chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Companies Act, 2006

140. Shareholder May Sue on Behalf of the Company: (1) A company may file a suit in court against any of its directors, officers, or shareholders controlling the company under a unanimous agreement, or against any person to enforce any right or interest of the company.

(2) If the concerned company does not file a suit under Sub-section (1), any shareholder holding two and a half percent or more of the paid-up capital of the company, or more than one shareholder together holding five percent shares, may file a suit in court on behalf of the company against such director or officer or person controlling the company or any other person.

(3) When a shareholder files a suit under Sub-section (2), he or she shall mention what efforts he or she had made to have the company itself file the suit.

(4) If a suit is filed under Sub-section (2), the court may determine whether it is appropriate for the shareholder to continue prosecuting the suit or to have the company join the suit, and if it deems appropriate to have the company join, the court may order the company to join.

(5) Once a suit filed under Sub-section (1) or (2) is filed, it shall not be dismissed or settled by compromise except upon the inclusion of conditions specified by the court.

(6) When a suit filed under Sub-section (2) is decided, if the claim of the complaining shareholder is upheld, the company shall reimburse the expenses incurred by such shareholder in prosecuting such suit and reasonable expenses for the services of legal practitioners. If the claim is not upheld, an amount deemed appropriate by the court out of the expenses incurred by the defendant in defending the suit shall be reimbursed by the complaining shareholder. 141.
Companies Act, 2006

If the claim is not upheld, an amount deemed appropriate by the court out of the expenses incurred by the defendant in defending the suit shall be reimbursed by the complaining shareholder. 141. Acquisition or Sale of Property: (1) If a public company or its subsidiary company purchases or sells any property, it shall inform the Office in the following cases:
(a) If, as a result of purchasing any property, the value of its assets or consolidated assets mentioned in the latest audited annual financial statement increases by more than fifteen percent,
(b) If the income from the property being sold or already sold amounts to more than fifteen percent of the consolidated income before tax of the company as mentioned in the latest audited accounts of the company.

(2) When informing the Office under Sub-section (1), the following details shall be disclosed, and if such details also apply to the company's business, they shall also be shown in the report of the board of directors:
(a) The date of the transaction and the parties involved in the transaction,
(b) A description of the nature of the property, and if such property includes wholly or partly shares issued by any other company, the name of the company issuing such shares and the nature of the business carried on by such company,
(c) The amount of the transaction and other terms of the transaction,
(d) The bases adopted for valuation of the property when purchasing or selling the property,
(e) If any property has been sold, whether the amount received from the sale of the property is more or less than the value shown in the register of such property. Chapter 13

Holding and Subsidiary Companies

142. Control Over Subsidiary Company: (1) A holding company may control its subsidiary company in the following ways:
(a) By exercising direct or indirect control over the composition of the board of directors,
(b) By holding the majority of the shares of the company.

(2) If one company is a subsidiary of another subsidiary company, the first company shall also be a subsidiary of the holding company controlling the latter company.

(3) Even if a representative on behalf of the holding company or its subsidiary company holds the shares of the company, or a person nominated on behalf of the holding company or its subsidiary company has the power to appoint directors of such company, the conditions written in Sub-section (1) shall be deemed to be fulfilled.
Companies Act, 2006

Provided that while determining a holding company and a subsidiary company, shares held in the following circumstances shall not be recognized for this purpose:
(1) If a company has taken debentures or has the right to exercise any power or has held shares based on a trust deed for issuing debentures,
(2) If the lending company has held shares as security. 143. Documents to be Included: (1) The holding company shall include in its balance sheet the following documents of the subsidiary company:
(a) A copy of the annual accounts of the subsidiary company for the immediately concluded fiscal year and the report of the board of directors of such company for that period,
(b) The auditor's report,
(c) Details of the holding company's investment in the subsidiary company at the end of the fiscal year,
(d) If the fiscal years of the holding company and the subsidiary company are different, any change in the holding company's rights over the subsidiary company within such different period.

(2) In the report pursuant to clause (b) of Sub-section (1), the net profit remaining after deducting the losses of the subsidiary company in the relevant fiscal year, and the profits and losses not recorded in the company's accounts since the company became a subsidiary but relevant to the shareholders of the holding company, shall also be mentioned.

(3) If the board of directors of the holding company is unable to obtain the information mentioned in clause (b) of Sub-section (1) and Sub-section (2) for any reason, the balance sheet of the holding company shall include a written report on the matter.

