chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Industrial Enterprises Act, 2020

31. Providing Land on Lease: (1) If land owned by the Government of Nepal is required to operate large industries and industries with national priority, such industries may submit an application, as prescribed, to the body registering the industry, specifying the area of land required, requesting that the land be provided.

(2) Upon receipt of an application under sub-section (1), the body registering the industry shall submit it to the Ministry to initiate necessary action regarding providing the land required by the industry.

(3) Upon receipt of an application under sub-section (2), the Government of Nepal may provide such land on lease to the concerned industry for the purpose of operating the industry, under the prevailing law.

(4) The amount payable by the industry for land provided on lease under sub-section (3) and other terms relating to the lease shall be as mentioned in the agreement entered into between the Government of Nepal and the concerned industry.

(5) If an industry operating after obtaining land on lease under this section ceases to operate for any reason, the lease agreement for the land provided under sub-section (3) by the Government of Nepal shall automatically terminate, and such land shall be deemed to have been automatically repossessed by the Government of Nepal without compensation.

(6) Other arrangements relating to providing land on lease to industries shall be as prescribed. 32. Exemption from Maximum Ceiling on Land: (1) If the land required by an industry exceeds the maximum ceiling on land that may be held under the prevailing law, such industry may submit an application to the body registering the industry to obtain an exemption to hold land up to such excess amount.

(2) Upon receiving an application under sub-section (1), the body registering the industry shall make necessary inquiry and submit a report with its opinion to the Ministry.

(3) Subject to the prescribed criteria, based on the needs of the industry and as mentioned in the approved scheme or project proposal of the industry, the Government of Nepal may, upon receipt of an application under sub-section (1), grant an exemption to hold land exceeding the ceiling.
Industrial Enterprises Act, 2020

Land granted an exemption exceeding the ceiling in this manner shall not be used for any purpose other than the purpose for which the exemption was granted.

(4) The body registering the industry may monitor or cause to be monitored, as prescribed, whether the land for which the industry has received an exemption from the ceiling under the prevailing law is being used according to the approved purpose, and may issue necessary directives.

(5) If it is found that a directive given by the body registering the industry under sub-section (4) has not been complied with, the Government of Nepal may repossess the land exceeding the ceiling that such industry was permitted to hold, without compensation, under the prevailing law. Amended by the Act to Amend Some Nepal Acts relating to Improving Economic and Business Environment and Enhancing Investment, 2024.(6) An industry permitted to hold land exceeding the ceiling under the prevailing law may, based on the Detailed Project Report (DPR), mortgage up to fifty percent of the purchased land to banks and financial institutions to obtain loans for enhancing the industry's capacity in the area determined by the body registering the industry. Provided that, in the case of a project implemented under an arrangement where, subject to the condition prescribed while granting permission to hold land exceeding the ceiling, the entire project is to be transferred to the relevant level of government or its body after a prescribed period, according to an agreement entered into with the government of that level or its body or a license issued by the government of that level, this sub-section shall not be deemed to prevent the land exceeding the ceiling from also being mortgaged to banks and financial institutions for obtaining loans. The loan liability shall not transfer to the relevant level of government or its body based solely on allowing such mortgage to banks and financial institutions. Explanation: For the purpose of this sub-section, "capacity enhancement" means investment made for infrastructure expansion or purchase and installation of machinery to increase the production and productivity of the industry in accordance with the objectives stated in the industry's memorandum.

(7) The maximum quantity of land an industry may hold, the provision for providing land exceeding the ceiling, and the criteria including the conditions to be complied with by the industry in that regard, subject to the prevailing land law, shall be as prescribed. 33. Guarantee of Incentives, Exemptions, Facilities or Concessions: (1) No provision shall be made that reduces the incentives, exemptions, facilities, or concessions provided to an industry under this Act.
Industrial Enterprises Act, 2020

33. Guarantee of Incentives, Exemptions, Facilities or Concessions: (1) No provision shall be made that reduces the incentives, exemptions, facilities, or concessions provided to an industry under this Act. Provided that nothing in this section shall be deemed to prevent the provision of additional incentives, exemptions, facilities, or concessions.

(2) An industry that, immediately before the commencement of this Act, was operating after obtaining permission or registration under the then prevailing Industrial Enterprises Act, 2073, shall, in the case of incentives, exemptions, facilities, or concessions with a specified period, continue to receive them under that Act, and in the case of those without a specified period, receive incentives, exemptions, facilities, or concessions under this Act.

(3) An industry registered or permitted before the commencement of this Act but commencing commercial production or business only after the commencement of this Act shall receive exemptions, facilities, or concessions under this Act. Provided that if the period for receiving incentives, exemptions, facilities, or concessions under the then prevailing law on industrial enterprises in force at the time of obtaining registration or permission for such industry is longer than the period provided by this Act, or if such incentives, exemptions, facilities, or concessions are not available under this Act, such industry shall receive incentives, exemptions, facilities, or concessions under the then prevailing law on industrial enterprises.

