion of enterprises by preparing good business plan
2. While evaluating proposals, if the proposals of two or more investors are found identical, priority
shall be given to Nepali investor or group of Nepali investors.
Sec13 Settlement of Disputes
1. If any dispute arises in respect of matter contained in the privatization agreement, shall be
resolved through mutual consultation
2. If not, through arbitration through consent of both parties. Laws related to arbitration and United
Nation Commission on International Trade Law (UNCITRAL) must be followed.
3. Venue of arbitration shall be Kathmandu and current laws of Nepal is applicable.
Co-operative Acts, 2048
Sec26 Powers to carry on Banking Transaction
1. An association or society may accept saving deposits from its member and lend loan to its
member.
2. Must obtain prior approval from NRB in order to carry on acceptance of deposits and
disbursement of loans limited to only its members. Such association or society must comply with
directives issued by NRB
3. If any association or society carry on its transaction prior to commencement of this Act, must
make arrangements for approval its transactions within one year from the date of the
commencement of this Act.
4. Notwithstanding anything contained elsewhere in this Act, association or society may jointly
form a cooperative bank
5. In case of application filed for establishment of cooperative bank along with recommendation of
NRB, the registrar may conduct necessary inquiry and register such bank.
6. A bank established pursuant to (5) above, may carry banking transactions under Commercial
Bank Act and comply with Directives
Sec38 Exemption and Facilities to Association and Society
1. Notwithstanding anything contained in this prevailing law, the association or society shall be
entitled to the following exemption and facilities
a) Shall not require to register any instruments relating to its transaction other than
immovable property.
b) No revenue stamp or registration fee shall be charged on a document with the purchase,
sale or exchange of immovable property
c) No local taxes shall be levied on the goods traded by association or society.

2. GoN, by notification in Nepal Gazette, may exempt fully or partially from chargeable customs,
tariff and sales tax when association or society imports machineries, industrial or agro machinery,
equipment, spare parts, raw materials, office equipment for its use.
3. GoN, by notification in Nepal Gazette, may exempt fully partially from chargeable customs, tariff
and sales tax on the goods produced by association or society.
4. An association or society doing Industrial business shall also be entitled to other exemptions and
facilities and protection in addition to exemption mentioned in above.
Industrial Enterprises Act, 2049
Sec12 Constitution/ Formation of Industrial Promotion Board
1. GoN shall constitute an industrial promotion board consisting of the following members:
A Minister for Industries Chairperson
B Assistant Minister for Industries Member
Member (looking after industry), National Planning
C Member
Commission
D The Governor, NRB Member
E The Secretary, Ministry of Finance Member
F The Secretary, Ministry of Commerce Member
G The Secretary, Ministry of Industry Member
H The Secretary, Ministry of Tourism Member
I The DG, Department of Small and Cottage Industry Member
J The DG, Department of Industry Member
K Representative of FNCCI Member
Two person nominated by government from amongst the
L Member
person from industry, commerce and tourism sector
2. GoN, by alteration in the Nepal Gazette may make necessary alteration in the membership of
board.
3. The board, if necessary, may invite any national and foreign expert at meeting as an observer.
4. Procedures relating to the meeting of board shall be determined by the board.
Securities Act, 2063