(4) The details pursuant to clause (c) of Sub-section (1) shall also show loans taken for any purpose other than fulfilling debts or liabilities currently outstanding or loans taken by keeping the immovable property of the subsidiary company as collateral. 144. Not to Invest in Holding Company: A subsidiary company shall not purchase or otherwise invest in shares or debentures of the holding company. Chapter 14

Special Provisions Relating to Private Company

145.
Companies Act, 2006

144. Not to Invest in Holding Company: A subsidiary company shall not purchase or otherwise invest in shares or debentures of the holding company. Chapter 14

Special Provisions Relating to Private Company

145. Unanimous Agreement: (1) Except where otherwise provided in this Act, a unanimous agreement of a private company may provide for the following matters:
(a) The management, business and affairs of the company,
(b) Any restriction on the transfer of shares,
(c) The right of one or more shareholders to dissolve the company upon a specified or contingent event or at will,
(d) The division or exercise of voting rights,
(e) The terms of appointment of officers, employees, workers of the company,
(f) Matters concerning who shall be the director, officer, person bearing ultimate responsibility or chief executive of the company,
(g) The method of payment or distribution of dividends,
(j) The absence of a board of directors,
(jh) If there is to be no board of directors, who is to do the work that the board of directors is required to do under this Act,
(n) Provisions regarding not holding an annual general meeting, if applicable,
(t) The types of shares and provisions for shares with differential rights. Added by the First Amendment.(th) Matters relating to the operation, management, voting rights available to shareholders, or any other special privileges, rights, or mutual relations among shareholders.

(2) The unanimous agreement may be amended by the written consent of all parties to the agreement.

(3) After a unanimous agreement is concluded, a shareholder acquiring shares in the following manner shall be deemed to have consented to and become a party to such agreement:
(a) If shares have been received by gift,
(b) If shares have been obtained in any other manner, and at the time of obtaining such shares, the person had knowledge of the existence of such agreement. 146. Right of Shareholder to Inspect Accounts: (1) A shareholder of a private company or his or her representative may, during office hours, inspect the following documents or records related to the company's business:
(a) Minutes book of the general meeting and board of directors,
(b) Annual financial statements,
(c) Share register book, and
(d) Accounts of the company.

(2) Directors or officers of a private company shall make adequate arrangements so that the documents and records under Sub-section (1) can be inspected by the shareholders. 147.
Companies Act, 2006

147. Details of Business: (1) A shareholder of a private company may request details of the company's business for any fiscal year from the company.

(2) Within fifteen days of a request for details under Sub-section (1), the director, managing director or officer conducting the business of the company shall provide a statement including the certified annual financial statement. 148. Annual General Meeting Not Required: (1) Notwithstanding anything written elsewhere in this Act, if the unanimous agreement among the shareholders of a private company mentions that the company shall not hold an annual general meeting, such private company shall not be required to hold an annual general meeting during the term of such agreement.

(2) If a unanimous agreement has been made not to hold an annual general meeting pursuant to Sub-section (1), the company shall also make provisions regarding the procedure and authority for making decisions on matters that are required to be decided by a general meeting under this Act. 149. Private Company to Pass Written Resolution: (1) Notwithstanding anything written elsewhere in this Act, but except where otherwise provided in the articles, any act which may be done by passing any resolution, including a special resolution, by a general meeting or by a meeting of a specific class of shareholders of a private company, may be done by a written resolution signed by all shareholders representing at least seventy-five percent of the shares entitled to vote on such resolution, effective from the date such resolution is deemed to be passed.

(2) For the purpose of Sub-section (1), if separate written resolutions are recorded for any reason, it shall not be necessary for all shareholders to sign the same document if the content of all such documents is identical, and even if each shareholder has signed a separate document, such document shall be valid, deeming it as signed on the same written resolution.

(3) Every shareholder signing a written resolution pursuant to this Section shall indicate the date on which he or she signed the resolution, and the date on which the last shareholder signs shall be deemed to be the date on which the resolution was passed.

(4) A document attached to a written resolution shall be deemed to have been presented to the meeting of shareholders signing such resolution.

(5) A resolution approved under this Section shall be recognized for any purpose as if it were a decision passed by the general meeting or a meeting of a specific group of shareholders of the company. 150.
Companies Act, 2006

150. Deemed Participation in General Meeting: (1) Notwithstanding anything written elsewhere in this Act, but except where otherwise provided in the articles of the company, if any shareholder of a private company communicates with all shareholders through any communication medium and participates in communication with another shareholder in such a way that the words spoken or read by each shareholder can be heard or read by the other shareholders, each shareholder so participating in communication shall be deemed to have participated in a general meeting with other shareholders.

