chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Companies Act, 2006

93. Transactions with a Company in which a Director is Interested: (1) Except as otherwise provided in this section, no public company shall, without the approval of the general meeting, and no subsidiary company shall, without the approval of the general meeting of its holding company, enter into a material transaction with any director of the company or his/her close relative or substantial shareholder or Added by the first amendment.any other firm, company or other corporate body in which the director, close relative of the director or substantial shareholder has substantial shareholding. Explanation: For the purpose of this section, "material transaction" shall be deemed to mean the purchase, sale, dealing in any goods or services, or contract or lease related transaction, the value of which at the time of transaction exceeds one hundred thousand rupees or five percent of the total assets of the company, whichever is lower, and such term also includes a rental transaction of one hundred twenty thousand rupees or more per annum.

(2) If any transaction is made in contravention of sub-section (1), any amount or benefit received directly or indirectly from such transaction shall be refunded to the company, and if the company has suffered any loss or damage from such transaction, the person deriving benefit from such transaction shall also compensate for the same.

(3) Notwithstanding anything contained elsewhere in this section, the provisions of sub-section (1) shall not apply to tangible property acquired as follows:-

(ka) When the holding company acquires such property from its wholly-owned subsidiary company,

(kha) When a wholly-owned subsidiary company of a holding company acquires such property from another wholly-owned subsidiary of the same holding company,

(ga) When transacting at the prevailing market price in the ordinary course of the company's business. 94.
Companies Act, 2006

94. Directors to Report on Shares: (1) While a person is in the position of director, if he/she acquires any right or interest in any manner in the shares or debentures of that company or its subsidiary or holding company or other subsidiary of the holding company, he/she shall give the following information to the company:-

(ka) The nature of his/her right,

(kha) Details of the number of shares of each class and the amount of debentures of each class in which he/she has a right or interest during his/her tenure as director in the concerned company or other company.

(2) If the following circumstances arise, a director of the company shall give written notice thereof to the company of which he/she is a director within fifteen days of the circumstance coming to his/her knowledge:-

(ka) If for any reason he/she acquires or is about to acquire, or his/her right is about to cease, in shares or debentures of the company of which he/she is a director or its subsidiary or holding company or other subsidiary of the holding company,

(kha) If he/she makes any agreement to sell shares or debentures as referred to in clause (ka) held in his/her name,

(ga) If he/she transfers to any other person the right granted by the company of which he/she is a director to purchase shares or debentures of that company,

(gha) If the subsidiary or holding company of the company of which he/she is a director, or a subsidiary of such company or another subsidiary of the holding company, grants a right to purchase shares or debentures of that company,

(nga) If he/she transfers to any other person the right to purchase shares or debentures of the company referred to in clause (gha).

(3) When sending information to the company pursuant to sub-section (2), the number, amount and class of shares or debentures shall be clearly stated.

(4) The company shall maintain a separate register for recording the information received pursuant to sub-sections (2) and (3).

(5) The provisions of this section shall apply to the close relative of a director in the same manner as to the director. 95.
Companies Act, 2006

95. Powers and Duties of the Board of Directors: (1) Subject to the matters stated in this Act and the articles of association and the decisions of the general meeting, the management of the entire business of the company, the exercise of powers and the performance of duties shall be carried out by the directors collectively through the board of directors.

(2) Except in accordance with a decision of the general meeting, no director of a public company shall, through the company of which he/she is a director, do any act that results in personal benefit to himself/herself. Provided, however, that a private company may make reasonable provision regarding the benefits that a director may receive through the company as stated in the memorandum and articles of association or a unanimous agreement.

(3) Except as otherwise provided in this Act, the memorandum and articles of association of the company, or in the case of a private company, a unanimous agreement, the board of directors may, by delegating all or some of its powers, appoint a representative by authorizing any director among themselves or any employee of the company, either alone or jointly, to perform any act on behalf of the company, to do paperwork, to sign bills of exchange, cheques, etc.
Companies Act, 2006

When so delegating powers, at least one director and, if there is a company secretary, he/she shall certify the same in accordance with the decision of the board of directors.

(4) The company may recover from the director or representative any loss or damage caused to the company by any act performed by a director of the company or a person acting as a representative exceeding his/her authority.

(5) If any person knowingly or having reason to believe that a director or a representative under sub-section (3) is about to enter into a transaction for his/her personal interest or to cause loss or damage to the company, and still enters into any transaction with such director or representative, such person shall not be entitled to make any claim against the company in respect of such transaction.

