chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Impeachment (Procedure Regularization) Act, 2002

6. Procedure of the Investigation Committee: The procedure of the investigation committee shall be for a period of three months. Provided that, if reasonable cause exists, the Speaker may extend the time limit by a maximum of thirty days. 7. Powers of the Investigation Committee: (1) In the course of conducting inquiries and investigations regarding the causes and grounds specified in the motion submitted pursuant to sub-section (2) of Section 3, the investigation committee shall have the following powers:

(a) To issue summons, notices, or interrogatories as required for the appearance before the investigation committee of the constitutional office-bearer against whom the accusation is made or any other person,
(b) To require any person, body, or authority to produce any documents or evidence in their possession before the investigation committee within a specified time,
(c) To record the statement of the constitutional office-bearer against whom the accusation is made,
(d) To summon and question any person, expert, witness, or other individual having knowledge of the relevant facts to appear before the investigation committee and to record their deposition,
(e) To carry out or cause to be carried out other necessary proceedings related to the investigation.

(2) If a motion of impeachment is submitted on the accusation of corruption against a constitutional office-bearer and an investigation committee is formed, such committee may also exercise the powers that an investigating officer may exercise under the prevailing law in corruption-related cases.

(3) The proceedings of the investigation pursuant to this Section shall generally be confidential, and no person other than the accused constitutional office-bearer, if he/she has appointed a legal practitioner, such legal practitioner, persons, experts deemed necessary by the investigation committee in relation to the investigation of the accusation, and employees engaged in the work of the investigation committee shall be allowed to be present or participate in such proceedings.

(4) The investigation committee may impose a fine of up to ten thousand rupees on any person who disobeys a summons, notice, or interrogatory issued pursuant to this Section, fails to produce documents or evidence as per the order given, violates any other order of the investigation committee, or obstructs or opposes the work and proceedings of the investigation committee. Provided that, if a person submits an application stating a reasonable cause for the inability to produce such documents or evidence, and the cause appears appropriate, the investigation committee may waive the fine imposed on him/her, wholly or partially. 8. Procedure Related to Investigation: (1) The investigation committee shall prepare a charge-sheet stating the causes and grounds for which the motion of impeachment has been submitted against the constitutional office-bearer for removal from office.
Impeachment (Procedure Regularization) Act, 2002

8. Procedure Related to Investigation: (1) The investigation committee shall prepare a charge-sheet stating the causes and grounds for which the motion of impeachment has been submitted against the constitutional office-bearer for removal from office. The committee shall give a reasonable time limit for the accused constitutional office-bearer to submit a defense including his/her explanation, and shall deliver the charge-sheet to him/her.

(2) In addition to other matters, the charge-sheet pursuant to sub-section (1) shall clearly mention the following:
(a) A brief description of the accusation based on which the motion of impeachment is submitted for his/her removal,
(b) The basis for each accusation and the available evidence thereof,
(c) If the motion of impeachment is submitted based on more than one accusation at once, the details and evidence mentioned in clauses (a) and (b) concerning each accusation,
(d) Other necessary matters.

(3) If the constitutional office-bearer fails to submit an explanation within the time limit pursuant to sub-section (1), or if the explanation submitted is not considered reasonable by the investigation committee, the investigation committee shall evaluate it accordingly and decide whether the motion of impeachment is appropriate or not. 9. Formation of Medical Board: (1) While investigating a constitutional office-bearer on the accusation of lack of functional competence, if the concerned constitutional office-bearer denies such accusation in the explanation requested, the investigation committee may, in consultation with the Speaker, form a three-member Medical Board consisting of experts in the relevant field to examine his/her physical or mental condition.

(2) The Board pursuant to sub-section (1) shall examine the physical or mental condition of the concerned constitutional office-bearer and submit a report, stating the cause and basis of his/her physical or mental condition, to the investigation committee within the time limit set by the committee.

(3) If the concerned constitutional office-bearer refuses to have his/her physical or mental condition examined before the Board pursuant to sub-section (1), or if he/she remains absent without reasonable cause within the time limit set by such Board for examination, the Board shall submit a report of that fact to the investigation committee.

(4) Upon receiving the report pursuant to sub-section (3), it shall be presumed, unless proven otherwise, that the constitutional office-bearer refusing the examination of his/her physical or mental condition has a lack of functional competence due to his/her physical or mental condition, and the investigation committee shall base its report on that fact. 10.
Impeachment (Procedure Regularization) Act, 2002

10. Special Provision Regarding Investigation Related to Allegation of Corruption: (1) Notwithstanding anything contained elsewhere in this Act, if a committee is formed pursuant to Section 4 to investigate an allegation of corruption against a constitutional office-bearer, the investigation committee itself may conduct the inquiry and investigation of such allegation, or the investigation committee may seek the assistance of any suitable person or body to conduct such inquiry and investigation. It shall be the duty of the concerned person or body to provide such assistance.

