chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Special Economic Zone Act, 2016

Explanation: For the purposes of this Section, "circumstances beyond control" means a disaster situation such as war, flood, inundation, earthquake, epidemic, fire, industrial accident occurring in a manner that adversely affects the industry and export activities, and that term also denotes a situation where export is impossible due to an adverse effect on exports caused by a change in the trade policy of the importing country.

(2) Notwithstanding anything written in Sub-section (1), the Licensee may sell goods or services produced from such industry in the domestic market of Nepal for up to Inserted by the Act to Amend Certain Nepal Acts Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.three years from the date of commencement of operation of the industry established in the Special Economic Zone.

(3) If any goods or services produced by the Licensee are to be sold in the domestic market of Nepal pursuant to Sub-section (1) or (2), information thereof shall be given to the Authority stating the prescribed particulars before selling such goods or services.

(4) A Licensee selling goods or services in the domestic market of Nepal pursuant to Sub-section (1) or (2) shall not be provided tax exemption and facilities under this Act to the extent of the quantity of such goods or services sold. Chapter-5
Establishment of Authority and Its Functions, Duties and Powers

14. Establishment of Authority: (1) The Special Economic Zone Authority is established to operate and manage the Special Economic Zone, to construct or maintain infrastructure structures in the Special Economic Zone or cause them to be so done, to monitor or regulate industries established within the Special Economic Zone, and to provide services to such industries from a single window unit.

(2) The head office of the Authority shall be in Kathmandu Valley, and the Authority may, with the approval of the Ministry, open branch offices or contact offices as required. 15. Authority to be an Autonomous Corporate Body: (1) The Authority shall be an autonomous and corporate body with perpetual succession.

(2) The Authority shall have its own separate seal for its business.

(3) The Authority may, like a person, acquire, enjoy, sell or otherwise dispose of movable and immovable property.

(4) The Authority may, like a person, sue and be sued in its own name.

(5) The Authority may, like a person, enter into contracts and exercise rights and assume liabilities under such contracts. 16.
Special Economic Zone Act, 2016

16. Functions, Duties and Powers of Authority: In addition to the functions, duties and powers written elsewhere in this Act, the functions, duties and powers of the Authority shall be as follows:-

(a) To advise the Government of Nepal on policies to be adopted for the establishment, development and operation of Special Economic Zones,

(b) To prepare or cause to be prepared necessary standards for the establishment, operation and management of Special Economic Zones and the development of their infrastructure structures,

(c) To grant licenses to industries to be established in the Special Economic Zone and renew licenses,

(d) To determine the standards for lease or rental amounts, fees or charges to be collected in lieu of land, buildings, services or facilities provided to industries:

Provided that, if any Special Economic Zone is established, operated and managed with the participation of the Government of Nepal and the private sector or by the private sector pursuant to Sub-section (1) of Section 6, the lease or rental amounts, fees or charges to be collected in lieu of land, buildings, services or facilities provided to industries from such Special Economic Zone shall be as determined in agreement with the company establishing, operating and managing such Special Economic Zone,

(e) To recommend to the concerned body for services, facilities or tax exemptions to be obtained by industries under this Act,

Inserted by the Act to Amend Certain Nepal Acts Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.(e1) To approve the map of physical structures including buildings required for the industry and inform the concerned local level,

(f) To lease out land, buildings, etc. required by industries,

(g) To conduct periodic inspection of industries established in the Special Economic Zone and take necessary action if any industry is found to have acted contrary to this Act or the Rules framed under this Act,

(h) To arrange for security in the Special Economic Zone,

(i) To make necessary arrangements for the provision of services and facilities such as banks, post office, health posts, recreation centers in the Special Economic Zone,

(j) To permit the import of goods such as machinery, equipment, spare parts, means of transport, raw materials, packaging materials required by investors within the Special Economic Zone on the basis of approval of investment proposal,

(k) To provide export, import, approval or certificate of origin as required by industries,

(l) To perform other functions necessary for the development and promotion of the Special Economic Zone and industries therein. 17.
Special Economic Zone Act, 2016

17. Provisions Relating to Employees: (1) There shall be necessary number of employees in the Authority for the conduct of its affairs.

(2) The appointment, remuneration, facilities and service conditions of the employees of the Authority shall be as prescribed.