(2) Notwithstanding anything written elsewhere in this Section, if any shareholder files a complaint petition with the prescribed fee at the Office within three months of the general meeting stating that he or she did not participate in the general meeting, the Office shall inquire into the concerned company. If, upon such inquiry, the company fails to prove that the complaining shareholder participated in such meeting, the decision made by such meeting shall not be valid.

(3) A meeting of shareholders conducted pursuant to Sub-section (1) shall be deemed to have been conducted at the place where the chairperson of such meeting is present.

(4) The provisions of Sub-section (1), (2) or (3) applicable to a general meeting of the company shall apply mutatis mutandis to meetings of the board of directors or a sub-committee of directors of such company.

(5) After the conclusion of a general meeting pursuant to Sub-section (1), a record of the proceedings and decisions made at such meeting shall be prepared annually, certified by the chairperson of the meeting, and retained. 151. Special Exemption for Companies Conducting Prescribed Business: The Government of Nepal may, by publishing a notice in the Nepal Gazette, exempt private companies conducting business up to a prescribed amount from complying with the provisions of Chapter 8. Chapter 15

Provisions Relating to Single Shareholder Company

152.
Companies Act, 2006

156. Accounts, audit and annual report of a foreign company: (1) Every foreign company registered pursuant to Section 154 shall prepare an annual financial statement, including a balance sheet and a profit and loss account, showing the true state of its business within the State of Nepal, similar to a company established under this Act, and shall have it audited and submitted to the Office within six months from the date of the end of the fiscal year.

(2) A foreign company shall submit to the Office a copy of the annual financial statement, the audit report, and the report of the board of directors prepared for each fiscal year in accordance with the law of the country where its registered office is located, within three months from the date of their final preparation.

(3) While preparing the annual financial statement pursuant to sub-section (1), the foreign company shall include the following details:-
(a) A statement prepared by classifying, separately showing, the fixed, current, and other assets located within the State of Nepal in the name of the foreign company,
(b) A clear statement of the cash amount held in banks and financial institutions in Nepal in the name of the foreign company,
(c) Details, if any, of loans and overdraft amounts taken by the foreign company from banks and financial institutions located in Nepal,
(d) The total amount of loans and liabilities, if any, payable by the foreign company to any resident person of Nepal or to a Nepalese company registered under this Act.

(4) If the reports and statements required to be submitted to the Office pursuant to sub-section (2) and the documents to be attached are in a language other than Nepali or English, a copy of their official translation into Nepali or English shall also be attached.

(5) A foreign company that has registered a liaison office in Nepal pursuant to Section 154 shall submit the following to the Office within three months of the end of the fiscal year, certified by an auditor: details of employees, advisors, or contact persons working in such office, and the salaries, allowances, and amounts paid to them; details of tax deducted at source on such payments in accordance with prevailing law; and details of payments for rent and expenses incurred for the operation of such office, and details of tax deducted at source on such payments in accordance with prevailing law. 157.
Companies Act, 2006

157. Power of attorney: (1) A foreign company registering pursuant to Section 154 shall appoint a person residing in Nepal as its authorized representative, granting authority to receive summons or notices in respect of cases, matters, or legal proceedings instituted by or against the company, or any other legal notices, and shall submit a copy of the power of attorney, executed in the prescribed format and fulfilling the legal formalities of the country of incorporation or the principal office of the company, to the Office.

(2) The power of attorney given pursuant to sub-section (1) shall, in addition to other matters, state that service of summons or notices relating to cases instituted by or against the company, or other legal notices, upon the authorized representative shall be binding on the company for any purpose whatsoever. 158. Cancellation of registration and liquidation of a foreign company: (1) If a foreign company registered pursuant to Section 154 wishes to cease its operations within the State of Nepal and have its registration cancelled, or if a competent authority under prevailing law prohibits such company from carrying on any business or operations within the State of Nepal, such company shall submit an application to the Office for cancellation of registration, along with the prescribed fee.

(2) A foreign company submitting an application pursuant to sub-section (1) shall also submit with the application evidence confirming that it has no outstanding liability payable to any person, institution, or government or non-government body within the State of Nepal.

(3) To ascertain whether the evidence submitted pursuant to sub-section (2) is true or not, the Office shall publish a notice in a national daily newspaper at least twice, giving a period of twenty-one days for any person to submit a claim with evidence regarding whether the company has any liability to pay or settle.