(4) The procedure relating to incentives, exemptions, facilities, or concessions to be provided to industries shall be as prescribed. 34. Not to be Nationalized or Acquired: (1) No industry registered under this Act shall be nationalized.

(2) No industry shall be acquired, directly or indirectly, except for a public purpose. If acquisition is necessary for a public purpose, the proper procedure under the prevailing law must be followed. 35. Provision relating to Industrial Security: The Government of Nepal shall provide industrial security as prescribed, as required, to an industry established under the prevailing law. 36. Not to Misuse Incentives, Exemptions, Facilities or Concessions: (1) The incentives, exemptions, facilities, or concessions received by an industry under this Act shall be used only for the purpose for which they were provided.

(2) If any industry commits any act contrary to this Act or the rules made under this Act, such industry shall not be provided with the incentives, exemptions, facilities, or concessions under this Chapter. Chapter-6

Provisions relating to Single Point Service Center

37.
Industrial Enterprises Act, 2020

Chapter-6

Provisions relating to Single Point Service Center

37. Establishment of Single Point Service Center: (1) For the purpose of providing services, incentives, exemptions, facilities, or concessions to which an industry or investor is entitled under this Act and other prevailing laws through simple and easy procedures, and making available from one place in a timely manner the functions to be performed by various bodies of the Government of Nepal, as well as providing industry administration-related services from permission for establishment, registration, expansion, to dissolution of industries, the Government of Nepal may establish and operate a Single Point Service Center as prescribed.

(2) The location of the Single Point Service Center under sub-section (1), the services to be provided to industries through the Center, and the representation of bodies in the Center shall be as prescribed.

(3) For representation of bodies in the Single Point Service Center, the concerned body shall deploy the necessary number of employees. While deploying, the authorized officer shall also delegate necessary powers to such employees, subject to the prevailing law.

(4) Other arrangements relating to the Single Point Service Center shall be as prescribed.

(5) Until a Single Point Service Center is established under sub-section (1), the Government of Nepal shall, by publishing a notification in the Nepal Gazette, form a Single Point Service Operation Committee. 38.
Industrial Enterprises Act, 2020

Chapter-7

Provisions relating to Sick Industries

39. Identification of Sick Industries: (1) An industry that has been in operation for a minimum of five years from the date of commencing commercial production or business, and due to circumstances beyond its control and not due to its own will or managerial weakness, has been operating at thirty percent or less of its installed capacity for three consecutive years and has been running at a loss continuously during that three-year period, may be declared as a sick industry by the Government of Nepal based on prescribed criteria and following the prescribed procedure.

(2) If, upon the scheme or project proposal submitted by the industry under sub-section (1) Deleted by the Act to Amend Some Nepal Acts relating to Improving Economic and Business Environment and Enhancing Investment, 2024. and a study conducted by the Ministry, it appears that the industry can be revived by providing certain exemptions, facilities, or concessions, the Government of Nepal may provide exemptions, facilities, or concessions as prescribed for a certain period to rehabilitate, restructure, and manage such industry.

(3) If a cooperative society proposes to operate an industry declared sick by the Government of Nepal under sub-section (1), with the consent of the investor, such industry may be operated through that cooperative society, subject to prescribed conditions, considering the capacity and feasibility of such cooperative society. 40. Classification of Sick Industries: Industries identified under Section 39 may be classified as fully sick, sick, and potentially sick based on prescribed criteria, and necessary arrangements may be made as prescribed for the management of such industries. 41. Facilities, Concessions and Exemptions relating to Sick Industries: Notwithstanding anything written in the prevailing law, for an industry identified as a sick industry under Section 39 or classified under Section 40, the Government of Nepal may grant full or partial exemption from duties, fees, or taxes on machinery, tools, or equipment imported for the expansion, restructuring, or diversification of such industry. 42. Institutional Arrangement relating to Sick Industries: (1) To provide suggestions for the identification, classification, rehabilitation, restructuring, and management of sick industries under this Chapter, the Government of Nepal may form a committee including experts from relevant fields.

(2) The structure, functions, duties, and powers of the committee formed under sub-section (1) shall be as prescribed. Chapter-8

Provisions relating to Penalties and Appeals

43.
Industrial Enterprises Act, 2020

An industry failing to fulfill such responsibility for a period exceeding one fiscal year shall be subject to an additional fine of zero point five percent of the annual net profit for each additional year.

(8) If any industry fails to comply with the conditions required to be fulfilled under this Act or the regulations made under this Act, or with directives issued from time to time by the body registering the industry Amended by the Act to Amend Some Nepal Acts relating to Improving Economic and Business Environment and Enhancing Investment, 2024., the body registering the industry may impose a fine on such industry as follows:-

(ka) In the case of a micro enterprise: up to five thousand rupees.