(3) Until employees are appointed pursuant to Sub-section (2), the Government of Nepal shall provide the employees required by the Authority. 18. Special Provision Relating to Employees: The employees working in the Special Economic Zone Development Committee operated by the Government of Nepal at the time of commencement of this Act may be converted into employees of the Special Economic Zone Authority on the basis as prescribed. Chapter-6
Provisions Relating to Management Committee

19. Formation of Committee: (1) A Management Committee shall be formed to perform all business to be carried out on behalf of the Authority in accordance with this Act and the Rules framed under this Act. Amended by the First Amendment.(2) The Committee pursuant to Sub-section (1) shall consist of the following members:-

(a) Secretary, Ministry of Industry, Commerce and Supplies - Chairperson

(b) Joint Secretary, Ministry of Industry, Commerce and Supplies - Member

(c) Joint Secretary, Ministry of Law, Justice and Parliamentary Affairs - Member

(d) Joint Secretary, Ministry of Finance - Member

(e) Joint Secretary, Ministry of Labour, Employment and Social Security - Member

(f) President or Member of the Federation of Nepal Chambers of Commerce and Industry - Member

(g) President or Member of the Confederation of Nepalese Industries - Member

(h) President or Member of the Federation of Women Entrepreneurs' Association of Nepal - Member

(i) President or Member of the Nepal National Industrial Business Association - Member

(j) One representative recommended by the Joint Trade Union Coordination Centre - Member

(k) Executive Director, Authority - Member-Secretary

(3) The Government of Nepal may, by publishing a notice in the Nepal Gazette, make necessary additions, deletions or changes to the members of the Committee.

(4) The term of office of a member appointed by the Government of Nepal pursuant to Clause (nya) of Sub-section (2) shall be four years.

(5) Notwithstanding anything written in Sub-section (4), if the performance of a member appointed by the Government of Nepal is not satisfactory, the Government of Nepal may remove him/her at any time: Provided that, a reasonable opportunity to submit a defense shall be given to him/her before such removal. 20.
Special Economic Zone Act, 2016

20. Meeting and Decision of Committee: (1) Meetings of the Committee shall be held as required.

(2) The meeting of the Committee shall be held at the date, time and place designated by the Chairperson.

(3) The Member-Secretary of the Committee shall give notice of the meeting to all members at least seven days before the meeting.

(4) The quorum for a meeting of the Committee shall be deemed to be constituted if more than fifty percent of the total number of members currently holding office are present.

(5) The meeting of the Committee shall be chaired by the Chairperson, and in his/her absence, a member chosen by the members present at the meeting from among themselves shall chair the meeting.

(6) The opinion of the majority shall prevail in a meeting of the Committee, and in case of a tie, the person chairing the meeting shall have a casting vote. Amended by the First Amendment.(7) The Committee may, as required, invite any expert on the relevant subject or any office bearer of any other body concerned with the subject to the meeting of the Committee.

(8) The decision of the Committee shall be certified by the Member-Secretary.

(9) Other procedures relating to the meeting of the Committee shall be as determined by the Committee itself. 21. Meeting Allowance and Facilities for Members: (1) A member of the Committee shall receive meeting allowance as prescribed for participating in a meeting.

(2) Other facilities to be received by a member of the Committee for performing the work of the Authority shall be as prescribed. Chapter-7
Provisions Relating to Executive Director

22.
Special Economic Zone Act, 2016

Chapter-7
Provisions Relating to Executive Director

22. Executive Director: (1) There shall be an Executive Director to act as the administrative chief of the Authority.

(2) The Government of Nepal shall appoint the Executive Director on the recommendation of the Recommendation Committee pursuant to Sub-section (3).

(3) There shall be a Recommendation Committee as follows to recommend the appointment of the Executive Director:-

(a) Member of the National Planning Commission (looking after the concerned sector) - Coordinator

(b) Secretary, Ministry of Industry - Member

(c) One person designated by the Committee from among experts working in the field of industry, commerce, trade, revenue administration, law, engineering or management - Member

(4) The Recommendation Committee pursuant to Sub-section (3) shall, based on open competition, select and recommend three names to the Government of Nepal for appointment to the post of Executive Director from among persons who have obtained at least a post-graduate degree in management, economics, engineering or law from a recognized educational institution and have at least ten years of experience in the field of industry, commerce, trade, revenue administration, engineering or management.

(5) The term of office of the Executive Director shall be four years, and if his/her performance is found satisfactory, the Government of Nepal may, on the recommendation of the Recommendation Committee pursuant to Sub-section (3), reappoint him/her to the post of Executive Director for another one term.

(6) Notwithstanding anything written in Sub-section (5), if the Executive Director is found to have failed to fulfill his/her official responsibilities or to have done any act contrary to the interest of the Authority, the Government of Nepal may remove him/her from the post of Executive Director at any time: Provided that, he/she shall not be deprived of a reasonable opportunity to submit a defense before such removal.