(6) Notwithstanding anything contained in sub-section (3), the board of directors shall not delegate the following powers vested in the company, and such powers shall be exercised only in accordance with a resolution passed at a meeting of the board of directors:

(ka) The power to call for payment of unpaid amounts on shares,

(kha) The power to issue debentures,

(ga) The power to borrow loans or debts other than through debentures,

(gha) The power to invest funds held in the company's treasury,

(nga) The power to grant loans.

(7) The provision of clause (nga) of sub-section (6) shall not apply to loans granted and deposits accepted by companies engaged in banking and financial transactions in the ordinary course of business.

(8) If the board of directors deems it necessary to form a sub-committee to get a specific task done, it may form one or more sub-committees as required and get such task done. 96.
Companies Act, 2006

96. Appointment of Managing Director and Management of Company: (1) Subject to the articles of association, the directors may appoint one of themselves as managing director.

(2) The functions, duties and powers of the managing director shall be as stated in the articles of association or as determined by the board of directors.

(3) When appointing the managing director appointed pursuant to sub-section (1) or another director taking charge of the management of the company, a written agreement shall be made determining the terms of appointment, remuneration and facilities, and no facility other than the remuneration and facilities specified in such agreement and other facilities determined by the general meeting shall be given or paid.

(4) The term of the agreement pursuant to sub-section (3) shall not exceed four years at a time.

(5) Arrangements shall be made so that shareholders can inspect the agreement made with directors pursuant to sub-section (3) free of charge.

(6) A director who is receiving regular remuneration or facility from one listed company, other than meeting allowance, shall not be appointed to the position of managing director in another listed company with entitlement to regular remuneration or facility. 97. Meeting of Board of Directors: (1) Meetings of the board of directors of a private company shall be held as stated in the articles of association.

(2) Meetings of the board of directors of a public company shall be held at least six times a year. Provided, however, that the interval between two meetings shall not exceed three months.

(3) Directors must attend meetings of the board of directors in person. Attendance by a representative of a director shall not be valid.

(4) No meeting of the board of directors shall be held unless at least fifty-one percent of the total number of directors are present. Provided, however, that a director who is not permitted to participate in the discussion of any subject to be discussed at a meeting of the board of directors under this Act shall not be counted for the purpose of this sub-section.

(5) If a meeting of the board of directors cannot be completed due to lack of the number of directors specified in sub-section (4), another meeting may be called with at least three days' notice. If the number of directors specified in sub-section (4) is not present at that meeting as well, the proceedings and decisions of the directors present shall be valid.

(6) In a meeting of the board of directors, the decision of the majority shall prevail, and in case of a tie of votes, the chairperson may also give a casting vote in addition to the vote given in the capacity of a director.
Companies Act, 2006

Provided, however, that no director shall participate in the discussion or vote on any subject in which he/she has a personal concern or interest at a meeting of the board of directors.

(7) A separate record (minutes) of the directors present at the meeting, the subjects discussed, and the decisions made in relation thereto shall be maintained, and such minutes shall be signed by at least fifty-one percent of all the directors present at the meeting. Provided, however, that if any member expresses an opinion contrary to or different from the decision while discussing any subject, the same may be recorded in the minutes of the meeting.

(8) The decision shall not be deemed invalid merely because a member has not signed it.

(9) Notwithstanding anything contained in sub-sections (3), (4), (5) and (6), unless expressly prohibited by the memorandum or articles of association, if all members of the board of directors or any sub-committee of directors agree in writing in relation to any work or decision that the board of directors or sub-committee may do, such agreement may be recorded as minutes and such work may be done without a meeting also.

(10) An agreement pursuant to sub-section (9) shall be deemed equivalent to a decision of a meeting of the board of directors. 98. Notice of Meeting of Board of Directors: (1) Unless otherwise provided in the articles of association of the company, a meeting of the board of directors shall be called by the company secretary or the chairperson of the board or the chief executive officer of the company.

(2) Notwithstanding anything contained in sub-section (1), if at least twenty-five percent of the total number of directors request in writing, specifying the subject to be discussed at the meeting, that a meeting of the board of directors be called, the chairperson shall call a meeting of the board to be held within Amended by the first amendment.fifteen days of receiving such request. If the meeting of the board of directors is not called within that period, the concerned director(s) making the request may themselves call a meeting of the board of directors.

(3) If any provision has been made in the articles of association of the company regarding the notice of a meeting of the board of directors, it shall be in accordance with that. If no such provision has been made, the notice and the subject of discussion of the meeting of the board of directors shall be sent in writing to each director at the address provided by him/her to the company, and such notice may also be given through electronic means of communication. 99.
Companies Act, 2006

99. Accountability and Liability of Directors: (1) A director of a company shall not do any act through the company or in the course of the company's work that results in personal benefit.