(2) The person or body pursuant to sub-section (1) shall conduct the inquiry and investigation according to the prevailing law on corruption and submit a report, including their opinion and findings, to the investigation committee.

(3) The investigation committee shall make its decision based, inter alia, on the report submitted pursuant to sub-section (2). 11. Requirement to Submit Report: (1) After making a determination pursuant to sub-section (3) of Section 10, the investigation committee shall submit a report thereof to the Speaker.

(2) In addition to other matters, the report submitted pursuant to sub-section (1) shall contain the following:
(a) A brief description of the investigation,
(b) The subject matter determined or concluded by the investigation committee during the investigation,
(c) The bases and evidence relied upon for the determination or conclusion pursuant to clause (b),
(d) If any expert or authority has given any opinion concerning the matter, details thereof,
(e) If the investigation was conducted concerning corrupt bad conduct, details of the report received pursuant to sub-section (2) of Section 10,
(f) Other necessary matters relied upon for determining or not determining the accusation. 12. Consideration of the Motion: (1) The Speaker shall present the report submitted by the investigation committee pursuant to Section 11 to the Amended by the Republic Strengthening and Some Nepal Laws Amendment Act, 2066. Legislature-Parliament.

(2) The report submitted pursuant to sub-section (1) shall be an integral part of the motion submitted pursuant to sub-section (2) of Section 3.

(3) If the motion pursuant to sub-section (2) of Section 3 is approved by the Amended by the Republic Strengthening and Some Nepal Laws Amendment Act, 2066. Legislature-Parliament, the motion of impeachment against the accused constitutional office-bearer shall be deemed to have been passed. 13. Repealed by the Republic Strengthening and Some Nepal Laws Amendment Act, 2066. 14. Amended by the Republic Strengthening and Some Nepal Laws Amendment Act, 2066. Deemed Removed from Office: After the motion of impeachment against the accused constitutional office-bearer is passed by the Legislature-Parliament pursuant to sub-section (3) of Section 12, such office-bearer shall be deemed to have been automatically removed from office. 15.
Torture Related Compensation Act, 1996

Torture Compensation Act, 2053 (1997)

Seal and Publication Date
2043.9.3
Certification and Publication Date
2066.10.7

Amending Acts

1. Republic Strengthening and Some Nepal Laws Amendment Act, 2066 (2010) 2066.10.7

Act No. 14 of the year 2043 (1986)



An Act Made to Provide for Compensation to a Person Tortured While in Detention

Preamble: Whereas it is desirable to make provision for compensation for physical or mental torture inflicted upon, or cruel, inhuman or degrading treatment meted out to, a person who is in detention in the course of investigation, inquiry or trial or in any other manner,

Now, therefore, Parliament has enacted this Act in the twenty-fifth year of the reign of His Majesty King Birendra Bir Bikram Shah Dev. 1. Short Title and Commencement: (1) This Act may be cited as the "Torture Compensation Act, 2043 (1986)."

(2) This Act shall come into force immediately. 2. Definitions: Unless the subject or context otherwise requires, in this Act, –

(a) "Torture" means physical or mental torture inflicted upon a person who is in detention in the course of investigation, inquiry or trial or in any other manner, and the term also includes cruel, inhuman or degrading treatment meted out to him or her.

(b) "Victim" means a person who suffers torture. 3. Torture not to be inflicted: (1) No person who is in detention in the course of investigation, inquiry or trial or in any other manner shall be subjected to torture. Explanation: For the purposes of this sub-section, the term "detention" also includes the condition of being in custody pursuant to the prevailing law.

(2) While keeping a person in detention and while releasing him or her, to the extent possible, the physical condition of such person shall be examined by a medical practitioner in government service, and where such a medical practitioner is not available, by the concerned official himself or herself, and a record thereof shall be maintained. Explanation: For the purposes of this sub-section, "medical practitioner" means a doctor, Kaviraj, Health Assistant, Auxiliary Health Worker (A.H.W.) or Vaidya in government service.

(3) One copy of the report concerning the examination of physical or mental condition pursuant to sub-section (2) shall be sent to the concerned District Court. 4. Compensation to be provided: If it is determined that an employee of the Government of Nepal has subjected any person to torture, the victim shall be provided compensation in accordance with this Act. 5.
Torture Related Compensation Act, 1996

4. Compensation to be provided: If it is determined that an employee of the Government of Nepal has subjected any person to torture, the victim shall be provided compensation in accordance with this Act. 5. Complaint may be filed: (1) A victim may file a complaint before the District Court of the district where he or she was detained, claiming compensation, within thirty-five days from the date of torture or from the date of being released from detention.