(7) The remuneration, facilities and other terms of service of the Executive Director shall be as prescribed. 23. Functions, Duties and Powers of Executive Director: The functions, duties and powers of the Executive Director shall be as follows:-

(a) To implement or cause to implement the decisions and directives of the Committee,

(b) To implement or cause to implement the programs approved by the Committee,

(c) To inspect and monitor the business relating to the operation and management of the Special Economic Zone and submit a report to the Committee,

(d) To conduct the day-to-day administration of the Authority,

(e) To perform other functions as prescribed. Chapter-8
Provisions Relating to Concessions to be Received by Industries Established in Special Economic Zone

24.
Special Economic Zone Act, 2016

Chapter-8
Provisions Relating to Concessions to be Received by Industries Established in Special Economic Zone

24. Special Treatment: For the purposes of duty, fee or tax leviable on commercial transactions conducted by an industry established in a Special Economic Zone, or on goods or services produced in such Zone, such Zone shall be considered as an area outside the tax jurisdiction and given special treatment. 25. Not to be Nationalized: No industry established and operating within a Special Economic Zone shall be nationalized. 26. Discount on Rental or Lease of Land or Building: In the amount payable as rental or lease for land or building used by an industry established within a Special Economic Zone, there shall be a discount at the rate of fifty, forty and twenty-five percent respectively for the first, second and third years from the establishment of the industry. Inserted by the Act to Amend Certain Nepal Acts Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.26a. Power to Borrow Loan: An industry in a Special Economic Zone may borrow loans by keeping its fixed assets other than land or its agreement as collateral with banks and financial institutions. Amended by the First Amendment.27. Exemption on Income Tax: (1) There shall be exemption as follows in the income tax leviable on the income of an industry established in a Special Economic Zone and the tax leviable on dividends distributed by such industry:-

(a) One hundred percent of the income tax leviable for ten years from the date of commencement of business by an industry established in a Special Economic Zone situated in a Himalayan district or a hilly district designated by the Government of Nepal, and fifty percent of the income tax leviable in subsequent income years,

(b) One hundred percent of the income tax leviable for five years from the date of commencement of business by an industry established in a Special Economic Zone situated in an area other than the area referred to in Clause (a), and fifty percent of the income tax leviable in subsequent income years,

(c) One hundred percent of the tax leviable on dividends distributed by an industry established in a Special Economic Zone for five years from the date of commencement of business, and fifty percent for the subsequent three years,

(d) Fifty percent of the income tax leviable on the income earned by a foreign investor of an industry established in a Special Economic Zone from foreign technology or management service fees and royalties.
Special Economic Zone Act, 2016

29. Customs Duty Exemption: Amended by the First Amendment.(1) On goods imported by an industry established in a Special Economic Zone, customs duty and other facilities shall be provided as follows on the recommendation of the Authority:-

(a) To import raw materials and auxiliary raw materials (including packaging materials) required for producing such goods for export or for sale domestically in convertible foreign currency, taking bank guarantee for the customs duty and other duties leviable on import,

(b) To import plant, machinery, equipment and spare parts required by the industry, taking bank guarantee for the duties leviable on import,

(c) If the fact that the plant, machinery, equipment and spare parts imported pursuant to Clause (b) have been installed in the concerned industry is certified by the Authority, to release the bank guarantee taken pursuant to Clause (b),

(d) One percent customs duty shall be leviable on one means of transport imported for use by the industry for transporting its workers and employees and on transport means for transporting goods.

(2) If any importer sells goods imported by him/her to an industry located in a Special Economic Zone as prescribed, and if he/she has paid customs duty at the time of importing such goods, the Customs Office shall refund such customs duty to him/her as prescribed.

(3) If any finished goods produced by an industry located outside a Special Economic Zone are sold to an industry located within the Special Economic Zone, such sale shall be treated as export and the same customs duty and other facilities as obtained upon export shall be provided.

(4) If goods prepared from raw materials imported with customs duty exemption by an industry established in a Special Economic Zone are sold by the concerned industry for consumption in Nepal, such goods shall be allowed to be taken out of the Special Economic Zone only after paying the duty leviable on the raw materials used in such goods.

(5) The Government of Nepal may, by publishing a notice in the Nepal Gazette, issue an order prescribing procedures regarding the transfer of ownership of goods imported with duty exemption by an industry located in a Special Economic Zone to any person within or outside the Special Economic Zone. It shall be the duty of the concerned industry to comply with such order. 30.
Special Economic Zone Act, 2016

It shall be the duty of the concerned industry to comply with such order. 30. Facility Equivalent to Export: If any firm, company or industry established pursuant to the prevailing law sells its raw materials or Amended by the Act to Amend Certain Nepal Acts Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081.any product or service to an industry established in a Special Economic Zone, such sale shall be deemed to be equivalent to export, and if any facility is obtainable under the prevailing law for export, such firm, company or industry shall obtain such facility. 31. Power to Take Back in Foreign Currency: (1) A foreign investor investing in foreign currency in an industry established in a Special Economic Zone may take back the following amounts in foreign currency outside Nepal:-

(a) Amount obtained from the sale of shares of part or all of the foreign investment,

(b) Amount of dividends receivable in lieu of foreign investment,

(c) Amount received as payment of principal and interest on foreign loans.