(2) If any director has taken personal benefit in the course of the company's business in contravention of sub-section (1), the company shall recover that amount from such director as if it were a loan.

(3) After any person is appointed as a director of a public company, he/she shall, before assuming office, take an oath of confidentiality and honesty in the prescribed format.

(4) Every director and officer of the company shall, while performing their official duties, act honestly and in good faith with due regard to the interest and welfare of the company, and shall exercise the care, caution, intelligence, skill and diligence of a person of ordinary prudence and knowledge.

(5) The company may recover compensation for any loss or damage caused to the company by a director who, with mala fide intent in contravention of sub-section (4), conducts acts in a manner likely to cause loss or damage to the company.

(6) It shall be the duty of every director to comply with the provisions of this Act, the memorandum of association, articles of association and unanimous agreement of the company. 100. Information on Securities: (1) If shares or debentures of a company are listed with the organization operating the securities market, after the director informs the company pursuant to Section 94 regarding such shares or debentures, the company shall immediately give notice thereof to such organization.

(2) Such organization shall publish the information received pursuant to sub-section (1) in such manner as it deems appropriate. 101. Prohibition on Providing Loans to Officers or Shareholders: (1) A company shall not provide any loan or financial assistance to its officers, substantial shareholders or Amended by the first amendment.officers, substantial shareholders of the holding company or subsidiary company, or close relatives of any of them, and shall not give any guarantee or provide security for loans taken by such officers or shareholders or close relatives elsewhere. Provided, however, that this provision shall not apply to loans or facilities given to employees of the company according to the company's rules, or to loans or guarantees provided in the ordinary course of business by any bank or financial institution, unless prohibited by prevailing law.

(2) Any loan received by any person mentioned in sub-section (1) from the company before the commencement of this Act shall be fully repaid within Ashwin 22, 2065 B.S. (October 8, 2008). 102.
Companies Act, 2006

102. Officers Not to Give False Statements: If an officer of a company, by intentionally giving false statements in the general meeting of the company regarding the actual financial position of the company, induces the shareholders of the company to distribute dividends in excess of what can be distributed from profits, thereby affecting the company's capital, the officer giving such false statements shall be personally liable for such act. 103. Transactions with Other Persons and Company's Authority (Ultra Vires): (1) Any transaction made by a company with another person based on any matter stated in the memorandum of association of the company shall not become illegal or invalid merely on the ground that it was ultra vires.

(2) It shall be the duty of every director and officer to conduct such transaction within the limits of the authority determined in the memorandum of association of the company.

(3) Except in the situation mentioned in sub-section (1), any act or transaction done by a director beyond the authority vested in him/her may be ratified by passing a special resolution at the general meeting of the company.

(4) Merely because an act is ratified by a special resolution pursuant to sub-section (3), the director, officer or other person of the company shall not be deemed to have been relieved from liability under this Act in respect of the acts performed without exceeding authority. 104. Binding Effect on Company: Amended by the first amendment.(1) Any act done or document signed by an officer or a person authorized to act on behalf of the company shall be valid and binding on the company.

(2) If any person in good faith enters into any transaction with the company, such transaction shall be binding on the company, and nothing contained in the memorandum of association, articles of association or any resolution passed by the company, or any agreement between the company and any of its shareholders, shall be deemed to impose any limit or restriction on the authority of the director or authorized person to enter into such transaction. Provided, however, that if any officer, by exercising authority beyond that vested in him/her, does any act or transaction mentioned in sub-section (1) or (2), such officer shall remain personally responsible unless such authority is ratified by the general meeting under this Act, and if the company has suffered any loss or damage from such act or transaction, the company may recover the same from him/her. 105.
Companies Act, 2006

105. Restrictions on Authority of Directors: (1) The board of directors of a public company or a private company that has received a loan from a bank or financial institution shall not, without passing a special resolution at a general meeting of shareholders, do or cause to do any of the following acts:

(ka) To sell, donate, gift, lease or otherwise transfer the right to more than seventy percent of the business (undertaking) of one or more businesses operated by it,

(kha) To borrow an amount exceeding the total of its paid-up capital and free reserves, except for loan facilities obtained from a bank or financial institution for a period of less than six months in the ordinary course of business,

(ga) To give donations, grants or gifts exceeding Amended by the first amendment.one hundred thousand rupees or one percent of the average net profit of the company for the preceding three fiscal years, whichever is lower, in a fiscal year, excluding expenses incurred for grants, donations, gifts, etc., given for the promotion of the company's employees or its business. Provided, however, that:

(1) Nothing in clause (ka) shall affect the right or title acquired by a person who, by paying the prevailing market price, purchases any asset or business of a company engaged solely in the business of buying and selling movable and immovable property.