(2) Notwithstanding anything contained in sub-section (1), if the victim has died or, for any other reason, the victim is unable to file a complaint himself or herself, stating the reason thereof, any adult member of his or her family or his or her legal practitioner may file a complaint pursuant to sub-section (1).

(3) If it is suspected that a person in detention has been subjected to torture, any adult member of his or her family or his or her legal practitioner may submit an application to the concerned District Court. Upon receipt of such an application, the Court may, within three days, order a physical or mental examination of the person in detention. If treatment is required during such examination, treatment shall be provided on behalf of the Government of Nepal.

(4) A complaint filed pursuant to sub-section (1) or (2) shall, to the extent possible, include the following particulars: –

(a) The reason for detention and the period spent in detention.
(b) Details of the torture inflicted while in detention.
(c) Details of the injury caused as a result of the torture.
(d) The amount of compensation claimed.
(e) Any other particulars that may assist in proving the claim. 6. Proceedings on complaint and compensation: (1) With respect to a complaint filed pursuant to Section 5, the District Court shall, adopting the procedure under the Summary Procedure Act, 2028 (1971), conduct proceedings, and if it determines that the particulars of such complaint are true, it may render a decision to have the victim paid compensation of up to one hundred thousand rupees from the Government of Nepal.

(2) If, while conducting proceedings pursuant to sub-section (1), it is determined that the complaint was filed with mala fide intent, the District Court may impose a fine of up to five thousand rupees on the person filing such complaint. 7. Action against person involved in act of torture: If torture is determined to have been inflicted under this Act, the District Court shall order the concerned body to take departmental action against such government employee who inflicted the torture, in accordance with the prevailing law. 8.
Torture Related Compensation Act, 1996

7. Action against person involved in act of torture: If torture is determined to have been inflicted under this Act, the District Court shall order the concerned body to take departmental action against such government employee who inflicted the torture, in accordance with the prevailing law. 8. Determination of compensation amount: For the purposes of sub-section (1) of Section 6, while determining the amount of compensation, regard shall be had to the following matters: –

(a) The physical or mental pain or suffering caused to the victim and the severity thereof.
(b) The loss of the victim's earning capacity due to the physical or mental injury.
(c) In case of physical or mental injury of an incurable nature, the age of the victim and his or her family responsibilities.
(d) In case of injury of a curable nature, the estimated cost of treatment.
(e) In case of the victim's death due to torture, the number of members of the victim's family dependent on his or her income and the minimum expenses necessary for their livelihood.
(f) Such of the matters claimed by the victim as appear reasonable and appropriate. 9. Execution of decision: (1) After a final decision has been made regarding the payment of compensation to the victim, within one year from the date of receipt of notice of such decision, the victim, or, if the victim has died, his or her closest heir, shall submit an application, together with a copy of the decision of the District Court regarding compensation, to the Chief District Officer of the district where the victim was detained, in order to receive the compensation amount.

(2) Within thirty-five days from the date of receipt of the application pursuant to sub-section (1), the Chief District Officer shall pay the compensation amount to the applicant.

(3) If the application is not submitted within the period pursuant to sub-section (1), the compensation amount shall not be received. 10. Defense by government attorney may be provided: With respect to a complaint filed pursuant to Section 5, if the head of the concerned office so requests, a government attorney may appear in court and defend on behalf of such employee. 11. Not deemed to be torture: Notwithstanding anything contained elsewhere in this Act, for the purposes of this Act, the ordinary suffering naturally arising from being in detention under the prevailing law shall not be deemed to be torture. 12.
Banks and Financial Institutions Act, 2017

Bank and Financial Institution Act, 2073 (2017)

Certification and Publication Date
2074.01.10

Amending Acts

1. Act to Amend Some Nepal Acts to Make Them Consistent with the Constitution of Nepal, 2075 (2018) 2075.11.19
2. Act to Amend Some Nepal Acts Relating to the Civil Code, 2075 (2018) 2076.01.02
3. Act to Amend Some Nepal Acts Relating to Improvement of Economic and Business Environment and Enhancement of Investment, 2081 (2024) 2081.12.18

Act Number 1 of the year 2074 (2017)

An Act Made to Amend and Consolidate Laws Relating to Banks and Financial Institutions

Preamble: Whereas, it is expedient to amend and consolidate the prevailing laws relating to the establishment, operation, management, regulation, inspection and supervision of banks and financial institutions and make them time-relevant, in order to enhance public confidence in the overall banking and financial system of the country, to protect and promote the rights and interests of depositors, to make the national economy strong and robust by providing quality and reliable banking and financial services through healthy competition among banks and financial institutions, and to maintain financial stability;

Now, therefore, 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, Extent and Commencement: (1) This Act may be called the "Bank and Financial Institution Act, 2073".