(2) If a Licensee investing pursuant to Sub-section (1) has mentioned taking back investment in a specific currency while entering into the agreement pursuant to Section 11, he/she shall be entitled to take it outside Nepal in that same currency. 32. Power to Open and Conduct Transactions in Foreign Currency Account: (1) A Licensee may, on the recommendation of the Authority, open an account in foreign currency in a commercial bank established pursuant to the prevailing law relating to banks and financial institutions.

(2) A Licensee may conduct transactions in foreign currency in connection with the industry established in the Special Economic Zone. 33. Single Window Unit: Amended by the First Amendment.(1) A single window unit shall be established with units of the concerned bodies for the purpose of assisting and facilitating industries or investors established in a Special Economic Zone in the following tasks required to be done by the industry under the prevailing law, and to provide other necessary services, facilities and concessions from one place:-

(a) Industry registration and industry administration related work,

(b) Work of granting approval for foreign investment,

(c) Company registration and administration related work,

(d) Work relating to granting exemption, facility or concession under this Act,

(e) Work relating to issuing Permanent Account Number registration certificate in coordination with the Inland Revenue Department,

(f) Work relating to issuing Certificate of Origin,

(g) Work relating to visa,

(h) Work relating to labor permit,

(i) Work relating to other services and facilities obtainable under this Act or the Rules framed under this Act.
Special Economic Zone Act, 2016

Amended by the First Amendment.(2) Other exemptions, facilities or concessions available to industries established in a Special Economic Zone, in addition to the facilities referred to in Sub-section (1), shall be as prescribed by the Government of Nepal by publishing a notice in the Nepal Gazette. 34. Provisions Relating to Visa: (1) A foreign citizen coming to Nepal to study or research with the objective of investing in an industry shall be granted a non-tourist visa of up to six months.

(2) A foreign investor or his/her dependent family or authorized representative or his/her dependent family shall be provided a business visa to stay in Nepal as long as the foreign investment in the industry subsists: Provided that, a foreign investor investing at least one crore US dollars or equivalent convertible foreign currency at one time and his/her dependent family shall be provided a residential visa as long as such investment subsists.

(3) A foreign worker or employee coming to work in an industry pursuant to Section 38 shall be granted a non-tourist visa on the recommendation of the Authority. 35. Other Facilities: (1) In addition to the facilities mentioned in this Chapter, an industry established in a Special Economic Zone shall receive the following facilities:-

(a) To use a bonded warehouse as written in the agreement,

(b) To sub-contract between industries,

(c) To claim accelerated depreciation as prescribed.

(2) The Government of Nepal may, on the recommendation of the Authority, provide other facilities as prescribed by publishing a notice in the Nepal Gazette to the industry. 36. Guarantee of Exemption, Facility or Concession: (1) No provision shall be made that limits or adversely affects the exemption, facility or concession provided to an industry established in a Special Economic Zone under the law in force at the time of its establishment.

(2) Exemptions, facilities or concessions provided to an industry established in a Special Economic Zone with a fixed period under this Act shall be obtained until that period.

(3) If there is any provision in this Act or any other prevailing law that is contrary to Sub-sections (1) and (2), such provision shall not apply to such industry to the extent of the adverse effect. 37.
Special Economic Zone Act, 2016

37. Exemption and Concession Not to be Obtained: (1) Notwithstanding anything written elsewhere in this Chapter, if an industry established in a Special Economic Zone fails to export its production pursuant to Section 13 in any fiscal year, it shall not obtain the tax exemption and concession obtainable under this Act for that fiscal year.

(2) The quantity of goods or services to be exported out of the goods or services produced by any industry established in a Special Economic Zone in any fiscal year shall be ascertained as prescribed on the basis of the production capacity of such industry and the quantity of raw materials used.

(3) The Authority shall keep a record of the details required to ascertain the quantity produced pursuant to Sub-section (2) in an updated manner and monitor it. Chapter-9
Provisions Relating to Workers and Employees

38. Fulfillment of Workers or Employees: (1) A Licensee shall fulfill the workers or employees required for the industry from Nepali citizens.

(2) While fulfilling workers or employees pursuant to Sub-section (1), the Licensee shall fill the positions by publishing a public advertisement.

