chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Companies Act, 2006

Added by the First Amendment.(u1) "Electronic Record" means the secure storage in a computer system of all types of documents submitted by the company to the Office in electronic form and documents sent by the Office to the company.

(v) "Common Seal of the Company" means the common seal of the company used by the company.

(w) "Securities Board" means the Securities Board established pursuant to the prevailing law for regulating and managing securities.

(x) "Securities" means shares, bonds, debentures or debt instruments issued by the company, and the term also includes receipts relating to deposit of securities and certificates of rights and interests relating to securities.

(y) "Director" means a director of the company, and the term also includes an alternate director.

(z) "Board of Directors" means the board of directors of the company.

(aa) "Managing Director" means the managing director of the company.

(ab) "Share at Premium" means a share issued by the company which is sold at a price higher than its face value.

(ac) "Net Worth" means the amount remaining after deducting from the total current assets of the company the total amount of liabilities including all reserves, funds or accumulated profits whether called by any name forming part of the paid-up capital or shareholders' equity, and accumulated losses, if any, but excluding any goodwill of the company.

(ad) "Unanimous Agreement" means an agreement made unanimously by all the existing shareholders of a private company relating to the operation of the company. Amended by the First Amendment.(ae) "Office" means the Office of the Company Registrar established by the Government of Nepal for the administration of companies, and the term also includes a branch office of the Office of the Company Registrar.

(af) "Registrar" means the Registrar of the Office.

(ag) "Independent Director" means an independent director appointed pursuant to sub-section (3) of section 86.

(ah) "Court" means the Commercial Bench of the Court designated by the Government of Nepal by publishing a notice in the Nepal Gazette with the consent of the Supreme Court.

(ai) "Close Relative" means a co-parcener of the same lineage, or husband, wife, father, mother, mother-in-law, father-in-law, brother, sister, sister-in-law, daughter-in-law, brother-in-law, sister-in-law, uncle, aunt, uncle, aunt, son, daughter, son's wife, grandson, granddaughter, granddaughter-in-law, or son-in-law.

(aj) "Prescribed" or "as prescribed" means prescribed or as prescribed by the Government of Nepal by publishing a notice in the Nepal Gazette. Chapter-2

Incorporation of a Company

3.
Companies Act, 2006

Amended by the First Amendment.4. Application Required for Incorporation of a Company: (1) A person desiring to incorporate a company pursuant to section 3 shall submit an application to the Office through electronic means for approval of the proposed name of the company.

(2) Upon receiving information that the name of the company has been approved by the Office pursuant to sub-section (1), the applicant shall upload the following documents in the computer system through electronic means and submit an application to the Office in the format as prescribed:

(a) Memorandum of Association of the proposed company,
(b) Articles of Association of the proposed company,
(c) In the case of a public company, if any agreement has been made among the founders before incorporating the company, a copy of such agreement,
(d) In the case of a private company, if a unanimous agreement has been made, a copy of such agreement,
(e) Where the prevailing law requires prior approval or license from any body before registering a company for conducting a particular type of business or transaction, such approval or license,
(f) Amended by the Some Nepal Acts Amendment Act Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.Certified copy of citizenship certificate, in case the founder is a Nepali citizen; certified copy of Non-Resident Nepali citizenship certificate, in case the founder is a person who has obtained Non-Resident Nepali citizenship; and in case the founder is an organized institution, the registration certificate of such institution, the decision of the board of directors regarding incorporation of the company, and the principal constitutive document of such institution,
(g) License obtained pursuant to law to make investment or carry on business or transaction in Nepal, in case a foreign person, company or body is a founder,
(h) Document certifying which country the founder is a citizen of, in case a foreign person is a founder,
(i) Certified copy of the certificate of incorporation of such company or body and the principal constitutive document, in case a foreign company or body is a founder.

(3) Notwithstanding anything contained in clause (b) of sub-section (2), it shall not be necessary to submit the Articles of Association of the proposed company for the incorporation of a company with a single shareholder having only one person as founder, if the founder agrees to accept the format of the prescribed Articles of Association. 5.
Companies Act, 2006

5. Company to be Registered: (1) Upon receipt of an application for incorporation of a company pursuant to section 4, the Office shall, after making necessary inquiry, register such company within Amended by the First Amendment.seven days from the date of receipt of the application upon charging the prescribed fee, and shall issue a certificate of incorporation of the company to the applicant in the format as prescribed. Added by the First Amendment.If the company is not registered within the prescribed time, the Office shall inform the proposed company within three days with reasons thereof. Added by the First Amendment.(1a) While authenticating application and documents related to certificates, electronic signatures shall also be valid, and documents may be submitted through electronic means.