Chapter3: Registration and Insurance of Securities
Sec27 Registration of Securities
1. A company shall have to register securities with the board prior to issue of securities
2. A corporate body shall have to make application to board in the prescribed format along with
AOA, MOA, and related documents with prescribed fees
3. The board shall make necessary inquiry to register such securities
4. Notwithstanding anything contained elsewhere in this Act, a body corporate which has already
issued securities prior to commencement of this Act shall register such securities within one year
from the commencement of this Act.
Sec30 Prospectus to be Published
A corporate shall have to publish the prospectus before issue of securities. However, prospectus shall not
be issued in following cases:
1. Securities issued by NRB
2. Securities issued against the full guarantee of GoN
3. Securities issued to own employees and workers
4. Securities proposed to be sold up to fifty persons at a time
5. Securities permitted by the board without issuing prospectus
Sec32 Matters to be referred to in Prospectus
The prospectus shall contain following matters:
a) Capital of corporate body
b) Main objective
c) Legal action
d) General administration
e) Economic condition
f) Information relating to expert
g) Matters as prescribed
The directors signing the prospectus and the expert preparing the prospectus shall be personally and
collectively liable for false statement.
Sec12 Circumstances on which a chairperson and a member may be removed from office
Government may remove the chairperson and member in any of the following cases:
a) If he is disqualified under Sec 11
b) If he is incompetent
c) If his professional license revoked or restricted
d) If he commits any act contrary to the interest of investors
e) If he remains absence from 3 consecutive meeting without giving notice
As per sec11, disqualified of chairperson or members are stated as following cases:
a) Office bearer of political party
 b) Insane
c) Insolvent
d) Securities business professional
e) Person convicted by court of an offence involving moral turpitude
Sec101 (4) Punishment
If any person knowingly does not maintain accounts or records as per Securities Act, Rules or Directives,
the board may punish with a fine of fifty thousand to two lakhs.
NRB Act, 2058
Secc84 Inspection and Supervision
1. Board shall form and implement Inspection and Supervision bylaws for inspection and
supervision of the commercial banks and licensed financial institution.
2. The NRB may, at any time, inspect any commercial bank or other licensed institution.
Such inspection and supervision may be carry out by the officials of NRB and experts designated
by NRB.
3. It shall be the duty of officials, employees and directors of concerned financial institution to make
available of the data, records and other audited documents
4. The inspecting and supervision staff may demand necessary written statement to the officials,
employees and directives of concerned financial institution
5. The official or expert who carried out inspection and supervision function, shall submit its report
generally within 15 days after completion of their work
In case, such report is not completed within 15 days, the Governor may extent the limit for
another 15 days.
6. The report submitted by the staff should be submitted in the next meeting of the board
7. After the study of the report the board may issue appropriate directions to the governor about the
action taken in the matter.
And, it shall be the responsibility of the governor to implement such directions.
FITTA, 2049
Sec6 Provision Relating to Visa
1.Non Tourist Visa
2.Business Visa
3.Residential Visa
Foreign Investor who makes investment of minimum 1lakh US dolor at a time shall be granted residential
visa during the period of investment.