(3) While publishing a public advertisement pursuant to Sub-section (2), if Nepali workers or employees possessing the required special skills are not available for a specific technical position requiring such special skills, the Licensee shall submit an application to the Authority for approval to appoint non-Nepali citizens as workers or employees, stating the basis and reason thereof.

(4) Upon inquiry into the application filed pursuant to Sub-section (3), if it appears that Nepali workers or employees are not available for the industry, the Authority may grant approval to employ non-Nepali citizens for a maximum of seven years in the case of a specific type of skilled technical worker or employee, and for a maximum of five years in the case of other technical workers or employees.

(5) Notwithstanding anything written elsewhere in this Section, for workers or employees at the managerial level and those involved in state-of-the-art technology, the Authority may grant approval to employ non-Nepali citizens for a period longer than the period mentioned in Sub-section (4).
Special Economic Zone Act, 2016

Explanation: For the purposes of this Sub-section, "managerial level" means a person making final decisions regarding the activities of any industry, and that term also denotes a person appointed to a chief position in any part or unit of the

(2) While conducting inspection, monitoring, and supervision pursuant to sub-section (1), if any licensee is found to have done any act contrary to this Act or the rules or agreements made under this Act, the Authority may give necessary directions to the concerned licensee.

(3) It shall be the duty of the concerned licensee to comply with the direction given by the Authority pursuant to sub-section (2). 51. Dispute Resolution: (1) If any dispute arises between an investor or the concerned industry and the Authority, the concerned parties shall resolve such dispute by mutual discussion under the auspices of the Ministry.

(2) If the dispute cannot be resolved pursuant to sub-section (1), it shall be resolved by arbitration in accordance with the prevailing arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL).

(3) The arbitration shall be held in Kathmandu, and the law of Nepal shall apply to the arbitration.

(4) Notwithstanding anything contained in sub-sections (1), (2) and (3), disputes arising in relation to foreign investment in industries with investment as prescribed may be resolved in accordance with the provisions mentioned in the foreign investment agreement. 52. Submission of Report: (1) A licensee shall submit a report including the quantity of goods or services exported from its industry throughout the year and details of the income and expenditure of the industry to the Authority within three months after the end of each fiscal year.

(2) The Authority shall submit an annual report of its activities to the Ministry within four months after the end of each fiscal year.

(3) The report pursuant to sub-section (2) shall include, among other things, the achievements from the establishment of the Special Economic Zone, its impact on the economic condition of the country, and the activities performed by the Authority throughout the year.

(4) The Ministry shall publish the annual report pursuant to sub-section (2) publicly. 53. May Form Sub-Committee: (1) The Committee may, as necessary, form a sub-committee to carry out or cause to be carried out its duties under this Act or the rules made under this Act in a smooth manner.

(2) The functions, duties, and powers of a sub-committee formed pursuant to sub-section (1) shall be as specified by the Committee at the time of forming such sub-committee. 54.
Special Economic Zone Act, 2016

54. Delegation of Powers: The Committee may, as necessary, delegate some of the powers vested in it pursuant to this Act or the rules made under this Act to any member of the Committee, a sub-committee formed pursuant to Section 53, or any officer or employee of the Authority. 55. Matters to be According to this Act: Matters provided for in this Act shall be according to this Act, and other matters shall be according to the prevailing law. 56. May Give Direction: The Government of Nepal may give necessary directions to the Authority regarding the proper operation, regulation, and development of the Special Economic Zone, and it shall be the duty of the Authority to comply with such directions. 57. Contact with Government of Nepal: The Authority shall maintain contact with the Government of Nepal through the Ministry. 58. May Frame and Implement Guidelines: The Authority may frame and implement necessary guidelines relating to the management of industries within the Special Economic Zone and the resolution of disputes between industries and workers or employees. 59. Power to Make Rules: The Government of Nepal may make necessary rules for the implementation of this Act. 60. May Make Regulations: The Authority may, subject to this Act or the rules made under this Act and with the approval of the Ministry, make necessary regulations relating to financial and employee administration. 61. Repeal and Saving: (1) The Special Economic Zone Development Committee (Formation) Order, 2069 is hereby repealed.

(2) All actions and proceedings performed under the Special Economic Zone Development Committee (Formation) Order, 2069 shall be deemed to have been performed under this Act.

(3) All movable and immovable property and liabilities of the Special Economic Zone Development Committee formed under the Special Economic Zone Development Committee (Formation) Order, 2069 shall vest in the Authority under this Act.
Insolvency Act, 2006

5. Notice to Be Given for Payment of Debt: (1) Before filing a petition in the Court under section 4 for insolvency proceedings, a notice issued for payment of debt in the prescribed format shall be sent to the registered office of the company.