(2) The provision of clause (kha) shall not apply when a company engaged in banking or financial transactions or insurance business receives deposits or insurance premiums from the public in the ordinary course of its business.

(2) For the purpose of sub-section (1), the general meeting may prescribe appropriate conditions when granting approval. 106. Validity of Acts Done: If it is later discovered that any provision under this Act regarding the appointment of a director has not been complied with, any act done by such director before such discovery shall not be invalidated by that fact. 107. Register of Directors and Company Secretary: (1) Every company shall maintain a separate register of directors and, if there is a company secretary, of him/her.

(2) In the register maintained pursuant to sub-section (1), every company shall record the name, surname, address, citizenship, occupation, business, date of appointment as director or secretary, and the date of removal if removed from the post, and if any change occurs in such details, notice thereof shall be sent to the office within fifteen days. Chapter-7
Company's Accounts and Books

108.
Companies Act, 2006

Chapter-7
Company's Accounts and Books

108. Accounts of Company: (1) A company shall keep its accounts properly in the Nepali or English language.

(2) The accounts kept pursuant to sub-section (1) shall be based on the double-entry system and shall be kept in accordance with the accounting standards adopted by the authorized body under the prevailing law and other conditions and provisions to be complied with under this Act, so as to clearly reflect the true position of the company's transactions.

(3) Except where approved by the office, the accounts of the company shall not be kept at a place other than the registered office of the company.

(4) Except for the amount determined by the board of directors, the cash balance held by the company shall be deposited in a bank and transactions shall be conducted only through the bank.

(5) Subject to the provisions made in this Chapter, the ultimate responsibility for keeping the books and accounts of the company shall rest with the directors or other officers.

(6) If the provisions made in this Act regarding the accounts and annual financial statements of the company are not complied with, the person who was acting in the capacity of director or officer at the time when such accounts, annual financial statements and other reports were made shall be responsible under this Act. 109. Preparation of Annual Financial Statements and Report of Board of Directors: (1) The board of directors of a public company shall, at least thirty days before the annual general meeting each year, and in the case of a private company, within six months of the end of the fiscal year, prepare the following annual financial statements in the prescribed format:

(ka) A balance sheet as at the last date of the fiscal year,

(kha) A profit and loss account for the fiscal year,

(ga) A cash flow statement for the fiscal year.

(2) The annual financial statements prepared pursuant to sub-section (1) shall show the true and fair position of the company's business up to the end of the relevant fiscal year and shall also show the profit and loss account and cash flow statement for that fiscal year.
Companies Act, 2006

Chapter-8

Audit

110. Company to Appoint Auditor: (1) Every company shall appoint an auditor under this Act to audit its accounts.

(2) If a company has a branch office outside the State of Nepal, the auditor appointed under sub-section (1) may also audit that branch, unless otherwise provided in the prevailing law of the country where such branch office is situated. 111. Appointment of Auditor: (1) The auditor of a company shall be appointed from among auditors licensed to conduct audits under the prevailing law, in the case of a public company, subject to Chapter 18, by the general meeting, and in the case of a private company, as provided in the memorandum, articles of association or unanimous agreement, and if not so provided, by the general meeting, and within fifteen days of such appointment, his/her name shall be sent to the office. Provided, however, that before the first annual general meeting, the board of directors shall appoint the auditor.

(2) The auditor appointed under sub-section (1) shall hold office only until the subsequent annual general meeting.

(3) For the audit of a public company, the same auditor, his/her partner or former partner or employee or former employee shall not be appointed as auditor for more than three consecutive times. Provided, however, that this restriction shall not apply to a partner who separates from the partnership three years prior, or to an employee who has separated from the service of such auditor. 112.
Companies Act, 2006

Provided, however, that this restriction shall not apply to a partner who separates from the partnership three years prior, or to an employee who has separated from the service of such auditor. 112. Persons Not Eligible for Appointment as Auditor: (1) The following persons, or a firm or company in which such a person is a partner, shall not be eligible for appointment as auditor, and if already appointed, shall not continue to hold office:

(ka) A director, a consultant appointed with regular remuneration or cash facility, a person in the management group of the company, or an employee or worker, or a partner of any of them, or an employee of any such partner, or a close relative of a director or partner among them, or his/her employee,