(2) After the company is registered pursuant to sub-section (1), the company shall be deemed to be incorporated.

(3) For the purpose of sub-section (1), the Office shall maintain a register of companies in the format as prescribed.

(4) After the incorporation of the company pursuant to this section, subject to this Act, the matters written in the Memorandum and Articles of Association shall be binding on the company and each of its shareholders as if they were provisions made in separate agreements between the company and its shareholders and among the shareholders themselves.

(5) No person shall, without registering a company pursuant to this Act, carry out any kind of transaction in the name of any firm or organization using the word "company". 6.
Companies Act, 2006

6. Refusal to Register a Company: (1) The Office may refuse to register a company in any of the following circumstances:

Amended by the First Amendment.(a) If the proposed name of the company is identical to or so closely resembles the name or trademark name of any existing registered company as to be likely to cause confusion,
(b) If the name or objectives of the proposed company are contrary to the prevailing law or appear inappropriate or undesirable from the perspective of public interest, morality, integrity, propriety, etc., or reflect the intention of a criminal act,
(c) If the proposed name of the company is identical to or so closely resembles the name of a company whose registration has been cancelled pursuant to this Act or which is in liquidation pursuant to the prevailing law, and the period of five years from such cancellation or liquidation has not yet expired,
(d) If the conditions necessary for the incorporation of the company pursuant to this Act have not been fulfilled.

(2) In case the Office refuses to register a company due to any of the circumstances mentioned in sub-section (1), the applicant shall be given a notice with the reasons thereof within fifteen days from the date of application for incorporation of the company pursuant to section 4.

(3) If the Office refuses to register a company pursuant to sub-section (1) or fails to give notice pursuant to sub-section (2), the person aggrieved may lodge a complaint with the Court within fifteen days. 7. Company to be a Body Corporate: (1) A company incorporated pursuant to this Act shall be a self-governing and organized body corporate with perpetual succession.

(2) Subject to this Act, a company may acquire, hold, sell or otherwise dispose of movable and immovable property like a person.

(3) A company may sue and be sued in its own name.

(4) A company may enter into contracts like a person and exercise rights and perform duties under such contracts. 8. Liability to be Limited: In relation to the transactions of a company incorporated pursuant to this Act, the liability of a shareholder shall be limited to the maximum amount of the shares he/she has purchased or has agreed to purchase. 9. Number of Shareholders: (1) The number of shareholders of a private company shall not exceed Amended by the First Amendment.one hundred and one.
Companies Act, 2006

9. Number of Shareholders: (1) The number of shareholders of a private company shall not exceed Amended by the First Amendment.one hundred and one. Added by the Some Nepal Acts Amendment Act to Make Compatible with the Constitution of Nepal, 2075.(1a) Notwithstanding anything contained in sub-section (1), if an application is made within three months from the date of commencement of this sub-section for the incorporation of a private company by transport entrepreneurs registered and operating pursuant to the prevailing law and associated with a transport entrepreneurs committee to operate transport business, it shall not be a bar to register such a private company even if the number of shareholders exceeds that mentioned in sub-section (1).

(2) Subject to the proviso of sub-section (2) of section 3, the number of shareholders of a public company may be at least seven and at most any number.

(3) Notwithstanding anything contained in sub-section (1), employees who have purchased shares of the company under an employee share purchase scheme, or employees who have already purchased shares under such scheme but are not currently in the service of the company, shall not be counted as shareholders. 10. Conditions to be Compiled with by a Company: A company incorporated pursuant to this Act shall, in addition to the conditions mentioned in this Act, the Memorandum or the Articles of Association, comply with the following conditions:

(a) All business and transactions carried out by it shall be done in the name of that company.
(b) A private company shall write "Private Limited" after its name and a public company shall write "Limited" after its name. Provided that this provision shall not apply in the case of a non-profit distributing company.

(c) A private company shall not openly sell its shares and debentures.
(d) A private company shall not transfer its securities by way of mortgage or any other means to any person other than its shareholders without completing the procedure provided in the Memorandum, Articles of Association or Unanimous Agreement.
(e) A company shall not open a partnership or private firm.
(f) Except where otherwise provided in this Act, a non-profit distributing company shall not distribute dividends to its members or make payment of any amount directly or indirectly to a member or his/her close relative. 11.
Companies Act, 2006

Added by the First Amendment.Existing private companies shall convert into public companies pursuant to this section within two years. 13. Conversion of Private Company into Public Company: (1) A private company shall convert into a public company pursuant to this section in the following circumstances:

(a) If the general meeting of the private company passes a special resolution deciding to convert the company into a public company,

Provided that a private company shall not be able to convert into a public company unless it fulfills the conditions required by this Act to become a public company.