(2) The notice under subsection (1) must be signed by the creditor himself or by a person authorized by him on his behalf. 6. Petition May Be Filed to Invalidate the Notice Issued for Payment of Debt: (1) If the notice received under section 5 is not reasonable, or if the debt does not need to be paid immediately for any other reason, the concerned company may file a petition in the Court to invalidate such notice within thirty-five days from the date of receiving the notice.

(2) If a petition under subsection (1) is filed, the Court shall issue a notice to the creditor who gave the notice under section 5 to appear before the Court within seven days, and while issuing such notice, a copy of such petition shall also be attached.

(3) If the creditor appears under subsection (2), the Court may, within seven days from the date of such appearance, or if the creditor does not appear, from the date of expiry of the time limit to appear before the Court, decide on whether to invalidate the notice issued under section 5.

(4) The Court may order the invalidation of the notice issued under section 5 in the following circumstances:-
(a) If there is a clear dispute as to whether the creditor has actually lent the debt to the company, or
(b) If the debt remaining unpaid by the company to the creditor does not appear to be immediately payable.

(5) If the Court has made an order under subsection (4), as long as the circumstances in that subsection exist, a fresh notice for payment of debt shall not be given to the company, nor shall a petition for insolvency proceedings be filed in the same matter.

(6) If the Court does not issue an order under subsection (4), the company shall pay the creditor's debt within thirty-five days from that date. 7.
Insolvency Act, 2006

7. Company Deemed to Be Insolvent: (1) Unless otherwise proven, a company shall be deemed to be insolvent in the following circumstances:-
(a) If a special resolution declaring the company insolvent is passed by the General Meeting of shareholders or a decision to this effect is made by the Board of Directors of the company,
(b) If there is a court order requiring the company to pay a debt and the debt is not paid according to such order within thirty-five days from the date the company received such order, or
(c) If the company fails to pay the debt within thirty-five days of service of the notice issued by the creditor for payment of debt, or fails to file a petition in the Court within the same period to invalidate such notice.

(2) Nothing written in this section shall prevent the establishment of a company's insolvency if it is proven by any other means that the company's liabilities exceed the value of its assets, or if the company itself admits that it is insolvent. 8. Petition Not to be Filed for Insolvency Proceedings: (1) Notwithstanding anything contained in section 4, a petition for insolvency proceedings shall not be filed in the Court regarding the following companies without obtaining the prior approval of the following authorities:-
(a) In the case of a Bank or Financial Institution engaged in banking and financial transactions, the approval of Nepal Rastra Bank,
(b) In the case of an Insurance Company engaged in insurance business, the approval of the Insurance Committee formed under the Insurance Act, 1997 (2049), or
(c) In the case of a company which cannot dissolve voluntarily without the approval of a body or authority empowered by prevailing law, other than those mentioned in clauses (a) or (b), the approval of such authority.

(2) When filing a petition for insolvency proceedings concerning the companies mentioned in subsection (1), a copy of the approval given by the authority mentioned in that subsection for that purpose shall be submitted along with the petition. 9.
Insolvency Act, 2006

9. Proceedings on Petition to Be Conducted: (1) If a petition is filed under section 4 to initiate or cause insolvency proceedings concerning a company, the Court shall register such petition if it is duly filed under this Act, and fix a date for hearing thereon within fifteen days.

(2) Except where the company itself has filed the petition for insolvency proceedings, after the petition under subsection (1) is registered, a notice shall be issued in the name of the concerned company, served at its registered office, requiring it to submit a written statement within seven days if there is any reason why such proceedings should not be initiated.

(3) If the Court deems fit, before the hearing on the petition under this section, it may order the authority mentioned in subsection (1) of section 8 to submit before the Court, prior to the date fixed for hearing, a statement of reasons, if any, for initiating proceedings according to the applicant's demand, and notice thereof shall be published at least twice in any national daily newspaper so as to be available also to the shareholders, creditors, or other persons dealing with the concerned company, or, if such company is listed on a securities market, to the concerned securities market.

(4) The company or person receiving the notice issued or published under subsection (2) or (3) shall submit a written statement with reasons within the time limit fixed by the Court if there is any reason why insolvency proceedings concerning the concerned company should not be initiated. 10. Hearing to Be Continued and Decision Made: (1) Notwithstanding anything contained in the prevailing law, in respect of a petition filed under this Chapter, once the hearing commences on the date fixed, the Court shall continue the hearing and make a decision until the final disposal thereof. Provided that, if the hearing cannot be completed or a decision cannot be made on the day of hearing due to lack of time, this provision shall not prevent the continuation of the hearing on that matter on the next day the Court is open.