(kha) A debtor who has taken any kind of loan from the company, or a person who has any amount payable to the company remaining unpaid within the due date, or a close relative of such person,

(ga) A person who has not served a period of three years after being punished for an offense related to audit,

(gha) A person who has been adjudged insolvent,

(nga) A substantial shareholder of the company, or a shareholder holding one percent or more of the paid-up capital of the company, or his/her close relative,

(cha) A person who has not served a period of five years after being punished for a criminal offense involving corruption, fraud or moral turpitude,

(cha) A person under sub-section (3) of Section 111,

(ja) In the case of a public company, a person working full-time or part-time in any government or entity wholly or partly owned or controlled by the Government of Nepal, or any other company, or his/her partner, or a person working as an employee of such partner, or a person authorized to sign any document or report prepared on behalf of the company's management,

(jha) A company or corporate body with limited liability,

(nya) A person who has any interest in a transaction with the company, or his/her close relative, or a director, officer or substantial shareholder of another company that has any interest in a transaction with the company.

(2) An auditor shall, before his/her appointment, inform the company in writing that he/she is not disqualified under sub-section (1).

(3) If an auditor becomes disqualified from auditing a company before the expiry of his/her term, or if a situation arises where he/she cannot be appointed or continue as auditor of the company, he/she shall immediately stop the audit work to be done or being done and give written notice thereof to the company.

(4) An audit conducted by an auditor appointed in contravention of this section shall not be valid.
Companies Act, 2006

113. Office May Appoint Auditor: If an auditor cannot be appointed for any reason at the annual general meeting of the company, or if the annual general meeting itself cannot be held, or if the auditor appointed under this Act cannot continue for any reason, Added by the Act to Amend Some Nepal Acts relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2024 (2081).in the case of a private company or a public company not listed on the securities market, the board of directors of such company may, after informing the office, appoint another auditor; and

123. Obligation to Assist the Inspector: (1) If any person gives a false statement, fails to submit the details or documents or any other items required to be submitted pursuant to Section 122, fails to answer questions asked by the inspector, or fails to provide details requested by the inspector for the purpose of inquiry, the inspector may submit a written complaint report to the court on the matter.

(2) Upon receipt of a complaint report pursuant to Sub-section (1), the court shall, after making necessary inquiries in accordance with the prevailing law, and if any person is found guilty, the court may impose a sentence it deems appropriate under Section 162. 124. Obligation to Submit Report: (1) An inspector appointed pursuant to this Chapter shall, after completing the inquiry, submit a report along with his or her opinion to the Office. The Office shall provide a copy of such report to the applicant, if any. If any shareholder applies to obtain a copy of such report, the Office shall provide a copy upon charging the prescribed fee.

(2) If it appears from the report submitted by the inspector pursuant to Sub-section (1) that any director, managing director, manager, employee or any other officer of the company has knowingly caused loss or damage to the company, defrauded or cheated shareholders or creditors, or committed any other illegal act, the Office shall, notwithstanding anything contained in the prevailing law, order the company to file a complaint or case against such persons on behalf of the company.
Companies Act, 2006

Provided that this provision shall not be deemed to restrict other remedies available to the company or shareholders under the prevailing law.

(3) If it appears that leaving the management of the company's affairs in the charge of the director, managing director, manager, employee or any other officer who is subject to action under Sub-section (2) may cause further loss or damage to the company, the Office may suspend such director, managing director, manager, employee or officer and give necessary directions to the company to conduct its business through other means.

(4) Notwithstanding anything contained in the prevailing law on evidence, any matter mentioned in the report submitted by the inspector pursuant to Sub-section (1) and the facts expressed therein shall be admissible as evidence. 125. Expenses of Investigation: (1) The expenses incurred by the Office in causing an investigation pursuant to this Chapter shall be borne by the concerned company. Provided that if any director, managing director, manager or officer of the company is found to have acted with mala fide intent, deceit, fraud or cheating during the investigation, such director, managing director, manager or officer shall pay the investigation expenses within seven days of the completion of the investigation.

(2) If the concerned director, managing director, manager, employee or person fails to pay the investigation expenses as per the proviso to Sub-section (1), it shall be recovered as a government overdue amount.

(3) An inspector appointed pursuant to this Chapter may submit recommendations in his or her report regarding the payment of expenses. Chapter 10
Voluntary Winding-up of Company

126.
Companies Act, 2006

Chapter 10
Voluntary Winding-up of Company

126. Winding-up (Liquidation) of Solvent Company: (1) Except in the case of being insolvent pursuant to the prevailing law on insolvency, the shareholders of a company may pass a special resolution at a general meeting or, subject to the provisions written in the memorandum, articles or unanimous agreement, wind up (liquidate) the company.