(b) Removed by the First Amendment.

(c) Removed by the First Amendment.

(2) In the case of clause (a) of sub-section (1), the relevant private company shall, within thirty days from the date of such decision, submit an application to the Office in the prescribed format along with the prescribed fee, attaching a copy of the decision mentioned in that clause, for conversion into a public company.

(3) Upon receipt of an application at the Office pursuant to sub-section (2), if the relevant private company has fulfilled the conditions necessary to carry on business as a public company pursuant to this Act, the Office shall, within sixty days, issue a certificate of conversion into a public company in the prescribed form, noting in the register of companies that such company has been converted into a public company.

(4) Removed by the First Amendment.

(5) Removed by the First Amendment.

(6) Removed by the First Amendment.

(7) Removed by the First Amendment.

(8) If a private company converts into a public company pursuant to this section, from the date of such conversion, the provisions applicable to a public company pursuant to this Act shall be deemed to apply automatically to that company.

(9) If a private company converts into a public company pursuant to this section, all assets and liabilities of the converting private company shall vest in the resulting company. 14. Conversion of Public Company into Private Company: (1) A public company shall convert into a private company pursuant to this section in the following circumstances:

(a) If the number of shareholders of a public company falls below seven,
(b) If a public company fails to maintain its paid-up capital as per section 11, or due to reduction of capital under section 57, the paid-up capital required under section 11 is not maintained.
Companies Act, 2006

Provided that this provision shall not apply in the case of a company falling under sub-section (2) of section 11.

(2) If the circumstances under sub-section (1) occur, the relevant public company shall, within six months, make necessary amendments to its Memorandum and Articles of Association and convert into a private company.

(3) The relevant public company shall, within thirty days of such amendment, submit an application to the Office in the prescribed format along with the prescribed fee, attaching copies of the amended Memorandum and Articles of Association, for conversion into a private company.

(4) Upon receipt of an application at the Office pursuant to sub-section (3), the Office shall, within sixty days, issue a certificate of conversion into a private company in the prescribed form, noting in the register of companies that such company has been converted into a private company.

(5) If a public company converts into a private company pursuant to sub-section (4), all assets and liabilities of the converting public company shall vest in the resulting company. 15. Service of Notice, Summons, etc.: (1) Notwithstanding anything contained in the prevailing law, if any notice, summons, warrant, etc., is required to be served on a company, director, shareholder, debenture holder or employee in relation to the business of the company or any matter connected with the company, such service shall be deemed to have been duly made if delivered at the registered office of the company, or sent by registered post, or sent by fax, email, telex or similar other electronic device kept at such office. If such notice, summons, warrant, etc., cannot be served in that manner, the concerned company, director or employee may be informed by broadcasting or publishing a notice related thereto on radio, television or a national daily newspaper.
Companies Act, 2006

If such notice, summons, warrant, etc., cannot be served in that manner, the concerned company, director or employee may be informed by broadcasting or publishing a notice related thereto on radio, television or a national daily newspaper. The notice so given shall be deemed to have come to his/her knowledge.

(2) Notwithstanding anything contained in the prevailing law, if any summons, notice, warrant, etc., is required to be served on any director, shareholder, debenture holder or employee of a company in relation to matters connected with his/her official duties, on behalf of the company or on behalf of any authorized officer or court, it may be sent by registered post to the address provided by such director, shareholder or employee for correspondence by post, or if such person has provided his/her telex, email, fax address, to such address; and upon such sending, the notice, summons, warrant, etc., shall be deemed to have been duly served.

(3) Notwithstanding anything contained elsewhere in this Act, when a company needs to send any notice or information to any shareholder, debenture holder or director pursuant to this Act, or receive any information from them, it may be sent, as provided in the Articles of Association or with their consent, to the electronic communication address provided by them, using electronic communication means. Provided that such notice or information shall be sent by post or other reliable means to those shareholders, debenture holders or directors who do not consent to receive such notice or information through electronic communication means. 16. Duties and Functions of the Registrar: (1) The Registrar shall have the duty to implement this Act and administer companies.

(2) Without prejudice to the generality of sub-section (1), the Registrar may issue necessary directives to effectively or systematically perform functions relating to the implementation of this Act and the administration of companies, and it shall be the duty of every company and officer to comply with and ensure compliance with such directives.