(4) If any claim is lodged pursuant to the notice published under sub-section (3), the concerned company shall submit evidence to the Office that such claim has been settled.
Companies Act, 2006

If the claim lodged against such company under sub-section (3) cannot be settled from the property of such company located in the State of Nepal, it shall be settled from the property of such company located outside the State of Nepal.

(5) If no claim is lodged within the period specified under sub-section (3), or if evidence of settlement of any lodged claim under sub-section (4) is submitted, the Office shall remove the name of such company from the Register of Companies and inform the concerned company accordingly.

(6) If the winding-up process is initiated under the law of any country where a foreign company registered in Nepal under this Chapter is carrying on business, the representative authorized pursuant to Section 157 of such foreign company shall immediately give written notice to the Office, and such person shall also publish such notice in a national daily newspaper published from the State of Nepal for the information of the public. Provided that, if an order for the cancellation of registration of such company has already been issued, such foreign company shall cease its business or operations within the State of Nepal.

(7) If a foreign company ceases its business or operations pursuant to the proviso to sub-section (6), the business or operations carried on by such company within the State of Nepal shall be governed by the prevailing law relating to winding-up. Chapter-17
Proceedings in Cases and Penalties

159.
Companies Act, 2006

Chapter-17
Proceedings in Cases and Penalties

159. Complaints and proceedings relating to cases under this Act: (1) A case may be instituted and proceedings may be conducted under this Act in relation to any matter only upon a complaint made by the Office, a director, officer, shareholder or member of a company, or any creditor or other concerned person.

(2) Except in matters where the Office itself is expressly specified to conduct proceedings under this Act, the court shall have the authority to conduct proceedings and adjudicate matters relating to offenses punishable under this Act, matters for which various sections of this Act provide for filing complaints or petitions in court, and matters including recovery of damages and compensation.

(3) The court shall adopt the procedure prescribed under the Summary Procedure Act, 2028 (1972) when conducting and adjudicating cases under this Act.

(4) An appeal against a decision or order made by the Office or the court under sub-section (2) shall lie to the court specified by the Government of Nepal, with the concurrence of the Supreme Court, within thirty-five days.

(5) Notwithstanding anything contained in sub-section (2), until the Government of Nepal specifies a court by publishing a notice in the Nepal Gazette for conducting cases, matters, and other proceedings under this Act, the Company Board constituted pursuant to Section 169 shall exercise the jurisdiction of the concerned court under this Act. Added by the first amendment.(6) Except where a limitation period is prescribed for filing a complaint on any matter under other provisions of this Act, a complaint shall not be maintainable for other matters under this Act if not filed within two years from the date of knowledge of the cause of action. 160.
Companies Act, 2006

161. Punishable with a fine of up to fifty thousand rupees: The following persons committing the following offenses shall be liable to a fine of ten thousand to fifty thousand rupees:-
(a) An officer or person who allocates shares in violation of the provisions of this Act,
(b) Every director of a company that purchases its own shares or shares of its holding company out of its working capital, or makes investments contrary to this Act,
(c) An officer or person responsible for showing or providing accounts to an auditor upon request, who fails to show or provide the same,
(d) An auditor who fails to submit a report as required by this Act,
(e) A director, manager, or officer of a company who fails to make arrangements as per sub-section (3) of Section 172,
(f) A director or officer who violates the provisions of Section 146 or 147, or fails to keep records, books, or documents required to be kept under this Act,
(g) A company, director, auditor, officer, or employee who acts contrary to the provisions of Chapter-18 or fails to fulfill the duties and obligations specified in that Chapter,
(h) A director, officer, or person responsible to call a general meeting or board meeting as required under this Act, or to send notice of such meeting, or to keep ready documents required to be made available to shareholders before the general meeting, or to present documents required to be presented at the meeting, who fails to do so,
(i) An officer who, in the record of decisions required under sub-section (1) of Section 75 and sub-section (7) of Section 97, or in other details or reports required to be prepared under this Act and submitted to the company or the Office, or in notices or information required to be provided, states false matters as true or true matters as false,
(j) A director who makes a declaration under sub-section (2) of Section 126 that is found to be false,
(k) A person who makes or certifies a false or incorrect translation of a document required to be submitted to the Office by a foreign company under this Act. 162.
Companies Act, 2006