(kha) In the case of a cottage and small industry: from fifty thousand to one hundred fifty thousand rupees.

(ga) In the case of a medium industry: from one hundred fifty thousand to three hundred thousand rupees.

(gha) In the case of a large industry: from two hundred fifty thousand to three hundred thousand rupees.

(9) For an industry committing any other act contrary to this Act or the rules made under this Act, other than those mentioned in this section, the body registering the industry Amended by the Act to Amend Some Nepal Acts relating to Improving Economic and Business Environment and Enhancing Investment, 2024. may impose a fine as follows:-

(ka) In the case of a micro enterprise: up to fifteen thousand rupees.

(kha) In the case of a cottage and small industry: from fifteen thousand to thirty thousand rupees.

(ga) In the case of a medium industry: from thirty thousand to fifty thousand rupees.

(gha) In the case of a large industry: from fifty thousand to one hundred thousand rupees.

(10) When imposing a fine under this section, in the case of an industry requiring permission under Section 8, an additional fine of fifty percent of the fine leviable under this section shall be imposed.

(11) Notwithstanding anything written in this section, the provision relating to imposing fines and taking action against industries registered and regulated by the Province or Local Level shall be as determined by the relevant province or local law. 44. To be Recovered as Government Dues: The amount of fine imposed under this Act shall be recovered as government dues under the prevailing law. 45. Opportunity to Submit Explanation: Before imposing a penalty on any industry under this Chapter, a reasonable opportunity to submit an explanation must be given. 46.
Industrial Enterprises Act, 2020

To be Recovered as Government Dues: The amount of fine imposed under this Act shall be recovered as government dues under the prevailing law. 45. Opportunity to Submit Explanation: Before imposing a penalty on any industry under this Chapter, a reasonable opportunity to submit an explanation must be given. 46. Provision relating to Appeal: (1) If not satisfied with the order of penalty under this Chapter, an appeal may lie to the High Court within thirty-five days from the date of receipt of information about the penalty.

(2) In the case of a decision made by the local level body registering the industry, an appeal may be filed in the concerned District Court; and in the case of a penalty imposed by the provincial body registering the industry and the Department, an appeal may be filed in the concerned High Court. Chapter-9

Miscellaneous

47. Provision relating to Special Economic Zone: Arrangements relating to economic zones, trans-national economic zones, export promotion zones, export processing zones, special economic zones, special trading zones, tourist zones, or any other zones for intensive operation of industrial activities shall be made under the prevailing law. 48. Provision relating to Nepal Business Forum: (1) With the objective of promoting regular dialogue and cooperation between the public and private sectors on matters relating to effective implementation, coordination, and facilitation of policies and laws related to industries and businesses; identifying obstacles, hindrances, and problems arising in business operation and investment enhancement and providing necessary suggestions and recommendations to the government; assisting in the implementation and monitoring of such recommendations; and providing an institutional basis for regular, result-oriented, and transparent dialogue between the public and private sectors, the Government of Nepal may form a Nepal Business Forum, including representation from the private sector.

(2) The formation, structure, functions, duties, and powers of the Nepal Business Forum, and other arrangements, shall be as prescribed. 49.
Industrial Enterprises Act, 2020

49. Industrial Manpower: (1) The manpower required by an industry shall be filled from Nepali citizens.

(2) Notwithstanding anything written in sub-section (1), if manpower possessing a specific skill or expertise required by the industry is not available among Nepali citizens even after publishing an advertisement in a national-level newspaper, or for a position at a high management level, such industry may appoint foreign citizens for a maximum of five years, subject to a work permit under the prevailing labor law, upon the recommendation of the Department under sub-section (3).

(3) For the purpose of sub-section (2), while recommending, the body registering the industry must confirm that an effort has been made to fill the required manpower with the demanded skill or expertise from Nepali citizens, that such skilled or expert manpower is necessary for the industry, and that such manpower is not available within Nepal, and then recommend to the Department of Labor for a work permit.

(4) If a foreign citizen appointed under sub-section (2) is a specialized technician and such manpower is not available within Nepal, after obtaining approval under sub-section (3), such manpower may be reappointed for an additional period of up to two years.

(5) If a foreign citizen is appointed in any industry under sub-section (2), such person may take out of Nepal seventy percent of the remuneration received by them in convertible foreign currency.

(6) Workers employed in an industry shall not engage in any type of activity that hinders or obstructs the operation of the industry and its production. Workers employed in the industry shall place their demands before the management peacefully, completing the procedure determined by the prevailing labor law, and resolve them through mutual understanding.

(7) Individual or collective disputes arising between workers employed in an industry and the industry shall be resolved according to the prevailing labor law.