(3) Directives issued pursuant to sub-section (2) shall be published to make them available to the public.

(4) The Registrar may, as required, delegate some of the powers conferred on him/her under this Act to Amended by the First Amendment.any authorized officer of the Office.

(5) Notwithstanding anything contained elsewhere in this section, this section shall not be deemed to limit any direction given by a regulatory body to a company pursuant to the prevailing law or the authority exercised by such body over such company pursuant to the prevailing law. 17.
Companies Act, 2006

Chapter-3

Memorandum, Articles of Association and Prospectus

18. Memorandum: (1) The Memorandum of Association of a company shall contain the following particulars:

(a) Name of the company,
(b) Address of the registered office of the company,
(c) Objectives of the company,
(d) Activities to be carried out to achieve the objectives of the company,
(e) Amount of authorized capital of the company, amount of share capital to be initially issued by the company, and amount agreed to be paid by the founders of the company,
(f) Types of shares of the company, rights and powers attached to such shares, value of each share and number of shares of different types,
(g) If there are any restrictions on purchase or transfer of shares, that fact,
(h) Number of shares agreed to be initially taken by the founders,
(i) Terms of payment for the shares,
(j) That the liability of shareholders is limited,
(k) In the case of a private company, the maximum number of shareholders,
(l) Other necessary matters.

(2) In addition to the matters mentioned in sub-section (1), if any of the following matters are to be done or occur, such matters shall also be mentioned in the Memorandum:

(a) If any founder or other person is to purchase shares or acquire rights in shares otherwise than in cash,
(b) If the company is to acquire any property from any founder or other person in any manner at the time of commencement of business,
(c) If the expenses incurred in incorporating the company are to be borne by the company,
(d) If any founder or other person is to receive any special privilege or right from the company.

(3) When a founder or other person purchases shares or acquires rights in shares otherwise than in cash as mentioned in clause (a) of sub-section (2), or when the company acquires any property from a founder or other person at the time of commencement of business as mentioned in clause (b) of that sub-section, in the case of a public company, such property shall be valued by a certified engineer or accountant pursuant to the prevailing law. Added by the Some Nepal Acts Amendment Act Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.(3a) After the incorporation of the company, the company may also grant to any founder or other person the right to purchase shares or acquire rights in shares otherwise than in cash.
Companies Act, 2006

Added by the Some Nepal Acts Amendment Act Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.(3b) When the company issues or sells shares or grants rights to any founder or other person otherwise than in cash, a special resolution shall be passed by the general meeting of the company. While passing such a special resolution, the company may decide to issue or sell shares at a discount. Added by the Some Nepal Acts Amendment Act Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.(3c) When the company issues or sells shares or grants rights to any founder or other person otherwise than in cash pursuant to this section, the basis may also include intellectual property, value addition, services, goodwill, know-how sharing or transfer of technical knowledge to be received by the company from the founder or person. The value of shares issued in such a manner shall be based on the value determined with reasons by a certified engineer or accountant authorized to conduct valuation pursuant to the prevailing law. Added by the Some Nepal Acts Amendment Act Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.(3d) If there is a written agreement between the company and its employee, shares may be provided to such employee in lieu of remuneration, allowances and facilities. Added by the Some Nepal Acts Amendment Act Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.(3e) When shares are provided to a founder or any other person otherwise than in cash pursuant to clause (a) of sub-section (2), it shall not exceed twenty percent of the paid-up capital of the company. Provided that in the case of a company registered as a startup enterprise, it shall not exceed forty percent of the paid-up capital of the company.

(4) The basis for valuation of any property pursuant to sub-section (3) shall be as prescribed, and if not so prescribed, the person valuing such property shall mention the basis of valuation along with the description of the property.

(5) In case of any conflict between the Memorandum and this Act, the Memorandum shall be void to the extent of such conflict.

(6) The format of the Memorandum shall be as prescribed. 19.
Companies Act, 2006

Provided that no correction shall be made which alters the main objectives of the company. 20. Articles of Association: (1) To achieve the objectives mentioned in the Memorandum and to conduct the affairs of the company in a systematic manner, the company shall prepare its Articles of Association.

