Corporate Governance in Nepal: A Comprehensive Analysis of the Company Act 2063 and Global Legal Perspectives
Authors: Prajwal Bhattarai  
Published: February 2025

This in-depth article explores the legislative framework of corporate governance in Nepal as defined by the Company Act 2063, with a keen focus on its provisions regarding the structure and function of board meetings, the appointment and responsibilities of directors, the protocols surrounding dividend distribution, and the requirements for disclosure and transparency. By juxtaposing these aspects with the corporate governance norms of internationally recognized economies such as the United Kingdom, India, and the United States, this analysis not only benchmarks Nepal’s legislative alignment against international standards but also identifies critical areas where enforcement and compliance lag global practices. The study highlights several core issues in the current corporate governance regime in Nepal, including lapses in enforcement, inconsistencies in the application of the law, and gaps in regulatory oversight. These issues significantly impair the effectiveness of Nepal’s corporate governance framework in preventing malpractice and ensuring corporate accountability. By addressing these deficiencies, Nepal could enhance its legal framework to better protect investors, maintain market integrity, and increase business transparency, which are essential for attracting foreign investment and promoting economic growth. To address these shortcomings, the article proposes a set of comprehensive reforms based on global legal precedents that have shown effectiveness in strengthening corporate governance. These reforms include enhancing the independence of board members, improving the rigor and frequency of financial disclosures, and instituting stricter penalties for non-compliance. The recommendations aim to refine Nepal’s corporate governance practices not only to meet international standards but also to instill a culture of compliance and transparency. Furthermore, the article underscores the significance of adopting a proactive approach to corporate governance reform in Nepal. It suggests that by preemptively aligning its legal framework with established international norms, Nepal can mitigate potential risks of corporate fraud and other forms of economic malfeasance. This proactive stance is crucial in building a robust economic environment that can withstand the pressures of globalization and the complexities of international financial markets. In conclusion, this article provides a critical examination of Nepal’s corporate governance framework under the Company Act 2063, enriched with insights from global jurisdictions. It offers a thoughtful critique and strategic recommendations for reforming Nepal’s corporate governance laws, aiming to enhance legal compliance, foster transparency, and build a sustainable economic environment conducive to both domestic growth and international investment. This scholarly work contributes significantly to the discourse on corporate governance in developing economies, emphasizing the pivotal role of a sound legal framework in achieving sustainable economic development and robust corporate ethics.
Keywords: Corporate Governance, Nepal Company Act 2063, Board of Directors, Shareholder Rights, Quorum Requirements, Dividend Distribution, Director Disclosures, Legal Compliance, Global Comparative Law, Fiduciary Duties