(8) If any activity occurs due to workers that hinders or obstructs the operation of the industry and its production, causing the industry to shut down, the concerned industry or establishment shall not be obliged to provide remuneration to the workers and employees who caused the shut-down or did not work for the period they did not work. 50.
Industrial Enterprises Act, 2020

50. Amended by the Act to Amend Some Nepal Acts relating to Investment Facilitation, 2024.May Produce by Contracting: (1) Industries, firms, companies, or establishments registered under the prevailing law with similar objectives may, by entering into contracts or sub-contracts with each other, produce or cause to produce goods or services.

(2) If any quantity of goods or services is produced on the basis of a contract or sub-contract under sub-section (1) for an export-oriented industry, fulfilling the prescribed criteria, such industry may also be provided incentives, exemptions, facilities, and concessions as prescribed.

(3) Other arrangements relating to production by contract or sub-contract shall be as prescribed. 51. Industrial and Investment Promotion Fund: (1) The Government of Nepal shall establish an Industrial and Investment Promotion Fund for the promotion and protection of industrial investment in the country.

(2) The Fund under sub-section (1) shall consist of the following amounts:

(ka) Amount received from the Government of Nepal.

(kha) Amount received from domestic associations, institutions, or individuals.

(ga) Amount received or remaining in the Micro, Cottage and Small Enterprise Development Fund, Micro, Cottage and Small Industry Loan Disbursement Fund, Technology Development Fund, Women Entrepreneurship Development Fund, Venture Capital Fund, Sick Industry Rehabilitation, Restructuring and Management Fund, and Industrial Investment Protection and Promotion Fund existing at the time of commencement of this Act, from investment returns.

(gha) Amount from bilateral or multilateral grants or assistance received from foreign governments and international organizations. Provided that prior approval of the Ministry of Finance, Government of Nepal, must be obtained before receiving grants or assistance from foreign governments and international organizations.

(3) The amount of the Fund under sub-section (1) may be expended on the following tasks:

(ka) Development of micro enterprises, cottage and small industries.

(kha) Technology development.

(ga) Industrial promotion.

(gha) Rehabilitation, restructuring, and management of sick industries.

(nga) Women entrepreneurship development.

(4) When expending the Fund amount on tasks under sub-section (3), investment and expenditure must be made subject to the approved annual program of the Fund.

(5) Other arrangements relating to the operation and management of the Fund shall be as prescribed. 52. Provincial Industrial and Investment Promotion Fund: (1) The Provincial Government may establish a Provincial Industrial and Investment Promotion Fund for the promotion and protection of industrial investment in the province.

(2) The operation and management of the Fund established under sub-section (1) shall be according to provincial law.

(3) The amount of the Fund under sub-section (1) may be expended on the tasks mentioned in sub-section (3) of Section 51. 53.
Industrial Enterprises Act, 2020

53. Not to Provide Duplicate Facilities: (1) When providing services, facilities, or concessions to any industry by the Government of Nepal or Provincial Government under this Act or the prevailing law, no service, facility, or concession that is duplicative shall be provided.

(2) Information about services, facilities, or concessions provided to any industry under this Act by the Government of Nepal shall be given to the relevant ministry or body of the province where such industry is located, and information about services, facilities, or concessions provided to any industry under provincial law by the Provincial Government shall be given to the Department. 54. Provision relating to Corporate Social Responsibility: (1) A medium or large industry, or a cottage or small industry with

It may publish and, as necessary, amend, add to, subtract from, or modify the schedule. 66. Matters under this Act: Matters provided for in this Act shall be dealt with in accordance with this Act, and other matters shall be dealt with in accordance with the prevailing law. 67. Power to make Rules: The Government of Nepal may make necessary Rules for the implementation of this Act. 68. Power to formulate and implement Directives, Procedures, or Standards: (1) The Government of Nepal may, subject to this Act and the Rules framed under this Act, formulate and implement Directives, Procedures, or Standards as necessary on the following matters to facilitate and simplify the work and proceedings related to industrial administration:

(a) Registration and regulation of industries,

(b) Promotion of domestic production,

(c) Incentives, exemptions, facilities, or concessions to be provided to industries,

(d) Relating to sick industries,

(e) Relating to industrial areas, industrial corridors, industrial clusters, and industrial villages,

Added by the Act to Amend Some Nepal Acts Relating to Investment Facilitation, 2024.(e1) Relating to registration and regulation of startup enterprises,

Added by the Act to Amend Some Nepal Acts Relating to Investment Facilitation, 2024.(e2) Relating to the establishment, operation, and regulation of business incubation centers.

(f) Operation and management of the Fund,

(g) Use of electronic means in service delivery,

(h) Automatic process of investment approval,

(i) Operation of the Nepal Business Forum,

(j) Operation of the Single Point Service Center,

(k) Relating to corporate social responsibility.