162. Punishable with a fine of up to twenty thousand rupees: A company or its concerned Amended by the first amendment.officer or employee who fails to do any act required to be done under this Act, or does any act that ought not to be done, or fails to perform duties, or does any required act without completing the period or complying with the formalities, or fails to give information to the Office that is required to be given, or fails to submit details required to be submitted to the Office, other than those mentioned in Sections 160 and 161, shall be liable to a fine of five thousand to twenty thousand rupees by the court. 163. Recovery of damages: If a director, officer, or any person of a company causes any loss or damage to the company, a shareholder, a creditor, or any other person by committing an offense punishable under this Act or by violating any provision of this Act, the memorandum, the articles, or the unanimous agreement, the affected company, shareholder, creditor, or person shall be entitled to recover the amount of such loss or damage. Such loss or damage shall be borne from his/her personal estate. Chapter-18
Audit Committee

164.
Companies Act, 2006

Such loss or damage shall be borne from his/her personal estate. Chapter-18
Audit Committee

164. Audit committee: (1) A listed company with a paid-up capital of three crore rupees or more, or a company wholly or partly owned by the Government of Nepal, shall form an audit committee consisting of at least three members, chaired by a director not involved in the daily operations or management of the company.

(2) No person who is a close relative of the chief executive officer of the company shall be a member of the audit committee constituted under sub-section (1).

(3) At least one member of the audit committee shall be an experienced person holding a professional certificate in accounting, or a person who has obtained at least a bachelor's degree in accounting, commerce, management, finance, or economics and has experience in the accounting and financial field.

(4) The report of the board of directors required to be prepared by the company shall include a summary of the work performed by the audit committee, the strategy adopted by the board of directors to implement any recommendations made by the audit committee, any allowances or facilities received by members of the audit committee, and the names of the members of the audit committee.

(5) The audit committee may summon the managing director, chief executive officer, or other directors involved in the daily operations, the auditor, the internal auditor, and the head of accounts of the company to a meeting by giving notice for inquiry on any matter, and it shall be the duty of such persons to attend the meeting upon such notice.

(6) The board of directors shall implement suggestions given by the audit committee regarding the accounting and financial arrangements of the company, and if any suggestion cannot be implemented, the board of directors shall mention the reason thereof in its report.

(7) The company shall make adequate arrangements for resources and means to enable the audit committee to perform its functions in accordance with its responsibilities, and the audit committee shall regulate its own internal procedures.

(8) The chairperson of the audit committee shall attend the annual general meeting of the company.

(9) The meeting of the audit committee shall be held as required. 165.
Companies Act, 2006

165. Functions, duties, and powers of the audit committee: The functions, duties, and powers of the audit committee constituted under sub-section (1) of Section 164 shall be as follows:-
(a) To review the company's accounts and financial statements and verify the truth of the facts stated therein,
(b) To review the company's internal financial control system and risk management system,
(c) To supervise and review the company's internal audit work,
(d) To recommend the names of potential auditors for the appointment of the company's auditor and to determine their remuneration and terms of appointment and submit them to the general meeting for approval,
(e) To monitor and review whether the company's auditor has complied with the code of conduct, standards, and directives determined by the competent authority under prevailing law while performing audit work,
(f) To determine the policy to be adopted by the company regarding the appointment and selection of the auditor based on the code of conduct, standards, and directives prepared by the competent authority under prevailing law,
(g) To prepare and implement accounting policies of the company,
(h) If any regulatory body has provided for a long form audit report to be included in the company's audit report, to fulfill the necessary conditions for preparing such report,
(i) To perform other functions assigned by the board of directors regarding the company's accounts, financial arrangements, and audit. Chapter-19
Provisions Relating to Companies Not Distributing Profits

166. Company not distributing profits may be established: (1) Notwithstanding anything contained elsewhere in this Act, a company may be established for carrying on any enterprise with the condition that dividends shall not be distributed, for the purpose of developing and promoting any profession or business, protecting the collective rights and interests of persons engaged in a particular profession or business, or achieving any educational, academic, social, charitable, or public utility or welfare objective.

(2) Any person desiring to register a company for achieving the objectives mentioned in sub-section (1), or the trustees of a public trust registered under prevailing law, or other organized institutions established under prevailing law, may submit an application to the Office pursuant to Section 4.

(3) The number of promoters for establishing a company under sub-section (1) shall be at least five, and after such company is established, the number of its members may be any number, provided it shall not fall below five.

(4) The membership of a company established under sub-section (1) shall not be transferable for any reason.
Companies Act, 2006

Upon the death, cancellation of registration or dissolution, or merger with another institution or company of a member, the membership of such person or institution shall automatically terminate.