Labour Act, 2048

Sec38 Compensation
In case of any worker or employee of enterprises is physically wounded or seriously hurt or dies in course
of his/her work, the compensation shall be paid to him/her or to his/her family.

Audit Act, 2048

Sec2 Definition
Corporate body wholly owned by GoN
It means a corporate body whose all shares or assets are owned by government.
Sec6 Audit of Corporate Body wholly owned by Government
1. Audit of such bodies shall be made by Auditor General
2. The AG may appoint license holder auditor as an assistant
3. The auditor appointed as an assistant shall act under supervision and control of AG
4. The remuneration of such auditor shall be fixed on the basis of:
a) Volume of Financial Statements
b) Status of accountants
c) Numbers of branches and sub branches, and
d) Work load and work progress of concerned organization
BAFIA, 2063
Sec17 Appointment of Director
1.General meeting of financial institution shall appoint directors subject to sec18 and AOA, provided that
a) Until the first annual general meeting, directors shall be appointed by promoters
b) Incase vacancy in the post of director, prior to holding AGM, a board may appoint a director for
the coming period
c) If any corporate body held shares of financial institution, concerned body may appoint director(s)
in a number proportionate a share value held by them
2.The director appointed as © above may also appoint alternate director during the absence of director
3.The professional expert director shall be appointed by the board of directors
Sec18 Disqualification of Directors
1. A person below 21 years of age
2. Insane
3. Insolvent
4. Person who has been blacklisted and a period of three years has not been lapsed after his name
has been removed from the list
5. A person who is a director of any bank or financial institution or employee, auditor or advisor of
such financial institution
6. A person who acquire membership of stock exchange as a security dealer
7. If a person who has be retired from the service of Rastra Bank after serving in the post of
governor, deputy governor or special class employee and at least one year from the date of
retirement has been lapsed
8. Person convicted by the court of an offence involving moral turpitude and the period of 5years
has not been lapsed from the expiry of punishment
9. Person convicted by court of offence of corruption or cheating
Sec23 Meeting of Board Formation under sec12
1. Meeting of board shall be held 12 times in a year. Interval of the two consecutive meeting shall
not exceed 2months.
2. The chairperson shall call the meeting at any time when at least two-third of directors requested
for the same in writing
3. No meeting of the board shall be held unless 51% of total numbers of directors who are entitled to
attend and vote in meeting are present in meeting.
4. The decision of majority shall be binding. The chairperson has casting vote in case of tie.
5. The resolution related to personal interest of director shall not be discussed in the meeting
6. In minute, subject discussed and decision taken there on shall be separately recorded and such
minute book shall be signed by all directors present in meeting
Sec46 Restriction on distribution of dividends
1. Licensed institution shall not declare and distribute dividend to its shareholders until it has
recovered all of its preliminary expenses and the losses sustained from the previous year.
 2. Licensed institution shall obtain the approval of the Rastra Bank prior to obtaining and
distributing dividends
Sec60 Appointment of Auditor
1. The general meeting of financial institution shall appoint an auditor.
2. Auditor shall be appointed from amongst the auditors included in the list of auditors approved by
NRB.
Provided that, the general meeting shall not appoint same auditor for three consecutive times.
3. While appointing auditor from list approved by NRB, Chartered Accountant in case of licenses
institution of class ‘A’,’B’ and ‘C’ and Chartered Accountant or Registered Auditors in case of
licensed institution of class ’D’.
4. At any time NRB may remove any auditor who fails to fulfil his or her duty.
Sec61 Disqualification of Appointment as Auditor
1. A director of licenses institution or his family member.
2. Employee of licensed institution.
3. Debtor of licensed institution.
4. Insolvent
5. A person who has subscribed 1% or more shares in licensed institution.
6. A person who has not included in list of auditors approved by licensed institution.
7. A person who has been punished in an offence relating to audit and period of five years has not
been lapsed thereafter.
8. A person who has been punished for an offence of corruption and cheating.
9. A person who has been punished for a criminal offence related to moral turpitude and period of
five years has not been lapsed thereafter.
Sec69 Application to be made for merger of licensed institution with each other
1. If any licensed institution wished to merged with another, both shall adopt special resolution in
their general meeting and make joint application to NRB for approval, setting out following
matters:
a. Audit report of last financial year with audited balance sheet, profit and loss account and cash
flow statement.
b. Written consent of auditors of merging and merged financial institution.
c. Valuation of movable and immovable properties of merging licensed institution.
d. Copy of decision of employees of the merging licensed institution.
e. Other necessary matters as prescribed by NRB.
2. After evaluating documents submitted by merging and merged institutions, the NRB shall make
decision within 45 days relating to merger.
3. NRB shall not grant approval for merger in following cases:
a. create an environment of unhealthy competition.
b. give rise to monopoly and controlled practices.
4. On receipt of approval from NRB, assets and liabilities of merging institution transferred to
merged institution.
5. NRB shall maintained records of merged institution.
6. The NRB may issue necessary directives in relation to merging procedures.
 Insurance Act, 2049
Sec2 Definition
a. Insurance Agent
Agent is a person other than salaried employee who worked on behalf of insurer on the basis of
commission.
b. Surveyor
Surveyor is a person who makes valuation of destroyed property and who makes valuation of
loss.
c. Broker
Broker means a person who works as an intermediary between insurer.
 If any person desires to work as a broker, surveyor or agent he has to make application to board for
license
 The board may after necessary inquiry provide license. The license shall be renewed every year.
 Application of renewal shall be submitted up to the last day of Chaitra of each year. The board may extent
the time period maximum to six months.
Sec32 Disqualification
1. Person below 16 years of age
2. Insane
3. Insolvent
4. Person who has convicted in an offence by court including fraud or thief
5. If any person has caused loss to insurer and insured
Sec33 Cancellation of license
The board may cancel the license of agent, surveyor or broker if the license is not renewed or if it is found
that any provision of Insurance Act has been violated.