(2) Upon completion of the hearing under subsection (1), the Court shall issue an order to initiate or not to initiate insolvency proceedings concerning the company.

(3) While issuing an order under subsection (2), the Court shall issue an order appointing an Insolvency Practitioner as an Investigating Officer for the purpose of conducting an investigation into the insolvency.

(4) While appointing an Investigating Officer under subsection (3), the Court shall appoint a person deemed suitable by the Court from among the persons whose names are included in the list approved by the Office for that purpose. 11.
Insolvency Act, 2006

11. Interim Order May Be Issued: (1) During the hearing of a petition filed in the Court under section 4, if it appears that the following circumstances exist in the company which may adversely affect the interests of creditors or other persons dealing with the company, the Court may, upon the petition of an interested party or on its own motion, issue an interim order:-

(a) If the company's assets are being or may be wrongly sold or transferred,
(b) If the company's management is not being properly conducted,
(c) If any legal proceedings or enforcement of such proceedings are about to be or may be initiated in a manner that adversely affects the company's assets.

(2) While issuing an interim order under subsection (1), the Court may issue an order prohibiting all or any of the following:-
(a) Transfer, sale, or creation of any mortgage or pledge over any of the company's assets, except in the ordinary course of its business,
(b) Transfer of the company's shares in any manner, or any change in the status of the company's shareholders,
(c) Attachment or execution of any of the company's assets by any person, or
(d) Initiation or continuation of any legal proceedings, or doing of any act or execution, by any creditor or person against the assets of the company or any assets owned, possessed, or occupied by the company.

(3) If an order is made under subsection (2), notice thereof shall be given to the concerned company, the Company Registrar, and the Office, and if the Court deems fit, it may also order publication in a national daily newspaper for general information.

(4) If the Court deems necessary, it may issue an order appointing a suitable person as an Interim Administrator of the company for the duration of the subsistence of the interim order, for the interim management of the company.

(5) The duties, functions, and powers of an Interim Administrator appointed under subsection (4) shall be as specified by the Court at the time of such appointment.

(6) Notwithstanding anything contained elsewhere in this section, the interim order made under this section shall automatically cease to have effect when the Court orders an investigation into insolvency proceedings or dismisses the petition. 12. Petition Not to Be Withdrawn: Notwithstanding anything contained in the prevailing law, a petition filed in the Court for insolvency proceedings under section 4 shall not be withdrawn except with the permission of the Court. Chapter 3

Investigation of Insolvency Proceedings

13.
Insolvency Act, 2006

12. Petition Not to Be Withdrawn: Notwithstanding anything contained in the prevailing law, a petition filed in the Court for insolvency proceedings under section 4 shall not be withdrawn except with the permission of the Court. Chapter 3

Investigation of Insolvency Proceedings

13. Investigation of Insolvency Proceedings to Be Conducted: (1) If the Court orders an investigation into insolvency proceedings under subsection (3) of section 10, the Investigating Officer shall independently investigate the financial position of the concerned company to determine the following matters:-
(a) Whether the financial position of the company is such that it cannot be improved and an order for immediate dissolution should be issued or not,
(b) Whether the investigation period under section 14 should be extended or not,
(c) Whether an order for restructuring the company through a restructuring program should be issued or not,
(d) Whether the company is already insolvent or is likely to become insolvent immediately.

(2) The Investigating Officer shall conduct an investigation under subsection (1) and submit an investigation report to the Court within the time period fixed by the Court, and such report shall, in addition to other matters, include any resolution passed by the meeting of creditors, the company's proposal, and the evaluation and recommendations made by the Investigating Officer. 14. Investigation Period for Insolvency Proceedings May Be Extended: (1) If the Investigating Officer files a petition before the Court seeking an extension of the investigation period, showing reasonable cause why the financial position of the company could not be investigated within the time fixed under subsection (2) of section 13, the Court may extend the period by an appropriate duration if it deems the cause reasonable.

(2) If the investigation period is extended under subsection (1), the concerned company shall be informed thereof. 15.
Insolvency Act, 2006

15. Management of the Company During Investigation Period: (1) Notwithstanding anything contained in the prevailing law, during the investigation period of insolvency proceedings, the management and regular business operations of the company shall be conducted by the Board of Directors of the company under the general supervision of the Investigating Officer.

(2) Notwithstanding anything contained in subsection (1), if the Investigating Officer submits a report to the Court stating that the Board of Directors has not properly managed the company, the Court may order the removal of the Board of Directors and entrust the Investigating Officer with the management and regular business operations of the company.

(3) If the Court orders the Investigating Officer to conduct the management and regular business operations of the company under subsection (2), the Investigating Officer shall conduct business accordingly.