(5) A company established under sub-section (1) shall not use words such as "Company", "Limited", or "Private Limited" with its name, except with prior approval of the Office.

(6) A company registered under sub-section (1) shall obtain the approval of the Office for branch expansion. 167. Special provisions relating to companies not distributing profits: (1) Notwithstanding anything contained in this Act or prevailing law, the following matters relating to a company established under Section 166 shall be as follows:-
(a) No share capital is required for establishing a company not distributing profits. Provided that the company may collect membership fees from its members and may receive donations and grants in accordance with law to fulfill its objectives.
(b) Members of the company shall not be liable for the debts or liabilities of the company, except where a member has accepted liability in writing, and if a member has accepted liability in writing specifying a limit, his/her liability shall be limited to that extent.
(c) All provisions of this Act applicable to a listed company shall also apply to the company, its directors, officers, auditors, and employees, except those provisions applicable only to a company having share capital.
(d) The company shall not distribute dividends, bonuses, or any other amount from its profits to its members or employees, and the profits earned by the company shall be used to increase the capital of the company or to achieve its objectives.
(e) The company shall obtain prior approval of the Office for changing its objectives.
(f) A company not distributing profits shall not merge into a company distributing profits.
(g) The members of a company established under this Chapter shall elect directors from among themselves, in the number determined in the articles, on the basis of one member one vote.
(h) The meeting allowance, salary, facilities payable to officers working in a company established under this Chapter, and the establishment and operating expenses of the company, shall not exceed the limits prescribed by the Office, and while prescribing such expenses, the Office shall base them on the capital position and profits of such company. Added by the first amendment.Provided that administrative expenses shall not exceed twenty-five percent of the total expenses.
(i) Upon dissolution or cancellation of registration of a company established under this Chapter, after settling the debts and liabilities of the company, the remaining property shall devolve as per the provisions made in the articles of the company, and if no provision is made, to the Government of Nepal.
Companies Act, 2006

Provided that such property shall not devolve in any manner to the founders or members of such company, or their close relatives, or any institution or company in which their close relatives are founders or members.

(2) If a provision in sub-section (1) is violated, the Office may cancel the registration of the company so violating. Provided that the company shall be given an opportunity to explain before cancellation of registration.

(3) A person aggrieved by the decision to cancel registration under sub-section (2) may file a complaint in the court within thirty-five days of receiving information of such decision.

(4) When the Office cancels registration under sub-section (2), it shall appoint a liquidator and an auditor, specifying the time limit within which the winding-up of such company is to be completed.

(5) The liquidator and auditor appointed pursuant to sub-section (4) shall perform their functions in accordance with the provisions made in this Act and prevailing law. Chapter-20
Interim Provisions Relating to Company Advisory Board and Company Board

168. Formation of Company Advisory Board: (1) The Government of Nepal shall, by publishing a notice in the Nepal Gazette, form a Company Advisory Board consisting of up to nine members, including one person each from the fields of law, accounting profession, tax administration, commerce or business administration from the government and private sectors who have obtained at least a Amended by the first amendment.bachelor's degree in that subject and have worked for at least seven years achieving expertise, and a representative of the Federation of Nepalese Chambers of Commerce and Industry, for the purpose of studying practical problems encountered in the implementation of this Act and prevailing law relating to company administration and advising the Government of Nepal on timely reforms to prevailing company law and reforms in company administration as required. The Registrar shall be the member-secretary of the Company Advisory Board.

(2) While forming the Advisory Board under sub-section (1), one of the members of the Board shall be designated as the chairperson in the same notice.

(3) The Company Advisory Board shall submit an annual report of its work performed under sub-section (1) to the concerned ministry of the Government of Nepal.

(4) The concerned ministry shall make the report submitted under sub-section (3) public and arrange for the general public to obtain it at a reasonable price. 169.
Companies Act, 2006

169. Provisions relating to Company Board: (1) Until the Government of Nepal designates a court in accordance with the provisions made in this Act, the Government of Nepal shall, by publishing a notice in the Nepal Gazette, form a three-member Company Board consisting of a chairperson and members as follows:-
(a) A person who is a graduate in law with experience in the field of commercial law, who is a District Judge or has been a District Judge or is qualified to be a District Judge - Chairperson
(b) A person who is registered as an advocate under prevailing law and has practiced law in the field of commercial law for at least ten years, or has served in a gazetted second class position in the Nepal Judicial Service for at least four years - Member
(c) A person who is a graduate in management, commerce, or accounting and has worked in company management, tax administration, or the accounting field for at least ten years, or a practicing accountant who has obtained a professional certificate in accounting and has at least five years of experience in the accounting profession - Member

(2) Notwithstanding anything contained in clauses (a), (b), or (c) of sub-section (1), the Government of Nepal may, by publishing a notice in the Nepal Gazette, designate any member of the Company Advisory Board constituted under Section 168 who possesses the qualifications mentioned in those clauses to also serve as the chairperson or a member of the Company Board formed under this section.