(2) This Act shall be applicable throughout the State of Nepal and shall also apply to branches or contact offices opened outside Nepal by a bank or financial institution established in Nepal.

(3) This Act shall come into force immediately. 2.
Banks and Financial Institutions Act, 2017

Provided however, that the term shall not refer to family members who have separated their shares by partition and are engaged in their respective professions and businesses.

(x) "Capital" means the authorized capital, issued capital or paid-up capital of a bank or financial institution.

(y) "Capital Fund" means the sum of the core capital and supplementary capital of a bank or financial institution as prescribed by the Nepal Rastra Bank, and this term also includes other funds or amounts designated by the Nepal Rastra Bank from time to time.

(z) "Infrastructure Development Bank" means an infrastructure development bank established to carry out financial transactions referred to in sub-section (5) of Section 49.

(aa) "Letter of Credit" means a letter issued by one bank or financial institution addressed to another bank or financial institution authorizing it to accept checks, drafts, or bills of exchange drawn upon it by a specified person up to a specified amount.

(ab) "Memorandum of Association" means the memorandum of association of a bank or financial institution made pursuant to the prevailing company law.

(ac) "Core Capital" means the paid-up capital, share premium, irr edeemable preference shares, general reserve fund, and the amount under the retained earnings (profit/loss) heading of a bank or financial institution, and this term also includes funds or amounts under other headings designated by the Nepal Rastra Bank from time to time as core capital.

(ad) "Acquiring Institution" means the principal bank or financial institution that merges a licensed institution into itself pursuant to this Act.

(ae) "Acquisition" means the act of one licensed institution taking over another licensed institution by accounting for all assets and probable liabilities so that the legal status of the licensed institution is terminated, and this term also includes the act of accepting all contractual obligations made by the target institution prior to its merger into the acquiring institution.

(af) "Savings Account" means an account in which the record of amounts deposited by a customer for savings purposes in a bank or financial institution is maintained.

(ag) "Bank" means a corporate body established to carry out banking and financial transactions pursuant to sub-section (1) of Section 49, and this term also includes branch offices of foreign banks situated in
Banks and Financial Institutions Act, 2017

Nepal, branch offices opened outside Nepal by a bank established in Nepal, and Infrastructure Development Banks operating pursuant to sub-section (5) of Section 49 and their branch offices.

(ah) "Banking and Financial Transactions" means banking and financial transactions pursuant to Section 49.

(ai) "Bonus Share" means shares issued to shareholders as additional shares by capitalizing savings from profits or other funds of a bank or financial institution, and this term also includes the situation where the paid-up amount of shares is increased by capitalizing savings or other funds.

(aj) "Fixed Account" means a periodic account in which the record of amounts deposited by a customer in a bank or financial institution generally without the ability to withdraw the deposit before a specified period is maintained.

(ak) "Nepal Rastra Bank Act" means the Nepal Rastra Bank Act, 2058 (2002).

(al) "Nepal Rastra Bank" means the Nepal Rastra Bank.

(am) "Target Institution" means a licensed institution whose entire assets and liabilities are merged into the acquiring institution pursuant to this Act.

(an) "Audit Committee" means the Audit Committee pursuant to Section 60.

(ao) "Divide nd" means cash dividend, interim dividend or bonus share given by a bank or financial institution pursuant to this Act and prevailing law.

(ap) "Liquidator" means a person appointed by order of the Court or by a resolution passed at a meeting of creditors to carry out the work of winding up a bank or financial institution, and this term also includes the office carrying out liquidation work.

(aq) "Leasing" means an act pursuant to an agreement whereby only the right to use movable or immovable property is obtained for a specified period, with ownership remaining with the licensed institution, and payment is received from the customer according to a fixed schedule in consideration thereof.

(ar) "Off-balance Sheet Transaction" means letters of credit, guarantees, acceptances, commitments, swaps, options, forward transactions relating to foreign exchange where there is a possibility that the bank or financial institution may have to assume liability, and this term also includes transactions in instruments designated by the Nepal Rastra Bank from time to time.