(2) Notwithstanding anything contained in subsection (1), the Ministry may, in relation to the process of electronic service delivery as well, formulate and implement a necessary Standard Operating Procedure. 69. Repeal and Saving: (1) The Industrial Enterprises Act, 2073 is hereby repealed.

(2) All acts and proceedings done under the Industrial Enterprises Act, 2073 shall be deemed to have been done under this Act. Schedule-1
(Relating to Section 8)
Industries Requiring Permission

1.
Industrial Enterprises Act, 2020

69. Repeal and Saving: (1) The Industrial Enterprises Act, 2073 is hereby repealed.

(2) All acts and proceedings done under the Industrial Enterprises Act, 2073 shall be deemed to have been done under this Act. Schedule-1
(Relating to Section 8)
Industries Requiring Permission

1. Industry producing arms and ammunition, gunpowder, or explosive substances,
2. Industry engaged in security printing, currency, and coin production,
3. Industry producing goods where the main raw material is cigarette, bidi, khaini, cigar, and tobacco products, and electronic cigarettes,
4. Industry producing microbrewery, beer, alcohol, or alcoholic substances,
5. Industry engaged in the extraction and processing of stone aggregates and sand,
6. Industry producing radio communication related equipment,
7. Industries such as extraction of precious minerals and petroleum substances,
8. Industry engaged in refilling Liquefied Petroleum Gas (LPG),
9. All types of industries producing drones or providing services through drones,
10. Other industries requiring permission as per the prevailing law. Schedule-2
(Relating to Clause (b) of Subsection (1) of Section 17)
Cottage and Small Industries

1. Handloom, pedal loom, semi-automatic loom operated by hand or foot; wrapping of cloth; dyeing, printing, sewing (excluding readymade garments) and weaving done by traditional methods,
2. Hand-woven products from wool and silk: radi, pakhi, carpets, pashmina, garments, handmade paper and articles based on them,
3. Articles based on traditional arts,
4. Traditional sculpture,
5. Handmade utensils and handicraft items from metals such as copper, brass, bell metal, bronze, and German silver,
6. Handmade utensils and traditional tools made of iron for household use, such as knives, chulesi, khukuri, sickles, hoes, spades,
7. Handmade ornaments, articles, and utensils from gold or silver (including those set with precious, semi-precious, and ordinary stones),
8. Industry for cutting precious, semi-precious, and ordinary stones available domestically, handmade articles from rural tanning/leather,
9. Industries based on natural fibers such as jute, sabai grass, choya, babiyo, cotton thread, allo, etc.,
10. Stone art (articles carved from stone),
11. Paubha, thangka paintings, and other traditional paintings,
12. Masks and dolls and toys representing traditional culture,
13. Various types of handicraft items representing traditional culture, musical instruments, and arts,
14. Artistic objects of wood, bone and horn, clay, rock and minerals, ceramics and earthenware,
15. Handmade brick industry. Schedule-3
(Relating to Clause (a) of Subsection (2) of Section 17)
Energy-Based Industries

1. Industry producing energy from water resources, wind, solar power, coal, natural oil and fuel or gas, biomass, or other sources; industry manufacturing machines/equipment used for producing such energy,
2. Electricity transmission line,
3. Electricity distribution system,
4. Biogas-based energy,
5. Electrical energy produced as a by-product of the sugar industry,
6. Conducting energy feasibility studies.
Industrial Enterprises Act, 2020

Hospitals, nursing homes, veterinary hospitals and clinics, health examination services, health laboratories, biological research centers, and teaching and training institutions established outside the Kathmandu Valley, metropolitan area, and sub-metropolitan areas of the Terai region,
10. Information technology industry,
11. Industries established in industrial areas, special economic zones, and industrial villages constructed and operated by the private sector,
12. Industries producing goods identified by the Government of Nepal, by setting necessary criteria, as having high price and low weight/volume, and specified by publishing a notice in the Nepal Gazette,
13. Industries producing goods or services determined by the National Trade Integration Strategy (NTIS) approved by the Government of Nepal,
14. Film production,
15. Added by the Notice published in the Nepal Gazette dated 2078/04/25.Industry producing vaccines,
16. Added by the Notice published in the Nepal Gazette dated 2078/04/25.Industry producing liquid oxygen. 17. Added by the Act to Amend Some Nepal Acts Relating to Investment Facilitation, 2024.National and international air service, cable car. Schedule-10
Classification of Districts Based on Industrial Development
(Relating to Clause (c) of Subsection (2) of Section 24)

(a) Very Underdeveloped Region

1. Darchula
2. Baitadi
3. Bajhang
4. Bajura
5. Achham
6. Doti
7. Mugu
8. Dolpa
9. Humla
10. Jumla
11. Kalikot
12. Jajarkot
13. Rolpa
14. Eastern Rukum
15. Western Rukum
16. Mustang
17. Manang
18. Solukhumbu
19. Khotang
20. Okhaldhunga
21. Taplejung
22. Bhojpur
23. Panchthar

