As comparison, India’s Companies Act, 2013 has, amongst other things, introduced enhanced corporate governance standards particularly in relation to independent directors, audit, corporate social responsibility, mandatory valuation, private placement of securities, cross-border mergers (including merger of Indian companies into foreign companies) and class action suits. Further, corporate governance and accounting standards in India, particularly for listed companies, have gained increased attention in recent years and have become more stringent with respect to disclosures, segmental reporting and consolidation of financial statements. For example, SEBI requires listed companies to pass ordinary resolution for all all material related party transactions. The rules also require entities to give prior intimation about fund-raising events such as preferential issue, rights issue and debt issue (including the method for determination of issue price), as well as file an annual information memorandum.

# **B. Minority protection for AIF in portfolio companies**

Various provisions of Nepal’s Companies Act seek to protect minority shareholders. Some of the key provisions related to protection of minority rights include:

- a. Per Section 138, any shareholder may petition the Court to prevent a director or officer of the company from acting _ultra vires_ (beyond his/her powers).

- b. The Companies Registry Office (“CRO”) may also petition the Court if, based on investigation, the CRO finds that the business of a company is being conducted, or or at risk of being conducted, in a manner that is not in the best interest of any of its shareholders.  Similarly, a shareholder can petition the Court, providing necessary evidence, if an act is considered not in the best interest of any shareholder.

- c. The Court may make an order to prevent the act complained of, requiring the company to institute civil proceedings as directed by the Court, requiring the buy-back of the shares of any shareholder by reducing the capital of the company, and to return the amount of such shares. Where any shareholder has incurred any loss and damage as a result of any discrimination against him, the Court may order the company or the person making responsible for such discrimination to pay compensation to the shareholder. The court may order the liquidation of the company.

- **d.** Per Section 140, if a Company fails to take legal action against any director, officer or shareholders, a shareholder holding 2.5% or more of the paid-up capital of the company may start such legal action on behalf of the company.<sup>42</sup>

In comparison, under India’s Companies Act, 2013, members of a company<sup>43</sup> can file an application to the National Company Law Tribunal (“NCLT”) in case of oppression and mismanagement. Additionally, if the members<sup>44</sup> of a company are of the opinion that the management or conduct of the affairs of the company are being conducted in a manner prejudicial to the interests of the

> 42 The shareholder may choose to take such action separately or jointly with two or more shareholders holding 5 percent shares. If the shareholder wins the case, expenses and legal costs incurred by him/ her in connection with the legal proceedings must be reimbursed by the company.

> 43 In case of a company having share capital, not less than 100 members of the company or not less than 1/10th of the total number of its members, whichever is less, or any member or members holding not less than 1/10<sup>th</sup> of the issued share capital of the company and in case of a company not having share capital, not less than 1/5<sup>th</sup> of the total number of its members. 44 In case of a company having share capital, not less than 100 members of the company or not less than 1/10th of the total number of its members, whichever is less, or any member or members holding not less than 1/10<sup>th</sup> of the issued share capital of the company and in case of a company not having share capital, not less than 1/5<sup>th</sup> of the total number of its members.

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