(as) "Financial Institution" means a corporate body established to carry out banking and financial transactions pursuant to
Banks and Financial Institutions Act, 2017

sub-section (2), (3) or (4) of Section 49, and this term also includes development banks, finance companies, microfinance institutions, branch offices of foreign financial institutions situated in Nepal, and branch offices of financial institutions established in Nepal situated abroad.

(at) "Financial Interest" means the interest of a director, a shareholder holding one percent or more shares, or the chief executive, or the family of such person, or a person, company or corporate body authorized to nominate a director, in any firm, company or corporate body where such person or persons hold ten percent or more share ownership, if they have purchased shares separately or jointly amounting to ten percent or more of the paid-up capital of that firm, company or corporate body, and this term also includes interest designated by the Nepal Rastra Bank from time to time as financial interest considering the nature and circumstances of the financial transaction.

(au) "Branch of a Foreign Bank or Financial Institution" means a branch of a bank or financial institution that has obtained approval from the Nepal Rastra Bank pursuant to this Act to open a branch office in Nepal and carry out banking and financial transactions.

(av) "Electronic Transaction" means transactions for accepting deposits, making payments, transferring funds through telephone, telex, computer or magnetic tape or other similar electronic devices, and this term also includes transactions through terminals, automated teller machines and cash dispensing machines, and transactions through charge cards, debit or credit cards.

(aw) "Prospectus" means the prospectus required to be published by a bank or financial institution pursuant to Section 8.

(ax) "Branch Office" means any branch, sub-branch, extension counter, regional office, representative or contact office of a bank or financial institution situated in Nepal and outside Nepal, and any branch, representative, contact or any other office of a foreign bank or financial institution situated in Nepal.

(ay) "Share" means the divided portion of the share capital of a bank or financial institution.

(az) "Shareholder" means a person having ownership in the shares of a bank or financial institution.

(ba) "Director" means a member of the Board of Directors, and this term also includes the Chairperson of the Board of Directors and an alternate dire
Banks and Financial Institutions Act, 2017

ctor.

(bb) "Board of Directors" means the Board of Directors formed pursuant to Section 14.

(bc) "Founder" means a person who agrees to take at least one share in the memorandum of association and articles of association for the establishment of a bank or financial institution pursuant to this Act and signs as a founder.

(bd) "Related Person" means a director, officer of a bank or financial institution, or any firm, company or institution in which the family of such person has significant ownership, or any person, firm, company or institution having significant ownership in such firm, company or institution, or the beneficiary having significant ownership therein.

(be) "Independent Director" means a person appointed to the position of independent director pursuant to sub-section (3) of Section 14.

(bf) "Voluntary Winding Up" means a situation where a bank or financial institution is voluntarily wound up pursuant to Chapter 11.

(bg) "Creditor" means a person or corporate body to whom a bank or financial institution owes or is liable to pay, and this term also includes depositors and debenture holders for the purposes of winding up.

(bh) "Hypothecation Loan" means a loan disbu rsed based on an agreement between a bank or financial institution and a borrower pledging goods or stock as collateral, with the right of possession remaining with the concerned borrower. Chapter 2

Provisions Relating to Establishment of a Bank or Financial Institution

3. Establishment of a Bank or Financial Institution: (1) Any person wishing to establish a bank or financial institution to carry out banking and financial transactions pursuant to this Act must register such bank or financial institution as a public limited company under the prevailing law. Provided however, that banks or financial institutions operating at the time of commencement of this Act shall not be required to register under this sub-section.

(2) The officer authorized under the prevailing law to register a company must, when registering a company pursuant to sub-section (1), do so subject to Section 4. 4.
Banks and Financial Institutions Act, 2017

5. Prior Approval Required for Establishing a Bank or Financial Institution with Foreign Investment: (1) When a foreign bank or financial institution submits an application for prior approval for the purpose of establishing a bank or financial institution pursuant to this Act, either jointly with a corporate body established in Nepal or a Nepali citizen, or as a subsidiary company with share ownership as prescribed by the Nepal Rastra Bank, the applicant must, in addition to the documents mentioned in sub-section (1) of Section 4, submit the following documents and details along with the fee prescribed by the Nepal Rastra Bank:-

(a) Copy of the memorandum of association, articles of association and certificate of registration of the foreign bank or financial institution in its home country, and capital structure,
(b) Copy of the license obtained to conduct banking and financial transactions in the home country of the foreign bank or financial institution,
(c) Details of the principal place of business,
(d) Certified copies of the audited balance sheet and profit and loss account for the last three fiscal years of the foreign bank or financial institution,
(e) Details of the proposed business plan, business strategy and type of transactions to be conducted, internal control and risk management in Nepal,
(f) Decision of the foreign bank or financial institution to open a bank or financial institution in Nepal in accordance with the law of its home country, and the authorization given by the regulatory body of that country.