(b) Underdeveloped Region

1. Dadeldhura
2. Pyuthan
3. Myagdi
4. Dailekh
5. Parbat
6. Lamjung
7. Salyan
8. Gulmi
9. Baglung
10. Gorkha
11. Dolakha
12. Ramechhap
13. Sindhuli
14. Sindhupalchok
15. Rasuwa
16. Dhankuta
17. Sankhuwasabha
18. Tehrathum

(c) Less Developed Region

1. Kanchanpur
2. Kailali
3. Bardiya
4. Dang
5. Surkhet
6. Palpa
7. Arghakhanchi
8. Syangja
9. Kapilvastu
10. Tanahun
11. Nuwakot
12. Dhading
13. Kavrepalanchok
14. Rautahat
15. Sarlahi
16. Mahottari
17. Siraha
18. Saptari
19. Udayapur
20. Ilam
Commodity Exchange Market Act, 2017

Commodity Exchange Market Act, 2074 (2017)

Certification and Publication Date
2074.5.11 (August 27, 2017)

Amending Acts

1. Some Nepal Acts Amending Act relating to the Civil Code, 2075 (2018) 2076.1.2 (April 14, 2019)

Act made to provide for the Commodity Exchange Market

Preamble: Whereas it is desirable to regulate the business relating to the development and operation of commodity exchange market, protection of investors, commodity transactions, clearing and settlement, and warehouse operation,

The Legislature Parliament, pursuant to sub-Article (1) of Article 296 of the Constitution of Nepal, has enacted this Act. Chapter – 1

Preliminary

1. Short Title and Commencement: (1) This Act shall be called the “Commodity Exchange Market Act, 2074.”

(2) This Act shall commence on the ninety-first day after the date of its certification. 2. Definitions: Unless the subject or context otherwise requires, in this Act,-

(a) "Court" means the commercial bench of the court designated by the Government of Nepal by publishing a notice in the Nepal Gazette.

(b) "Chairperson" means the Chairperson of the Board.

(c) "License" means the license pursuant to Section 5.

(d) "Transaction" means the purchase, sale, clearing and settlement, transfer of a commodity derivative, and other related acts in the commodity exchange market.

(e) "Prescribed" or "as prescribed" means prescribed or as prescribed in the rules framed under this Act.

(f) "Board" means the Nepal Securities Board established under the prevailing law relating to securities.

(g) "Clearing and Settlement business" means the business relating to clearing and settlement pursuant to Section 26.

(h) "Clearing House" means an institution licensed to carry out clearing and settlement business.

(i) "Investor" means a person who purchases commodities through commodity derivatives on the commodity exchange market, and the term also refers to a person who sells commodities.

(j) "Commodities" means commodities as prescribed that can be traded through commodity derivatives on the commodity exchange market.

(k) "Commodity Exchange Market" means an organized institution licensed pursuant to Section 5.

(l) "Commodity Trading Business" means the business relating to commodity transactions pursuant to sub-section (1) of Section 19.

(m) "Commodity Trader" means an institution licensed to carry out commodity trading business.

(n) "Commodity Derivative" means a commodity contract entered into between a buyer and a seller for the purchase or sale of a commodity at least thirty days later, specifying the price, quantity, quality, and delivery date of the commodity.

(o) "Warehouse" means an institution licensed to operate a warehouse.

(p) "Institution" means a company or organized institution established under the prevailing law.

(q) "Organized Institution" means a Public Company established under the prevailing Company Law or an organized institution established to make a public issue of securities through the securities market.
Commodity Exchange Market Act, 2017

Chapter – 2

Provisions Relating to License

3. Prohibition on Transaction without Obtaining License: No person shall operate the following businesses without obtaining a license under this Act:-

(a) Commodity Exchange Market,
(b) Commodity Trading Business,
(c) Clearing and Settlement Business, or
(d) Warehouse. 4. Application for License: (1) An organized institution desiring to operate a commodity exchange market shall submit an application to the Board in the prescribed format, along with prescribed details, documents, and application fee, to obtain a license to operate the commodity exchange market.

(2) An institution desiring to operate a commodity trading, clearing and settlement business, or a warehouse shall submit an application to the Board in the prescribed format, along with prescribed details, documents, and application fee, to obtain a license to operate the commodity trading, clearing and settlement business, or warehouse.

(3) The qualification of the organized institution or institution applying pursuant to sub-section (1) or (2) shall be as prescribed. 5. Grant of License: (1) Upon examining the application and documents received pursuant to Section 4, if the Board is satisfied that it will be in the interest of investors and the general public, the Board shall, within one hundred and twenty days in the case of a commodity exchange market and within ninety days in the case of operating a commodity trading business, clearing and settlement business, or warehouse, collect the prescribed fee and grant a license to the applicant in the prescribed format.