(4) While conducting the regular business operations of the company under subsection (3), if any special transaction such as the sale of the company's assets or business is required, a petition shall be filed in the Court for permission, stating the reasons therefor, and if the Court orders granting such permission, the Investigating Officer may carry out such transaction. Added by the Act to Amend Some Acts Relating to Money Laundering Prevention and Business Environment Promotion, 2023 (2080).(5) When filing a petition under subsection (4), if it is necessary to sell assets or property amounting to fifty percent or more of the total assets of the company, a decision shall be obtained from the meeting or group of creditors and a certified copy of such decision shall be attached to the petition. 16. Director to Submit Report: A person who held the position of director of the company at the time of the order under subsection (3) of section 10 for investigation of insolvency proceedings, or within one year prior to that, shall submit a report to the Court in the prescribed format regarding the financial position and transactions of the company during the period of his or her tenure. 17. Loan May Be Taken: (1) If the Investigating Officer considers it necessary to obtain funds to keep the company running or to conduct its regular business operations, he or she may take a loan from any person, with or without providing necessary security.

(2) A loan taken under subsection (1) shall be considered as expenses incurred during the investigation period of insolvency proceedings, and such amount shall be paid according to the priority order provided under this Act.
Insolvency Act, 2006

Provided that, if the company has already provided security for taking a loan to some other person previously, the priority of claim over such security shall not be maintained unless the Investigating Officer has made an agreement for that purpose with the person whose claim over it would otherwise be satisfied. 18. Investigating Officer to Submit Report: (1) The Investigating Officer shall investigate the financial and business position of the company and submit a report thereof to the Court within the investigation period.

(2) In the report under subsection (1), in addition to other matters, the Investigating Officer shall determine one of the matters mentioned in subsection (1) of section 13, including the actual financial position of the company, details obtained from the investigation, and the Investigating Officer's opinion and conclusion, and shall state the recommendation along with the basis and reasons therefor in the report.

(3) If the recommendation made under subsection (2) was presented to a meeting of creditors, it shall be mentioned whether the majority of creditors present at such meeting accepted the recommendation or not.

(4) One copy each of the report submitted under subsection (1) shall be sent to the concerned company and the Office, and the concerned company and the Office shall make arrangements to keep such report available for inspection by the shareholders, directors, and creditors of the company. 19.
Insolvency Act, 2006

19. Automatic Stay: (1) Notwithstanding anything contained in the prevailing law, if the Court has ordered the initiation of insolvency proceedings under subsection (2) of section 10 concerning a company, without the permission of the Court, none of the following transactions shall occur, and if any such proceedings are ongoing but not completed, they shall be automatically stayed:-
(a) Transfer, sale, or change of the status of shares or shareholders of the company,
(b) Transfer, sale, or creation of any mortgage or pledge over any assets of the company in any manner,
(c) Attachment or execution of any assets of the company or enforcement of security pursuant to any judgment or order,
(d) Repossession by the lessor of any property leased by the company, or initiation of any legal proceedings in relation thereto,
(e) Payment or provision of security for any debt that remains unpaid or is payable at the time the Court orders the initiation of insolvency proceedings under subsection (2) of section 10, and
(f) Transfer or withdrawal of funds from the company's treasury.

(2) Notwithstanding anything contained in subsection (1), if any person files a petition in the Court stating that he or she has suffered loss due to the automatic stay of a transaction under that subsection, and if the Court deems that the petitioner's claim is reasonable and that it does not adversely affect the interests of the company or its creditors, the Court may order allowing a transaction. 20. Essential Services Not to Be Discontinued: Notwithstanding anything contained in the prevailing law, if the Court has ordered the initiation of insolvency proceedings concerning a company under subsection (2) of section 10, from the date of such order until such proceedings are completed, an institution or person supplying amended by the Act to Amend Some Acts Relating to Money Laundering Prevention and Business Environment Promotion, 2023 (2080).electricity, drinking water, drainage, gas, amended by the Act to Amend Some Acts Relating to Money Laundering Prevention and Business Environment Promotion, 2023 (2080).telecommunication services, or other essential amended by the Act to Amend Some Acts Relating to Money Laundering Prevention and Business Environment Promotion, 2023 (2080).goods or services supplied pursuant to a contract for the regular business operations of the company shall not stop or discontinue such amended by the Act to Amend Some Acts Relating to Money Laundering Prevention and Business Environment Promotion, 2023 (2080).goods or services being provided to such company without the permission of the Court. Added by the Act to Amend Some Acts Relating to Money Laundering Prevention and Business Environment Promotion, 2023 (2080).20A.