(3) The Board formed under sub-section (1) or (2) shall exercise the jurisdiction vested in the court under this Act.

(4) The Company Board formed under sub-section (1) or (2), while conducting and adjudicating cases exercising jurisdiction under sub-section (3), shall act as follows:-
(a) The three members shall collectively exercise its jurisdiction.
Companies Act, 2006

Provided that the case may be conducted and adjudicated if the chairperson and another member are present, and the case may be conducted if two members other than the chairperson are present.
(b) If three members are present, the unanimous vote of all members or the majority vote of two members shall be deemed the decision of the Company Board.
(c) If only two members are present and both are unanimous, it shall be deemed the decision of the Company Board.
(d) If two members are present and cannot reach unanimity, in the case of proceedings, if the chairperson is present, the opinion of the chairperson shall prevail, and if members other than the chairperson are present, the opinion of the senior member shall prevail; in the case of judgment or final order, the matter shall be referred to the member who was previously absent, and the opinion supported by that member shall be deemed the decision of the Company Board.
(e) If three members are present and their opinions differ, or if even after being referred to the previously absent member under clause (d), no majority is reached, in the case of proceedings, the opinion of the chairperson shall prevail; in the case of judgment or final order, a certificate of difficulty shall be made to the appellate court.

(5) The Company Board may, considering the caseload, establish its bench in any other location within the State of Nepal for a specified period and conduct and adjudicate cases there.

(6) The Company Board shall adopt the procedure under the Summary Procedure Act, 2028 (1972) while conducting and adjudicating cases.

(7) A party aggrieved by a decision of the Company Board in relation to any case under this section may appeal to the concerned appellate court within thirty-five days from the date of receiving information of the decision.

(8) The remuneration, facilities, and other terms of service of the chairperson and members appointed or designated under this section shall be as prescribed. Provided that terms of service shall not be prescribed so as to reduce the remuneration or facilities once provided.

(9) Notwithstanding anything contained in sub-section (1), the Company Board constituted and existing under the Companies Act, 2053 (1997) at the time of commencement of this Act shall continue until a Company Board under this Act is formed.

(10) Cases pending proceedings or awaiting decision in the Company Board referred to in sub-section (9) at the time of commencement of this Act, and related petitions, shall be transferred to the Company Board established under this section after the commencement of this Act, and such cases shall be conducted and adjudicated by that Board. 170.
Companies Act, 2006

170. Provisions relating to secretariat and employees of Company Advisory Board and Company Board: (1) The secretariat of the Company Advisory Board to be formed under Section 168 shall be located at the Office of the Company Registrar.

(2) The secretariat of the Company Board to be formed under Section 169 shall be located at the Ministry of Industry.

(3) The secretariat of the Company Board shall have such number of employees as prescribed by the Government of Nepal. 171. Dissolution of Company Board: (1) The Company Board formed under Section 169 shall automatically dissolve from the date the Government of Nepal designates a court under this Act by publishing a notice in the Nepal Gazette.

(2) Upon the dissolution of the Company Board under sub-section (1), the appointments of the chairperson, members, and other employees working in that Board shall automatically terminate, and no compensation or additional amount shall be payable to them thereof. If any employees were deputed to that Board from other offices, their deputation shall automatically terminate.

(3) Upon the dissolution of the Company Board under sub-section (1), all cases pending proceedings or awaiting decision in that Board under this Act, and related petitions, shall be transferred to the court. Chapter-21
Miscellaneous

172.
Companies Act, 2006

Chapter-21
Miscellaneous

172. Company records and use of computers: (1) Records of the minute book, register of shareholders or debenture holders, list of shareholders, accounts, and ledgers, etc., required to be kept by a company under this Act may be kept in a separate book or, in a manner not inconsistent with the provisions of this section, through electronic communication means and computers in a non-legible form, or in any other manner that creates a record.