(2) If, upon examining the application and documents pursuant to sub-section (1), it appears that additional details or documents need to be requested from the applicant or further clarification regarding the submitted details or documents is necessary, the Board may order a maximum period of thirty days to request such details or documents or to provide further clarification regarding the submitted details or documents.

(3) If an order is given pursuant to sub-section (2), the concerned applicant shall submit details or documents according to such order or further clarify the submitted details or documents. 6. Refusal to Grant License: Notwithstanding anything contained in Section 5, the Board may refuse to grant a license if it deems it inappropriate from the perspective of the national economy, industrial business development, feasibility of commodity transactions, and protection of investor interests, and shall promptly provide written notice to the applicant stating the grounds and reasons for such refusal. 7. Prescription of Conditions: While granting a license, the Board may prescribe necessary conditions, and it shall be the duty of the licensed institution to comply with such conditions. 8.
Commodity Exchange Market Act, 2017

7. Prescription of Conditions: While granting a license, the Board may prescribe necessary conditions, and it shall be the duty of the licensed institution to comply with such conditions. 8. Provisions Relating to License Term and Renewal: (1) The term of a license shall be valid for three years.

(2) An application for renewal of the license shall be submitted to the Board in the prescribed format, along with the prescribed fee, at least ninety days before the expiry of the license term pursuant to sub-section (1).

(3) Notwithstanding anything contained in sub-section (2), an application for renewal may be submitted to the Board in the prescribed format, along with double the fee required for renewal, at least thirty days before the expiry of the license term.

(4) Upon receiving an application for renewal pursuant to sub-section (2) or (3), the Board shall renew the license within thirty days of receiving the application and inform the licensed institution accordingly.

(5) If the license term expires without renewal under this Section, the license of such institution shall be cancelled pursuant to sub-section (1) of Section 35, and the concerned party shall be informed promptly. 9. Provisions Relating to Infrastructure: (1) A licensed institution shall, within one hundred and eighty days from the date of obtaining the license, make arrangements for the prescribed infrastructure necessary to operate the business for which the license was obtained. Provided that the infrastructure required for operating a warehouse shall be as prescribed by the Board.

(2) If the licensed institution cannot arrange the infrastructure within the period under sub-section (1) and requests an extension, the Board may grant an extension for a maximum of ninety days.

(3) A licensed institution shall not be allowed to operate transactions without arranging infrastructure according to this Section.

(4) If the infrastructure is not arranged even within the extended period under sub-section (2), the license of such institution shall be cancelled pursuant to sub-section (1) of Section 35. 10. Requirement to Maintain Minimum Paid-up Capital and Financial Resources: (1) The minimum paid-up capital of an organized institution operating a commodity exchange market shall be as prescribed by the Board from time to time, not less than fifty crore rupees.

(2) The minimum paid-up capital of an institution operating a commodity trading business, clearing and settlement business, or warehouse shall be as prescribed. Chapter – 3

Commodity Exchange Market

11. Prior Approval of the Board Required: (1) Notwithstanding anything contained in the prevailing law, prior approval of the Board must be obtained before establishing a company to operate a commodity exchange market.

(2) Other provisions relating to granting approval under sub-section (1) shall be as prescribed. 12.
Commodity Exchange Market Act, 2017

Prior Approval of the Board Required: (1) Notwithstanding anything contained in the prevailing law, prior approval of the Board must be obtained before establishing a company to operate a commodity exchange market.

(2) Other provisions relating to granting approval under sub-section (1) shall be as prescribed. 12. Provisions Relating to Directors: (1) A commodity exchange market shall have a maximum of seven directors, including at least two independent directors.

(2) The qualification of directors shall be as follows:-

(a) Having obtained at least a Master's degree or Chartered Accountancy qualification from a recognized educational institution in Economics, Commerce, Finance, Accounting, Management, or Law, and having at least five years of work experience in the relevant field,
(b) Having completed the age of thirty-five years, and
(c) Not being disqualified as prescribed.

(3) While appointing directors, as far as possible, the representation shall be from the different disciplines mentioned in clause (a) of sub-section (2).

(4) For the purpose of appointing independent directors, the commodity exchange market shall recommend a list of potential candidates numbering three times the number of vacant independent director positions and submit it to the Board.

(5) The Board shall appoint suitable candidates from among the potential candidates submitted pursuant to sub-section (4) as independent directors. 13. Provisions Relating to Shares of the Commodity Exchange Market: (1) No person shall acquire more than five percent of the paid-up capital of the company operating the commodity exchange market.

(2) Notwithstanding anything contained in sub-section (1), for the purpose of operating a commodity exchange market using foreign capital, skills, and technology, a foreign investor may, as a strategic partner, acquire up to a maximum of fifty-one percent of the paid-up capital of such company.