(2) If, upon examining the application for prior approval received under sub-section (1) and the documents attached thereto, it appears appropriate to grant approval, the Nepal Rastra Bank may, with or without imposing any condition, grant prior approval to the foreign bank or financial institution to establish a bank or financial institution with share investment up to the prescribed limit or as a joint venture within one hundred and twenty days from the date of receipt of such application.

(3) A foreign bank or financial institution may, after obtaining prior approval from the Nepal Rastra Bank, acquire share ownership as a joint venture in an existing domestic bank or financial institution by completing the procedure prescribed by the Nepal Rastra Bank.

(4) Notwithstanding anything contained elsewhere in this Act, any investment made by a foreign bank or financial institution or any other foreign institution in a bank or financial institution prior to the commencement of this Act, with approval under the prevailing law, shall be deemed to remain valid in such bank or financial institution. 6.
Banks and Financial Institutions Act, 2017

7. Refusal to Grant Prior Approval: (1) The Nepal Rastra Bank may refuse to grant prior approval for establishing a bank or financial institution or for opening a branch office of a foreign bank or financial institution in the following circumstances:-

(a) If the name of the proposed bank or financial institution or the banking and financial transactions to be carried out by such institution are not considered desirable from the perspective of public interest, religion, caste, community, etc.,
(b) If the objective of the proposed bank or financial institution is contrary to prevailing law,
(c) If the proposed bank or financial institution is not considered technically suitable for establishment,
(d) If, upon studying the feasibility study report, details and documents submitted by the proposed bank or financial institution and other infrastructure, there is no basis to believe that financial transactions can be conducted in a healthy and competitive manner,
(e) If all founders of the proposed bank or financial institution have not signed the memorandum of association and articles of association in the presence of witnesses, specifying their names, addresses, and the number of shares to be taken by each, and the name and address of such witnesses are not disclosed,
(f) If the per person share investment limit and share ownership ratio are not found to be as prescribed by the Nepal Rastra Bank from time to time,
(g) If it is found to be contrary to the policy issued by the Nepal Rastra Bank relating to the establishment of banks or financial institutions and licensing,
(h) If other conditions prescribed by the Nepal Rastra Bank are not found to be fulfilled.

(2) If the Nepal Rastra Bank refuses to grant prior approval to the proposed bank or financial institution due to any circumstance mentioned in sub-section (1), it shall inform the applicant of the reason therefor. Chapter 3

Provisions Relating to Securities Transactions

8. Prospectus: (1) Before making a public issue of securities, a bank or financial institution must obtain approval under the prevailing law relating to securities and register its prospectus with the Nepal Rastra Bank.

(2) Until the prospectus is registered under sub-section (1), neither such bank or financial institution nor any person on its behalf may publish the prospectus of such bank or financial institution.

(3) Notwithstanding anything contained in sub-section (1), the Nepal Rastra Bank shall not register such prospectus unless it receives written information that approval has been granted for registration of the prospectus by the Securities Board. 9. Allocation of Shares: (1) A bank or financial institution must allocate at least thirty percent of its total issued capital for sale and distribution to the general public.
Banks and Financial Institutions Act, 2017

9. Allocation of Shares: (1) A bank or financial institution must allocate at least thirty percent of its total issued capital for sale and distribution to the general public. Explanation: For the purpose of this section, "general public" means a natural person.

(2) Shares allocated for the general public under sub-section (1) must be sold and distributed to the general public within the prescribed period. If not sold, such shares may be sold and distributed to other firms, companies or institutions.

(3) A bank or financial institution may allocate up to 0.5 percent of shares beyond the limit mentioned in sub-section (1) for its employees.

(4) If a bank or financial institution so desires, it may, by completing the procedure prescribed by the Nepal Rastra Bank, convert the remaining portion of shares into the general public share group, provided that the ownership of the promoter share group is not reduced below fifty-one percent. Explanation: For the purpose of this Chapter,-

(a) "Promoter Share Group" means the promoter share group as prescribed by the Nepal Rastra Bank.
(b) "General Public Share Group" means the share group other than the promoter share group.

(5) Notwithstanding anything contained in sub-section (1), the share ownership ratio need not be as per sub-section (1) in the case of a bank or financial institution to be established with significant ownership of the Government of Nepal, and an Infrastructure Development Bank.

(6) A bank or financial institution established with joint investment of a foreign bank or financial institution or any other foreign institution, or an Infrastructure Development Bank, must sell and distribute shares to the general public as prescribed by the Nepal Rastra Bank.