(2) The Articles of Association shall contain the following matters:

(a) Manner of convening the general meeting of the company, matters relating to notice to be given for the meeting,
(b) Procedure of the general meeting,
(c) Number of directors, provision for alternate directors if any, and term of office of directors,
(d) Provisions relating to record of decisions of the general meeting and board of directors, copies thereof and inspection,
(e) Minimum number of shares a person must hold to be appointed as a director of the company,
(f) In the case of a public company, the qualification and number of independent directors,
(g) If any professional person other than a shareholder is to be appointed as director, provisions relating to their number, term, qualification and appointment procedure,
(h) Powers and duties of the board of directors and managing director,
(i) Authority of directors and delegation of authority,
(j) Quorum for meetings of the board of directors, notice for meetings and procedure of meetings,
(k) Lien on shares,
(l) Different classes of shares and the rights, powers and restrictions attached to such shares,
(m) Provisions relating to calls for payment on shares and forfeiture of shares,
(n) Provisions relating to transfer of shares,
(o) Matters relating to increase or decrease of share capital,
(p) If the company is to purchase its own shares, that matter,
(q) Appointment of company secretary,
(r) Provisions relating to remuneration, allowances and facilities of directors,
(s) Use of the common seal, if the company uses a seal in its transactions,
(t) Accounts, books of account and audit of the company,
(u) Provisions for raising loans or debentures,
(v) Provisions relating to merger of companies,
(w) If any provision is made in the prevailing law requiring a particular matter to be specified in the Articles of Association of a company engaging in a specific business, that matter,
(x) Other necessary matters to be specified in the Articles of Association.

(3) If any provision of the Articles of Association, including any provision relating to the indemnification of directors or officers, conflicts with this Act or the Memorandum, it shall be void to the extent of such conflict.

(4) The format of the Articles of Association shall be as prescribed. 21.
Companies Act, 2006

21. Amendment of Memorandum or Articles of Association: (1) The company may, by passing a special resolution at its general meeting, and subject to section 6, amend the Memorandum or Articles of Association.

(2) The company shall inform the Office within thirty days of any amendment to the Memorandum or Articles of Association pursuant to sub-section (1), and the Office shall, within seven days of receiving such information, record it and notify the company accordingly.

(3) Notwithstanding anything contained in sub-section (2), if a company needs to amend its name, it shall pass a special resolution at its general meeting and submit an application to the Office for prior approval along with the prescribed fee; and the name of the company shall be amended if the Office approves the application for name amendment.

(4) If any shareholder is aggrieved by an amendment to the objectives of a public company, he/she may, stating reasons, apply to the Court to have the amendment declared invalid, upon fulfilling the following conditions:

(a) The application shall be made by a shareholder or shareholders holding at least five percent of the paid-up capital of the company, excluding shareholders who voted in favor of the amendment,
(b) The application shall have been made within twenty-one days of the passing of the resolution to amend the objectives of the company,
(c) If an application is to be made on behalf of one or more shareholders entitled to apply, the application shall be made by a person authorized in writing for that purpose.

(5) No application made pursuant to sub-section (4) shall be heard unless the Court is satisfied that the company has also been informed of the contents, date, time and place of the application.
Companies Act, 2006

Provided that if it appears from the documents submitted to the Court that the company has not acknowledged receipt of such notice, it shall not prejudice the hearing by the Court.

(6) If an application is made to the Court pursuant to sub-section (4), the amendment to the objectives of the company shall not take effect until a final decision or order is made by the Court on that matter.

(7) Upon an application under sub-section (4), the Court may issue appropriate orders specifying the following terms and conditions:

(a) Declare the amendment to the objectives wholly or partly valid or invalid,
(b) Order the company to purchase the shares and other rights of the shareholders who disagree with the change in the main objectives of the company and have applied under sub-section (4), at a fair price,
(c) Order that the purchase of shares pursuant to clause (b) be made from the amount referred to in sub-section (2) of section 61, and in the case of a company not having such amount, order the reduction of the company's capital to the extent of such share purchase, deeming the capital to have been reduced, by passing a special resolution; and upon such order, the company shall amend its Memorandum and Articles of Association subject to the provisions of this Act.

(8) Notwithstanding anything contained elsewhere in this Act, if an order has been issued wholly or partly invalidating a decision made by the company to amend its objectives pursuant to a court order, the company shall not amend the Memorandum or Articles of Association on that matter without the permission of the Court or in a manner contrary to the Court's order.

(9) If the Memorandum or Articles of Association of a company are altered by an order of the Court, or if an amendment made by the company is wholly or partly confirmed by the Court, such alteration or confirmation shall be treated and enforced as if it had been altered or confirmed by the general meeting itself. 22. Publication of Memorandum and Articles of Association: (1) A public company shall publish its Memorandum and Articles of Association within three months of obtaining the certificate to commence business.

(2) If any amendment is made to the Memorandum or Articles of Association of a public company, the amended Memorandum and Articles of Association shall be published within three months of such amendment.