Nepal Chartered Accountancy Act, 1997

Sec14 Disciplinary Committee
Objectives:
To recommend the council to the necessary actions after investigation upon complains lodged against any
action in contrary to this Act, Regulations or Code of Ethics formed under this Act.
Composition of Committee (7 persons)
1. FCA appointed by the council from amongst the council member -Chairperson
2. Three person nominated by council from amongst the council member –Member
3. Two person nominated by council from amongst the member of ICAN –Member
4. A person nominated by the Auditor General – Member
According t
o degree of offence, the disciplinary committee may impose the following punishment:
1. Reprimanding
2. Removing the membership for the period of five years
 3. Prohibiting from carrying on accounting profession for any particular period
4. Cancelation of COP or membership
Sec23 Certificate (membership and COP) to be cancelled
The council, upon receipt of information that a person has been registered in the membership register by
fraud or by mistake and upon inquiry such matter has been found to be true, may order to invalidate such
membership and COP, if any.
Notice of such actions shall be publically announced.
Sec34 Conduct
Auditing either in partnership or in collusion in any manner with a person who has not obtained COP of
one’s class is prohibited.
Sec41 Punishment
A person who carries out the audit without obtaining the COP, shall be liable to punishment of penalty up
to Rs two thousand or imprisonment for a maximum period of 3 months or with both.

Insolvency Act, 2063

Sec13 to Inquire into Insolvency Proceedings
For insolvency process, the court shall order to appoint an insolvency professional as inquiry official for
the purpose of making insolvency relating inquiry.
The inquiry official shall independently inquiry into the financial situation of concerned company in order
to determine the following: (Area of Inquiry)
1. Whether or not to issue an order for immediate liquidation of the company by the reason that the
financial statement cannot be improved.
2. Period of inquiry should be extended or not
3. Whether the company should be issued to restructure or not
4. Whether the company has become or likely to be become insolvent or not.
Sec23 Restructuring Program to be Prepared
1. Where any court makes an order to restructure any company, the restructure manager shall
prepare restructure scheme of company in writing
2. The scheme shall contain following programs:
I. To capitalize the debt of company
II. To pay the claims of creditors by selling assets of the company
III. To issue securities to the creditors for their claims
IV. To participant creditors in capital investment by issuing shares in consideration of their
claims
V. To amalgate company with any other company
VI. To change the management of the company
VII. To do any other act which the court consider appropriate
Sec37 Issuance of Order for Liquidation/ Liquidation of Company
 1. The court shall make an order to appoint one person as the liquidator
2. After making an order, the liquidation proceeding of the company shall be deemed to have
commenced
Sec59 Voidable Transactions
Where any company has become insolvent the following transactions shall be void:
1. Preferential transactions carried on in advance of 6 months immediately preceding
commencement of insolvency or within the period of six months after commencement of
proceeding.
2. Preferential transaction carried on with associate persons of company in advance of one year
immediately preceding commencement of insolvency proceeding or within the period of one year
after commencement of proceeding.
3. Any under-valued transactions have been carried on in advance of one year immediately
preceding the commencement of the insolvency proceedings or within the period of one year after
the commencement of the proceedings and the company has become insolvent as a consequence
of such transaction or other under-valued transactions carried on after the commencement of the
insolvency proceedings
4. All fraudulent transactions carried on in advance of two years immediately preceding the
commencement of the insolvency proceedings or within the period of two years after the
commencement of the proceedings