(7) When calling for applications from the general public for the purchase of shares of a bank or financial institution, one hundred percent of the face value of the share must be demanded along with the application. 10. Securities Transactions: (1) When a bank or financial institution issues its securities to the general public, the sale, allotment, and exchange of such securities must be carried out in accordance with the prevailing law relating to securities.

(2) A bank or financial institution must submit a copy of any agreement made with a securities dealer institution for conducting securities transactions to the Nepal Rastra Bank within seven days from the date of such agreement.

(3) A bank or financial institution must obtain prior approval from the Nepal Rastra Bank before issuing any type of debenture or financial instrument.

(4) When granting approval under sub-section (3), the Nepal Rastra Bank may impose necessary conditions, and it shall be the duty of the concerned bank or financial institution to comply with such conditions. 11.
Banks and Financial Institutions Act, 2017

11. Provisions Relating to Sale or Pledge of Shares: (1) A founder of a bank or financial institution shall not sell or pledge the shares held in his/her name until at least five years have elapsed from the commencement of financial operations.

(2) Notwithstanding anything contained in sub-section (1), if any obstruction or disruption occurs in the operation of a bank or financial institution creating a special circumstance, or if a founder becomes included in the blacklist of another bank or financial institution's financial transactions, shares may be purchased or sold among the founders themselves with the approval of the Nepal Rastra Bank. Explanation: For the purpose of this sub-section, "special circumstance" means a situation where the meeting of the Board of Directors cannot be held for three consecutive times due to lack of quorum, or where no decision can be reached due to disputes among directors.

(3) If a founder wishes to sell or pledge shares held in his/her name after five years from the date the bank or financial institution commenced operations and after shares have been issued to the general public, he/she may sell or pledge such shares, subject to the condition that the sold shares remain within the promoter group, with the approval of the Nepal Rastra Bank. Provided however, that a founder holding less than two percent of the paid-up capital shall not be required to obtain the approval of the Nepal Rastra Bank when selling or pledging his/her shares.

(4) Notwithstanding anything contained in sub-section (1) and sub-section (2) of Section 9, after ten years have elapsed from the date the bank or financial institution commenced operations, promoter shares may be gradually converted into general public shares with the approval of the Nepal Rastra Bank, considering the impact on the overall financial sector including the capital market and banking.

(5) In a situation where shares of a founder are held by a company or corporate body, prior approval of the Nepal Rastra Bank must be obtained before any change, sale or transfer of shares of shareholders having significant ownership in such company or corporate body. Provided however, that a company or corporate body holding less than two percent of the paid-up capital of a bank or financial institution shall not be required to obtain prior approval of the Nepal Rastra Bank before selling or transferring its shares. 12.
Banks and Financial Institutions Act, 2017

Provided however, that a company or corporate body holding less than two percent of the paid-up capital of a bank or financial institution shall not be required to obtain prior approval of the Nepal Rastra Bank before selling or transferring its shares. 12. Restriction on Securities Transactions: (1) A director, chief executive, auditor, company secretary, or a person directly involved in the management and accounting functions of a bank or financial institution shall not, during the tenure of such office or until one year from the date of retirement from such office, purchase, sell, cause to purchase or sell, permit to purchase or sell, pledge, cause to pledge, accept or give donation, transfer, or transact securities of the concerned bank or financial institution or its subsidiary company in his/her own name, in the name of a family member, or in the name of any other person or a firm, company or institution under the control of such person. Provided however, that this sub-section shall not be deemed to prevent bonus shares, rights shares, shares allocated for employees, or when new shares are issued, or when implementing directives of the Nepal Rastra Bank, or when any director or corporate body authorized to appoint directors sells all shares held in its name in a bank or financial institution, or when banks or financial institutions merge or amalgamate with each other under Chapter 10, or when one bank or financial institution acquires another bank or financial institution, or when any obstruction or disruption occurs in the operation of a bank or financial institution, the purchase or sale of securities among founder directors or directors with the approval of the Nepal Rastra Bank, or the purchase, sale or transfer of shares occurring in the process of corrective action or resolution of a problematic bank.

(2) If any person does any act contrary to sub-section (1), such securities shall be forfeited by the concerned bank or financial institution and sold and distributed as prescribed by the Nepal Rastra Bank. 13.
Banks and Financial Institutions Act, 2017

Chapter 4

Provisions Relating to Board of Directors and Chief Executive

14. Formation of Board of Directors: (1) A bank or financial institution shall have a Board of Directors consisting

However, this provision shall not be deemed to have prevented the Government of Nepal or an entity owned by the Government of Nepal from purchasing shares, or the Nepal Rastra Bank or a bank or financial institution from purchasing shares, or from nominating a director in a microfinance institution or an infrastructure development bank.