(2) A company may be wound up under this Act if the following conditions exist:
(a) The company is fully capable of paying its debts or other liabilities,
(b) No proceeding on a petition for insolvency review of the company is pending under the prevailing law on insolvency, or the company is not in any way subject to insolvency proceedings under the prevailing law on insolvency,
(c) The directors have made a written declaration that the company is capable of fully paying its debts and other liabilities after due inquiry, and that the debts and liabilities payable by such company can be settled or fully resolved through any other process within one year from the date of passing the resolution to wind up such company,
(d) The written declaration made by the director pursuant to clause (c) has been submitted to the general meeting called to discuss the matter of winding up such company, or such declaration is made at the time of the discussion on that matter in the general meeting.

(3) A copy of the special resolution passed regarding the winding up of the company pursuant to this Section and the written declaration of the directors shall be submitted to the Office within seven days from the date of passing such resolution. 127. Appointment of Liquidator and Auditor: (1) When passing a resolution to wind up a company pursuant to Section 126, a liquidator shall be appointed to complete the winding-up related work and the remuneration to be received by such liquidator shall be fixed.

(2) When appointing a liquidator pursuant to Sub-section (1), a professional licensed under the prevailing law on insolvency shall be appointed.

(3) The company shall give notice of such appointment to the Office within seven days from the date of appointment of the liquidator pursuant to Sub-section (2).

(4) Upon the appointment of a liquidator pursuant to Sub-section (2), the directors and officers of the company shall be relieved of their positions, and the liquidator shall exercise all powers used by the directors and officers of the company relating to the operation and management of the company.

(5) After the liquidator begins operating and managing the company pursuant to Sub-section (4), the services of employees of such company shall automatically terminate.
Companies Act, 2006

Provided that the liquidator may retain or appoint necessary employees for his or her assistance and support.

(6) The liquidator appointed pursuant to this Section shall complete the work of winding up the company within the time period fixed at the time of appointment. Provided that if the winding-up work cannot be completed within the stipulated time period for any reason, a reasonable extension of time may be granted by following the procedure followed for the appointment.

(7) When appointing a liquidator pursuant to Sub-section (1), an auditor shall also be appointed subject to the provisions made in this Act. Added by the First Amendment.(8) If a liquidator appointed under this Act acts contrary to the code of conduct for insolvency practitioners, the interests of the company, or other prevailing laws, he or she shall be removed through the same procedure by which the liquidator was appointed. Provided that:
(1) If the code of conduct for insolvency practitioners is violated, approval must be obtained from the body that enforces such code.
(2) Before removing him or her in such manner, he or she shall be given an opportunity to present his or her defense. Added by the First Amendment.(9) If a liquidator appointed under this Act ceases to hold that position for any reason, another liquidator shall be appointed through the same procedure by which the liquidator was appointed. Added by the First Amendment.(10) No person may be a liquidator of more than one company at the same time. 128. To be According to Prevailing Law on Insolvency: When winding up a company pursuant to this Chapter, the determination of whether a person is a creditor of the company being wound up shall be according to the prevailing law on insolvency. 129. Application to be Made if Company Unable to Pay Liabilities: If, after the liquidator initiates the process of winding up the company pursuant to this Chapter, he or she is satisfied that the company is insolvent and unable to pay the debts or fulfill the liabilities it is required to pay, the liquidator shall file a petition for insolvency review of the company according to the prevailing law on insolvency. 130. Liquidator May Take Custody of Company Property: After commencing his or her work pursuant to this Chapter, the liquidator shall take into his or her custody and control the property, accounts, and all records and documents of the company. 131.
Companies Act, 2006

130. Liquidator May Take Custody of Company Property: After commencing his or her work pursuant to this Chapter, the liquidator shall take into his or her custody and control the property, accounts, and all records and documents of the company. 131. Rights and Duties of Liquidator: (1) The liquidator appointed under this Act may exercise and perform all powers and duties which a liquidator can exercise and perform under the prevailing law on insolvency, mutatis mutandis (with necessary modifications).