(3) The Memorandum and Articles of Association published pursuant to sub-section (1) or (2) shall be kept at the registered office of the public company so as to be made available upon demand by any stakeholder. 23.
Companies Act, 2006

23. Prospectus to be Published: (1) A public company shall publish a prospectus before making a public issue of its securities.

(2) Before publishing a prospectus pursuant to sub-section (1), all directors of the company shall sign the prospectus and submit a written application to the Securities Board for approval in accordance with the prevailing law relating to securities.

(3) No company or any person on behalf of such company shall publish or cause to be published a prospectus of such company until the Securities Board has approved it and granted permission for public issue pursuant to sub-section (2) and one copy of such prospectus is registered with the Office.

(4) If it appears that any material particular has been omitted from or any unnecessary particular has been included in the prospectus submitted pursuant to sub-section (2), the Securities Board shall require necessary

(3) If a shareholder representing at least ten percent of the shares of a class dissatisfied with a decision made regarding the modification of rights attached to a specific class of shares under subsection (2) files a petition in the court to annul the decision to modify, the decision regarding the modification of the rights of the shareholders of that class shall not be effective until the court decides or orders otherwise.

(4) A petition under subsection (3) must be filed within thirty days of the decision to alter the rights attached to the specific class of shares, and the decision under subsection (2) shall not be implemented until that period has elapsed.

(5) If it appears that modifying the rights acquired by the shareholders of the relevant class would be detrimental to the interests of the petitioning shareholders, the court may annul the decision made regarding the modification of the rights of the shareholders of that class.

(6) A proposal to modify the rights of the shareholders of any specific class under subsection (2) shall be presented by the board of directors to the general meeting of the shareholders of the relevant class, and such proposal must be passed as a special resolution at the general meeting.

(7) Notwithstanding anything else written elsewhere in this section, when privatizing a company fully or partially owned by the Government of Nepal in its capacity as a shareholder, in accordance with the prevailing law on privatization, so long as the investment of the Government of Nepal in such company remains, the Government of Nepal may have special voting rights as provided in the regulations for decisions on the following matters:

(a) when deciding on a proposal to waive rights under clause (a) of subsection (1) of section 105,
(b) when deciding on the voluntary winding up of the company,
(c) when deciding on the merger of the company with another company.
Companies Act, 2006

31. Sending details of shares to the office: (1) The company shall send to the office, within thirty days of the allotment of shares, the number of issued and allotted shares, the total amount thereof, the names and addresses of the persons taking those shares, and an account of the amount collected and the amount remaining to be collected per share.

(2) If the value of any share has been paid, in whole or in part, by means other than cash at the time of allotment, the company shall also send to the office the document relating to the consideration for which the share was allotted, whether by contract for the sale of shares or for services or any other kind of consideration, the number of shares allotted, the face value of such shares, and the extent to which the value of the share is deemed to have been paid. 32. Conducting securities transactions: (1) When a public company issues its securities to the public, all activities such as the sale, allotment, and collection of proceeds of such securities shall be conducted only through a licensed securities dealer.

(2) A copy of the agreement made by a public company for conducting securities transactions through any institution shall be submitted to the office within seven days from the date of such agreement. 33. Share certificate: (1) Every shareholder shall be given a share certificate, in the format as prescribed, bearing the signatures of any two of the following: a director, or the chief executive officer of the company, or the company secretary (in the case of a public company), or the person mentioned in the regulations or unanimous agreement (in the case of a private company), and the seal of the company, if any, within two months from the date of allotment of the shares taken by him/her.

(2) When giving a share certificate for shares jointly taken by two or more persons, the names of those persons shall be mentioned in the certificate, and the certificate may be given to any one of them.
Companies Act, 2006

Provided that, in the register of shareholders, the names of all shareholders shall be mentioned.

(3) If a share certificate is lost, or destroyed due to an act of God or any other reason, the shareholder shall inform the registered office of the company as soon as he/she becomes aware of such loss, act of God, or destruction.

(4) Upon receiving a petition under subsection (3), the company shall, after making all necessary inquiries into the matter, if the content mentioned in the petition appears reasonable, give another share certificate to the petitioner upon collecting the fee prescribed in the regulations for the copy, and such matter shall also be recorded in the register of shareholders.

(5) Notwithstanding anything else written elsewhere in this section, if a listed company has arranged for a securities registrar authorized under the prevailing law to provide securities depository services to maintain the register pursuant to subsection (6) of section 46, the company may make provision to give the shareholder a securities depository passbook or any other certificate certifying him/her as a shareholder, instead of a share certificate.