(ṭ) Has not paid the tax payable in accordance with the prevailing law,

(ṭha) Has been convicted by a court in Nepal or a foreign country for an offense of theft, fraud, forgery, impersonation, corruption, any criminal offense involving moral turpitude, or a banking offense, and a period of ten years has not elapsed since the sentence was served,

(ḍa) Has been subjected to action by the regulatory body for acting contrary to law in accordance with the prevailing law, or a period of five years has not elapsed since such action was taken,

(ḍha) In the case of an independent director, such person is a founder of the concerned bank or financial institution or holds more than zero point one percent share ownership,

(ṇa) Has outstanding payment of imprisonment or fine imposed by a court order, or has outstanding government dues to be paid.

(2) Notwithstanding anything contained in clause (ḍa) of sub-section (1), an officer or employee of a bank or financial institution may serve as a director of a subsidiary company of the same bank or financial institution. 19.
Banks and Financial Institutions Act, 2017

19. Circumstances for not continuing in the office of director: (1) No person shall continue in the office of director of a bank or financial institution in the following circumstances: -

(a) If the qualification pursuant to Section 16 or 17 is not met, or if disqualified pursuant to Section 18,

(b) If a proposal submitted to the general meeting by shareholders representing at least fifty-one percent of the shares of the same group from which the director was appointed, to remove the director from office, is passed by a majority,

Explanation: For the purpose of this section, "group" shall be understood to mean the group of founder shareholders and the group of general public shareholders.

(c) If the resignation submitted by the director from his/her position is accepted,

(d) If the director performs any act prohibited for a director under this Act or a directive of the Nepal Rastra Bank,

(e) If the Nepal Rastra Bank gives a directive to remove the director, stating that he/she is disqualified to remain in the office of director of that bank or financial institution and perform functions due to acting against the interests of the bank or financial institution or the depositors.

(2) If a bank or financial institution believes that any of its directors is disqualified to continue in that office under this Act or the Nepal Rastra Bank Act, or if the director does not continue in the office, it shall inform the Nepal Rastra Bank in writing within fifteen days thereof.

(3) With respect to a director reported as disqualified to continue in office pursuant to sub-section (2), the Nepal Rastra Bank may make necessary inquiries and issue appropriate directives. 20. Regarding a person holding a constitutional office: A person holding a constitutional office shall not, while continuing in such office, hold the position of director of the board of directors or chief executive of any bank or financial institution. 21. Meeting of the board of directors: (1) The meeting of the board of directors shall be held at least twelve times a year. Provided that the interval between two meetings shall not exceed sixty days.

(2) If at least one-third of the directors make a written request specifying the subject matters to be discussed in the meeting, the chairperson shall convene a meeting of the board of directors at any time.

(3) The chairperson shall preside over the meeting of the board of directors.
Banks and Financial Institutions Act, 2017

Provided that if any director wishes to record a dissenting opinion on a decision of the board of directors, such dissenting opinion may be signed by him/her and recorded in the minute book. 22. Functions, duties and powers of the board of directors: (1) Except for the functions performed by the general meeting of the bank or financial institution, all functions, duties and powers of the bank or financial institution shall vest in the board of directors, subject to this Act, the prevailing law, the memorandum and the articles of association.

(2) It shall be the duty of the board of directors to operate the bank or financial institution in the interest of depositors, customers and general public shareholders by managing the overall risk of the bank or financial institution, and to ensure that the board does not interfere in the day-to-day operations of the bank or financial institution, such as taking deposits, granting loans, making investments, managing employees, and spending budgets, while maintaining appropriate institutional governance in the bank or financial institution.

(3) Other functions, duties and powers of the board of directors shall be as follows: -

(a) To make and implement necessary regulations, directives and procedures, subject to this Act, the prevailing law and the directives of the Nepal Rastra Bank, to conduct the functions of the bank or financial institution in a systematic manner,

(b) To prepare and implement internal control systems and risk management standards to conduct banking and financial transactions cautiously in accordance with its policies and strategies, in order to prevent risks or risky situations from arising in the transactions of the bank or financial institution,

(c) To make necessary policy arrangements for all functions and activities of the bank or financial institution, to conduct regular monitoring of the activities, and to operate or cause to operate the bank or financial institution in a systematic and prudent manner,

(d) To prepare a clear organizational structure of the bank or financial institution, to formulate policies and implement them,

(e) To present the annual report including the audit report of the bank or financial institution to the annual general meeting,

(f) To perform other functions as prescribed by the Nepal Rastra Bank from time to time. 23.