(2) Without prejudice to the generality of Sub-section (1), it shall be the duty of the liquidator to do the following acts:
(a) Prepare and submit to the Office a statement of income and expenditure and accounts relating to the winding up of the company for every six months after the appointment of the liquidator,
(b) Inform the shareholders of the company of the progress report of the winding-up related activities for every six months after the appointment of the liquidator,
(c) Recover property or all amounts receivable on behalf of the company and settle the debts and other liabilities of all creditors of the company,
(d) After completing the work pursuant to clause (c), convene a general meeting and submit to the shareholders the proposed report and details regarding the distribution of the remaining property of the company,
(e) If consent of shareholders holding at least seventy-five percent of the paid-up share capital is obtained for the details pursuant to clause (d), make payment to the shareholders accordingly,
(f) After completing the winding-up related work, prepare a report regarding the property recovered on behalf of the company, payments made to creditors, and distributions made to shareholders, certify the fact of the company's winding up along with the auditor's report, and submit such report to the Office. 132. Cancellation of Registration of Company: (1) After the Office receives a report regarding the winding up of the company pursuant to clause (f) of Sub-section (2) of Section 131, the Office shall issue an order canceling the registration of the company by removing the name of such company from the Company Register Book under this Act.

(2) After issuing the order canceling the registration of the company pursuant to Sub-section (1), the Office shall remove the name of such company from the Company Register Book and publish a notice of the dissolution of such company in a national daily newspaper. Added by the Act to Amend Some Nepal Acts, 2008.(3) Notwithstanding anything written elsewhere in this Section, the liquidator appointed under the Insolvency Act, 2006 shall send to the Office a statement that the winding-up work of such company has been completed for the purpose of winding up any company.
Companies Act, 2006

Added by the Act to Amend Some Nepal Acts, 2008.(3) Notwithstanding anything written elsewhere in this Section, the liquidator appointed under the Insolvency Act, 2006 shall send to the Office a statement that the winding-up work of such company has been completed for the purpose of winding up any company. Added by the Act to Amend Some Nepal Acts, 2008.(4) Upon receipt of the statement pursuant to Sub-section (3), the Office shall record such company as dissolved, and after such recording, such company shall be deemed to be dissolved. 133. Creditors and Shareholders May Lodge Complaint: If any creditor or shareholder of the company believes that there has been any irregularity regarding the work of the liquidator while winding up the company pursuant to this Chapter, such creditor or shareholder may lodge a complaint against such work before the court within fifteen days of obtaining information thereof. 134. Action to be Taken in Case of Fraud or Cheating: If the liquidator believes that any director, employee, or shareholder of the company has committed an act of fraud or cheating against the company, the liquidator may initiate necessary legal action against such person according to the prevailing law. 135. No Effect on Rights of Secured Creditors: Where proceedings for winding up have been initiated pursuant to this Chapter, it shall not be deemed to have affected in any way the right of secured creditors who have lent money against the security of the company's property to deal with or otherwise manage the secured property under the prevailing law. Chapter 11

Striking Off of Company Registration

136.
Companies Act, 2006

Chapter 11

Striking Off of Company Registration

136. Office May Strike Off Registration: (1) The Office may strike off the registration of a company in the following circumstances:
(a) If the founders of the company submit an application with the prescribed fee stating the reason for being unable to commence business operations,
(b) If the company fails to submit statements pursuant to Section 80 for three consecutive fiscal years, or fails to pay a fine under Section 81, or
(c) If there are reasonable grounds for the Office to believe, based on evidence obtained in the course of company administration, that the company has not been carrying on its business or is not in operation.

(2) If the registration of a company is to be struck off pursuant to Sub-section (1), the Office shall, before striking off the registration, give notice to the concerned company specifying the reason therefor.

(3) When sending notice to the company pursuant to Sub-section (2), if the registered office of the company, if its address is not registered with the Office, or if the company office is not located at the registered address, the notice shall be sent to the officer of such company, and if the address of such officer is also not obtained or found by the Office, the notice shall be sent to the address of each founder mentioned in the memorandum of the company.

(4) The notice given pursuant to Sub-section (2) shall also be published in a national daily newspaper as required.

(5) If the company fails to submit an application stating the reasons why its registration should not be struck off within two months from the date of receipt of notice pursuant to Sub-section (2), or if such reasons are submitted but are not found to be reasonable, the registration of such company may be struck off.

(6) If the registration of a company is struck off pursuant to Sub-section (5), information thereof shall be given to the concerned directors and shall also be published in a national daily newspaper.

(7) If the registration of a company is struck off pursuant to Sub-section (5), and if there is any kind of liability of such company, the liability of the officers or shareholders of such company shall remain in force, and nothing in this Section shall be deemed to prevent necessary legal action against them to fulfill or cause to fulfill such liability.