(2) If records of any minute book, register, list of shareholders or debenture holders, accounts, ledgers, etc., are kept in some other manner without maintaining a physical book, the following shall apply:-
(a) Such minute book, register, list of shareholders or debenture holders, or accounts, etc., shall be deemed to be kept at a particular place if there is easy access to the place where they are kept and if they can be inspected or a copy obtained from that place.
(b) The company shall make adequate arrangements so that no person can tamper with or alter the record under clause (a), and the information recorded therein can be easily traced, inspected, and copied.
(c) If any matter is recorded in a manner not readily legible, it shall be possible to reproduce it in a readily legible form.

(3) If records of any minute book, register, list of shareholders or debenture holders, accounts, ledgers, etc., are kept on a website using electronic communication means or computers under this section, arrangements shall be made so that the date of preparation and the date of amendment of such documents are clearly visible.

(4) If a company has recorded any minute book, register, list, accounts, or ledgers required to be kept under this Act in a non-legible form, and if any law imposes a duty on the company to allow inspection of or submit a copy of the same, the company shall be responsible for making arrangements so that the relevant part of such records can be inspected and viewed, or a copy thereof can be submitted in a legible form. 173.
Companies Act, 2006

173. Corporations owned by the Government of Nepal may be converted into companies: (1) If the Government of Nepal wishes to convert a public corporation established under prevailing law with full or partial ownership of the Government of Nepal, or a development committee under the Development Committee Act, 2013 (1956), into a company, such corporation or committee may be established as a public company under this Act.

(2) Notwithstanding anything contained elsewhere in this Act, there shall be no restriction on the number of founder shareholders when establishing a company under sub-section (1).

(3) The movable and immovable property of the corporation or committee under sub-section (1) may be valued and converted into share capital of the company to be established under sub-section (1), and upon such conversion, unless otherwise provided in the articles, all property and liabilities of such corporation or committee shall devolve upon such company.

(4) Notwithstanding anything contained elsewhere in this Act, the number of directors of a company established under this section shall be as specified in the company's articles, and such directors shall not be required to hold shares to become directors.

(5) A company under this section may sell and distribute its shares to the private sector through the securities market or directly through negotiation in a single block. 174. Outgoing person to hand over to incoming person: Any director or other officer or Amended by the first amendment.employee of a company shall, within thirty days of the termination of his/her office, hand over the documents and records in his/her charge to the incoming director, officer, or employee appointed to perform the duties in his/her place, and upon such handover by the outgoing person, the incoming person shall receive them. 175.
Companies Act, 2006

175. Transactions between related companies: (1) It shall be deemed that a transaction has taken place between related companies in the following cases where one company directly or indirectly provides loans or other financial assistance to another company, or provides guarantees or any other type of security for the payment of any liability, or conducts any transaction other than ordinary business dealings:-
(a) Between a company and its holding company,
(b) Between a company and another subsidiary of its holding company,
(c) Between a subsidiary company of a company and the holding company of such company,
(d) Between a subsidiary company of a company and another subsidiary of the holding company.

(2) If a transaction occurs under sub-section (1), the related company shall, as soon as possible, inform its shareholders and the Office of such transaction, disclosing the following details:-
(a) The date of the transaction and the parties involved,
(b) The nature of the transaction and the amount or value of any loan provided, financial assistance provided, or security given under such transaction. 176. Restriction on transactions between companies: (1) No company shall, directly or indirectly, without passing a special resolution in a general meeting Added by the Act to Amend Some Nepal Acts Relating to Improvement of Economic and Business Environment and Promotion of Investment, 2024.provide a loan to another company, give a guarantee for any loan taken by another company, or invest in securities of another company, if the amount exceeds sixty percent of its paid-up capital and free reserves, or one hundred percent of its free reserves, whichever is higher. Provided that this provision shall not apply to a company engaged in banking or financial transactions, an insurance company, Amended by the first amendment.a company whose main object is to buy and sell securities or solely to invest, a private company that has not taken loans from banks or financial institutions, a company whose object is to provide infrastructure facilities, investments made by a holding company in its wholly-owned subsidiary, loans provided to that subsidiary, guarantees given for loans taken by that subsidiary, and investments made in rights shares issued under this Act.

(2) Subject to sub-section (1), a company shall maintain such records as prescribed regarding loans provided to another company, investments made in such company, or guarantees given for loans taken by such company. 177. Amalgamation of companies: (1) A public company may, for the purpose of merging with another company, pass a special resolution in its general meeting and, subject to sub-section (3), merge with another company.