(3) Other provisions relating to strategic partners and share purchase of the company operating the commodity exchange market shall be as prescribed. 14.
Commodity Exchange Market Act, 2017

14. Ineligibility to Acquire Shares of the Commodity Exchange Market: (1) The following persons or institutions shall not purchase shares of the commodity exchange market:-

(a) A person who has been subject to insolvency proceedings and twelve years have not elapsed,
(b) A person who is a shareholder of another commodity exchange market,
(c) A person who is incompetent to contract under the prevailing law,
(d) A person who is on a blacklist under the prevailing law or from which three years have not elapsed since removal from such list,
(e) In the case of a natural person, a person convicted by a final court decision for an offense related to corruption, money laundering, and financial investment in terrorist activities,
(f) A person who has unpaid government dues,
(g) A person who has been punished for a criminal offense involving moral turpitude,
(h) Being in any other condition as prescribed.

(2) If a person or institution ineligible to purchase shares under sub-section (1) acquires shares in any manner, or if a situation under sub-section (1) arises after purchasing shares, such shares shall be sold or transferred to another person within thirty-five days.

(3) If the shares are not sold or transferred within the period under sub-section (2), the Board shall confiscate such shares.

(4) The Board shall sell the shares confiscated under sub-section (3) as prescribed. 15. Functions, Duties, and Powers of the Commodity Exchange Market: In addition to the functions, duties, and powers mentioned elsewhere in this Act, the functions, duties, and powers of the commodity exchange market shall be as follows:-

(a) To provide a market, place, or facility for investors to continuously purchase, sell, or exchange commodities in one place through commodity derivatives,
(b) To grant membership to commodity traders,
(c) To list or cause to list commodities for trading,
(d) To conduct or cause to conduct commodity transactions in a transparent, fair, and regular manner,
(e) To monitor and supervise or cause to monitor and supervise the activities of commodity traders,
(f) To adopt necessary measures to protect the trading system of the commodity exchange market or to mitigate its potential risks,
(g) To implement or cause to implement directives given by the Board,
(h) To perform or cause to perform other functions as prescribed. 16. Determination of Limits for Commodities or Transactions: (1) The limit of commodities that can be traded at one time shall be as determined by the Board.

(2) While determining the limit of commodities, it may be done separately based on the type of such commodity or transaction.

(3) The limit of commodities a natural person or institution may hold in their ownership shall be as prescribed. 17.
Commodity Exchange Market Act, 2017

17. Establishment of an Investor Protection Fund: (1) The commodity exchange market shall establish an Investor Protection Fund to protect investors from potential systemic risks.

(2) Provisions relating to the establishment and operation of the Investor Protection Fund shall be as prescribed. 18. Provisions Relating to the Chief Executive Officer of the Commodity Exchange Market: The Board of Directors of the commodity exchange market shall appoint a person possessing the following qualifications to the position of Chief Executive Officer to act as the administrative head:-

(a) Having obtained at least a Master's degree from a recognized educational institution in Economics, Commerce, Finance, Accounting, Management, or Law, and having at least seven years of work experience in the relevant field,
(b) Not being disqualified as prescribed. Chapter – 4

Commodity Trading Business

19. Businesses that a Commodity Trader may Operate: (1) A commodity trader may operate the following businesses:-

(a) Market making business,
(b) Investment management business,
(c) Investment advisory business,
(d) Custodian service business,
(e) Commodity brokerage business,
(f) Commodity trading business,
(g) Other commodity trading business as prescribed.

(2) For the purpose of sub-section (1), a commodity trader may be classified as follows:-

(a) Market maker,
(b) Investment manager,
(c) Investment advisor,
(d) Custodian,
(e) Commodity broker,
(f) Commodity trader,
(g) Other commodity trader as prescribed.

(3) Other provisions relating to commodity trading business shall be as prescribed. 20. Membership Requirement for Commodity Trader: (1) A commodity trader as prescribed shall obtain membership of the commodity exchange market to operate a commodity trading business.

(2) The procedure for obtaining membership under sub-section (1), membership fee, and other provisions shall be as mentioned in the regulations of the concerned commodity exchange market. 21. Provisions Relating to Shareholders and Ownership: (1) A shareholder of one commodity trader or a member of his immediate family shall not acquire shares of another commodity trader.

(2) Other provisions relating to the shares or ownership, sale, or transfer of a commodity trader shall be as prescribed. 22. Agreement Required: A commodity trader shall enter into an agreement as prescribed with the investor before conducting transactions. 23. Record Keeping Requirement: (1) A commodity trader shall obtain documents or details that genuinely reveal the identity of the investor before conducting transactions.

(2) A commodity trader shall maintain records of documents or details revealing the investor's identity, details of financial transactions related to the trade, or other activities as prescribed. 24. Insurance Requirement: A commodity trader shall arrange insurance for the commodity trading business as specified by the Board. Chapter – 5

Clearing and Settlement Business

25.