(8) At the time of striking off registration pursuant to Sub-section (5), the property, rights, facilities or liabilities in the name of the company shall be transferred to the names of its shareholders in proportion to the shares held by them.
Companies Act, 2006

Amended by the Act to Amend Some Nepal Acts Relating to Economic and Business Environment Improvement and Investment Enhancement, 2024.136A. Special Provision Relating to Striking Off Registration of Company: (1) Notwithstanding anything written elsewhere in this Act, if a company which, at the time of commencement of this Section, has not operated its business, is not in operation, has not submitted statements pursuant to Section 80, or has not paid fines imposed under Section 81, wants to get its registration struck off, such company may make a decision through its general meeting and submit an application to the Office.

(2) For the purpose of Sub-section (1), if a general meeting of the company cannot be convened or the general meeting cannot be held due to lack of quorum as per Section 73, the directors or shareholders present may make a decision for the winding up of such company and submit an application to the Office.

(3) The application under Sub-section (1) or (2) shall be accompanied by the statements pursuant to Section 80, along with an amount that is the lower of the penalty amount leviable under Section 81 or 0.5 percent of the paid-up capital of the company.

(4) Upon receipt of an application under Sub-section (1) or (2), the Office shall publish a notice in a national daily newspaper allowing a period of thirty days to submit any reason why the registration should not be struck off.

(5) If no one submits any reason why the registration should not be struck off within the period under Sub-section (4), or if the reason submitted is not satisfactory, the Office may strike off the registration of such company.

(6) If the registration of a company is struck off pursuant to Sub-section (5), information thereof shall be given to the concerned directors and made public through the website of the Office.

(7) If a company is dissolved pursuant to this Section, the settlement of the liability of such company shall be as per Section 136. 137.
Companies Act, 2006

137. Restoration of Registration of Struck Off Company: (1) Amended by the Act to Amend Some Nepal Acts Relating to Economic and Business Environment Improvement and Investment Enhancement, 2024.If the registration of a company has been struck off pursuant to Sub-section (5) of Section 136 or Sub-section (5) of Section 136A, and such company, its shareholders, or creditors file a petition before the court within five years from the date of publication of the notice of the company being struck off, stating reasons for restoring such company, the court may, in the following circumstances, order the restoration of such company and the reinstatement of its name in the Company Register Book:
(a) If it appears that the registration of such company was struck off while it was still carrying on its business,
(b) If the court deems it just to reinstate the name of such company for the proper settlement of the company's assets and liabilities.

(2) If the company is restored by the order of the court pursuant to Sub-section (1), such company shall be deemed to have been in existence from the date of its incorporation.

(3) When issuing an order pursuant to Sub-section (1), the court may issue such order as it deems appropriate and give directions to make necessary arrangements to restore the company and all other persons to a position similar to that before the registration was struck off.

(4) If a company is restored pursuant to Sub-section (1), and if a fine under Section 81 is payable, the company's restoration and re-registration of its name in the Company Register Book shall occur only after such fine is paid to the Office.

(5) If a company whose registration was struck off under Section 136 is restored pursuant to this Section, such company shall receive the following property:
(a) Property received by the shareholders in their capacity as per Sub-section (8) of Section 136 due to the striking off of the registration,
(b) If the property under clause (a) has already been sold, the amount received from such sale. Provided that property or amounts already expended to pay off creditors' debts or liabilities shall not be refundable. Chapter 12
Protection of Shareholders

138. Directors and Officers May Be Restrained from Acting Ultra Vires: (1) If any director or officer acts on behalf of the company by exceeding their authority, a shareholder of such company may file a petition in the court to restrain such action.
Companies Act, 2006

Chapter 12
Protection of Shareholders

138. Directors and Officers May Be Restrained from Acting Ultra Vires: (1) If any director or officer acts on behalf of the company by exceeding their authority, a shareholder of such company may file a petition in the court to restrain such action. Provided that no petition may be filed under this Section with respect to any act done or being done regarding the performance of an obligation arising from an act already performed by the company.

(2) In respect of any company, if it appears to the Office from a report received pursuant to Section 124 that the business of such company is being or has been conducted in a manner prejudicial to the rights and interests of any or all or a specific class or group of shareholders of such company, or that the interests of such shareholders are or will be adversely affected by any act done or proposed to be done by the company or by the failure of the company to do any act it should do, the Office may file a complaint petition in the court against such company or its directors or officers.

(3) Upon receipt of a petition under Sub-section (1) or (2), the court may, after hearing the concerned company or its directors or officers, issue an appropriate order. 139.