(6) A certificate issued by the company, stating the number of shares or debentures held by any shareholder or debenture holder, bearing the signature of its authorized officer and the company's seal if the company uses a seal, shall be prima facie evidence of his/her ownership of such shares or debentures.

(7) If a company has allotted any shares or debentures to a representative of a licensed securities transaction institution under the prevailing law, or transferred such shares or debentures, the provision of subsection (1) shall not apply in respect of such shares or debentures. 34. Raising loans or debentures: (1) If any public company considers it necessary to raise loans or debentures, it may, after determining the reason therefor, the action plan to be accomplished thereby, and the budget required therefor, raise loans or debentures either by mortgaging or pledging the immovable property of the company or without doing so.
Companies Act, 2006

Provided that, debentures shall not be raised until the issued capital of the company, which has obtained permission to commence business, has been fully paid up.

(2) Notwithstanding anything written in the prevailing law, subject to subsection (1), the company may, keeping the same security, raise further loans or debentures, clearly indicating all subsequent creditors and amounts, provided that the security given to previous creditors is not discharged.

(3) Notwithstanding anything written in the prevailing law, matters relating to the terms, tenure, and interest of loans taken or given by the company shall be as per the deed or contract between the creditor and the debtor.

(4) If the company is to raise loans or debentures under subsection (1) or (2), it shall give notice to the office along with the reason therefor. 35. Procedure for raising debentures: (1) When a public company issues debentures under this Act, it shall do so by arranging a debenture trustee. Such debenture trustee must be a debenture trustee approved by the Securities Board.

(2) When issuing debentures with a debenture trustee, matters relating to the creditor-debtor relationship shall be as mentioned in the agreement between such trustee and the company.

(3) If provision has been made in the memorandum or articles for converting debentures into shares, or if such condition was stated before the issuance of the debentures, subject to the provisions of this Act relating to share capital, any debenture may be converted into shares.

(4) If debentures are to be converted into shares under subsection (3), such matter shall be clearly stated in the prospectus.

(5) Notwithstanding anything written in the prevailing law, for the purpose of enforcing a contract entered into between the company and any person regarding the purchase of debentures issued by any public company, the court may, if it deems necessary, issue an order for specific performance. 36.
Companies Act, 2006

36. Agreement required between debenture trustee and company: (1) An agreement must be entered into between the company issuing the debentures and the debenture trustee acting as trustee to protect the interests of the debenture holders, in relation to the debentures to be raised by any company.

(2) When making an agreement under subsection (1), the following matters shall be stated in such agreement:

(a) that the debenture trustee may have the valuation of the company's assets, project analysis, or management analysis done,
(b) the time for payment of principal and interest on the debentures purchased by the debenture holder, the interest rate, the procedure for payment of principal and interest, and if there is provision for converting debentures into shares, matters relating thereto,
(c) matters relating to the rights of other creditors over the company's property and the arrangement made regarding future liabilities,
(d) if the conditions mentioned in the agreement are breached or not fulfilled, or if for any other reasonable reason the financial transactions of the company need to be taken under control, or if the security as per the agreement needs to be taken possession of, that the debenture trustee may take possession of such company's property or assets or the property taken as collateral by the debenture trustee, or may retain the collateral itself or sell it by auction or any other suitable means,
(e) matters relating to the procedure for the company to pay the service fee and other direct expenses of the debenture trustee,
(f) that the debenture trustee shall not be liable for any loss, damage, or harm caused to the company or the debenture holder while acting in the capacity of debenture trustee,
(g) if a situation arises requiring the company to be dissolved, the legal action that the debenture trustee may take on behalf of the debenture holder and the exercise of the rights of the debenture holder,
(h) any other matters necessary for the protection of the interests of the debenture holder.

(3) The debenture trustee may take the company's property as security for the protection of the interests of the debenture holder, and have such security registered in its own name in accordance with the prevailing law.

(4) Before taking security under subsection (3), the debenture trustee may, if it deems necessary, get the valuation of the property or assets to be taken as security, as well as the project analysis or management analysis of the company, done.