Companies Act, 2063

Sec136 Power of Office to cancel registration
1. Office may cancel the registration in following circumstances:
a. If promoters make application with prescribed fees
b. If a company fails to submit report of AGM to office under sec81 for three consecutive
financial years.
2. If it is required to cancel registration, office shall give prior notice about deregistration to the
concerned company.
3. Notice of deregistration shall be given to concerned company by CRO addressing registered
office.
4. As per necessary, notice about deregistration shall be published in a national daily newspaper
5. The assets, rights, benefits or liabilities of the company shall be transferred to its shareholders
on proportionate to their shareholding.
Sec152 Single shareholder company not required to call meeting of the board of director and
general meeting
Notwithstanding anything contained elsewhere in this Act, except as otherwise provided in the AOA of a
single shareholder company, all acts and decision to be done and made by the board of directors or
general meeting shall be as decided in writing by such shareholder, and no meeting of board of director or
general meeting shall be required to be called.
Sec153 Transfer and Transmission of Shares of single shareholder company
1. In the event of death of shareholder of single shareholder company, his/her heir or the person
acquiring the title to his share acquire the right of the shareholder, and such heir or person shall
 do all such acts inclusive transfer an d transmissions of shares as the single shareholders can do
under this Act. While making decision to transfer and transmit shares, the person so acquiring the
title shall make such decision in writing.
However, provided that if no heir to such shareholder is found, the office shall appoint the
liquidator and liquidate the company in accordance with the prevailing law.
2. A person acquiring the title to such shares pursuant to sub section (1) shall give information
thereof, accompanied by evidence of such title, to the office no later than one month after the
acquisition of such title.
3. On receipt of the information as referred to sub section (1), the Office shall record the
information by collecting the prescribed fees and give information thereof to the person who
acquires the title to shares.
4. Where the number of person acquiring the title to shares pursuant to sub section (1) is more than
one, they shall be considered to be directors of company for the time being, except where the
other heirs transfer the title to only one heir, and MOA and AOA of the company shall be
amended on that basis.
However, provided that where there is arises the question of entitlement, such matter shall be
governed by the judgement of the competent court.
Sec132 Cancellation of Registration of Company
1. Upon receipt by the Office of the report on the liquidation of a company pursuant to clause (f) of
subsection 2 of sec 131, the office shall strike the name of the company off the company register
and issue an order that the registration of that company has been canceled.
2. After the issuance of an order on the cancellation of registration of a company pursuant to sub
section (1), the Office shall strike the name of such company off the company register and
published in a national daily newspaper a notice that such company has been dissolved.
3. Notwithstanding anything contained in this section, liquidator appointed as per Insolvency Act,
2063, shall send to the Office regarding to the information completion of cancellation process of
the cancel such company.
4. Upon receiving the information pursuant to sub section (3), the office, shall keep record of
cancellation of such company and after such record the company shall deemed to be cancelled.
Sec81 Fine to be Imposed in case of Failure to submit returns

Case Study Notes

Hint 1:
As per Companies Act, the share or debenture of company may be sold or pledged as good as movable
property subject to this Act, MOA and AOA.
The promoter of company other than private company, which has not taken loan from any other company
shall not be entitled to pledged or sell shares until the first GM is held and call on his hares is fully paid
up.
Restrictions:
1.Should not be in contrary with AOA and agreements
2.transfer fee shall be paid
3.call on share on his/her name shall be fully paid up.
Hint 2:
In case of cancellation of register of a company, where the company or its shareholders or creditors makes
a petition, setting out the reason to court to have company restore no later than five years after date of
publication of notice of cancellation of registration of company.
It may allow to restore in following cases:
1.If it appears that the registration of the company was canceled while such company was carrying on its
business;
2. If the Court considers it to be just to restore the name of the company for the proper management of the
assets and liabilities of such company
If restored, the company is considered to have been in existence from date of its register.
Hint 3:
Company fails to submit financial Statement to securities Board:
A fine of Rs50,000 to Rs200,000
Hint 4:
Punishment for audit in partnership with non COP holder:
A. Audit without COP
penalty of maximum Rs2000 or imprisonment for maximum of 3months or with both
B. Have signed documents in the capacity of member
penalty of maximum Rs2000 or imprisonment for maximum of 3months or with both
Hint 5:
Visa for Foreign Investors:
As per section 6 of Foreign Investment and Technology Transfer Act,
1. A foreign national visiting Nepal to study or research for investing purpose shall be provided non
tourist visa up to 6 months.
2. A foreign investor, his dependent family or authorized person of the foreign investor and
dependent family of authorized person shall be provided with business visa until foreign
investment is retained.
3. Provided that, a foreign investor who at a time makes investment in amount not less than 100,000
$ and his/her family shall be gained residential visa until foreign investment is retained.
Hint 6:
EGM
1. In course of examining accounts of the company, auditor may request BOD to call EGM. If BOD
fails then auditor may make an application in writing setting out the matter to the office and if
application is so made, the office may call EGM of the company.
2. If shareholders holding 10% of paid up capital or at least 25% of total shareholders make an
application settling out reasons to register office of company, then EGM is called.
3. If BOD does not call the meeting within 30 days of application, the concerned shareholders may
make a petition to office setting out matter, then office may cause to call such meeting.
4. If office deems necessary to call EGM in view of findings at any inspection or investigation or for
any other reason, it may itself call or cause its BOD to call EGM.