(5) After an agreement has been entered into between the debenture trustee and the company under this section, if such company is to raise further debentures, it must obtain the consent of the debenture trustee. 37.
Companies Act, 2006

37. Debenture trustee may inspect and request details: Before entering into an agreement with the company to act as a debenture trustee, the debenture trustee may make necessary inspections and take or request details, information, or notice on the following matters, and if so requested, the relevant company shall provide the same:

(a) whether the memorandum or articles of the company contain a provision for raising loans or debentures, and if such provision exists, whether the board of directors of the company has the authority to decide to raise such debentures,
(b) whether there is a provision in the memorandum or articles of the company to raise debentures through a debenture trustee,
(c) whether the existing property of the company is sufficient to cover the value of the debentures to be raised,
(d) matters relating to other creditors and liabilities of the company,
(e) the balance sheet of the company and the auditor's report,
(f) any other necessary matters as the debenture trustee considers appropriate. 38. Company to submit periodic details to debenture trustee: (1) After an agreement has been entered into between the company and the debenture trustee under section 36, the company shall submit its financial transaction details to the debenture trustee every six months.

(2) If there is a change in the management of the company or any change in ownership after the debentures have been raised, the company shall inform the debenture trustee of such change within seven days of such change.

(3) If additional details, information, or notice on any matter is required beyond the details or information submitted by the company under subsection (1) or (2), the debenture trustee may request such details, information, or notice from the company, and it shall be the duty of the company to make available such requested details, information, or notice to the debenture trustee. 39.
Companies Act, 2006

39. Rights and duties of debenture trustee: (1) If the company violates any condition mentioned in the agreement made under section 36, the debenture trustee may demand that such company fulfill that condition as soon as possible or repay the principal and interest of the debenture holder within a fixed period.

(2) If due to the repayment under subsection (1) or for any other reasonable reason, the financial transactions of the company need to be taken under control or the security as per the agreement needs to be taken possession of, the debenture trustee may, subject to the prevailing law, take possession of the property, assets, or securities of such company, and may retain the property or assets so taken into possession, or sell them with or without auction, or make any other suitable arrangement.

(3) After taking possession of the company's property under subsection (2), the debenture holder's amount shall be paid from the proceeds of the sale of the property. If any amount remains after paying the debenture holder's amount, the debenture trustee shall return such amount to the relevant company.

(4) Notwithstanding anything else written elsewhere in this Act, if the entire amount due to the debenture holder cannot be paid from the proceeds of the property taken as security or sold after taking possession by the debenture trustee, except in the case where the debenture trustee itself has taken over the property under security, the debenture trustee shall pay the amount to the debenture holder on a pro-rata basis, and such shortfall shall not be borne from the property of the debenture trustee.

(5) A debenture holder holding more than fifty percent of the debentures may file a petition with the Securities Board stating that any debenture trustee has failed to act in the interest of the debenture holder, seeking the removal of such debenture trustee.

(6) If, upon examining the petition filed under subsection (5), the content appears reasonable, the Securities Board shall remove such debenture trustee and arrange for another debenture trustee. 40. Debenture trustee to charge service fee: (1) The debenture trustee may charge a service fee from the company for acting in the capacity of a debenture trustee. The amount of such service fee shall be as per the agreement between the debenture trustee and the relevant company.

(2) The debenture trustee may recover from the relevant company the actual expenses incurred while doing any work on behalf of the debenture holder or the company, such as when valuing the company's property, taking possession, or selling by auction. 41.
Companies Act, 2006

41. Debenture trustee to have the rights of the debenture holder: (1) If the company raising the debentures is dissolved, or if such company becomes insolvent for any other reason, the debenture trustee shall represent the debenture holder.

(2) If it becomes necessary to file a lawsuit on behalf of the debenture holder for the repayment of the principal and interest of the debenture holder or for any other reason, the debenture trustee shall have the right to file a lawsuit on behalf of the debenture holder. 42. Shares or debentures may be sold or pledged: (1) Subject to this Act, the memorandum and articles, shares or debentures of a company may be sold or pledged as movable property.

(2) Notwithstanding anything written in subsection (1), except for a private company that has not taken a loan from any other company, the founder of a company shall not be entitled to sell or pledge the shares taken by him/her until the first general meeting of the company is held and the call amount on the shares issued in his/her name is fully paid.

(3) If shares or debentures are pledged under subsection (1), the pledgee shall submit a petition to the registered office of the company in the format as prescribed, along with the prescribed fee, for recording such matter in the register. Along with such petition, the petitioner shall also submit the deed related to the pledge and the certificate of the shares or debentures.

(4) Upon receipt of a petition under subsection (3), the company shall record in the register the fact that such shares or debentures have been given and taken as a pledge, and upon receiving notice of the repayment of such pledged shares or debentures, the entry of such pledge shall be removed from the register. 43. Transfer of shares or debentures: (1) When a share or debenture is sold subject to subsections (1) and (2) of section 42, the person purchasing it shall submit an application to the registered office of the company in the format as prescribed, along with the fee prescribed in the regulations, for the transfer of such share or debenture.