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Synopsis of Company Act, 2006 (2063)

Private Limited Company - limits the number of its shareholders from 1 to


50 and it does not allow inviting the public to subscribe for shares.
Public Limited Company - the minimum number of 7 shareholders (and
there is no maximum limit) and should offer shares and debentures to the
public through a prospectus whichcomplies with the requirements of the
Companies Act and Securities Act.
b) Offers shares and debentures to the public through a
rospectus whichcomplies with the requirements of the Companies Act 2006
and Securities Act.
c) A company can be formed as a public company or alternatively, a
company which is incorporated as a private company can also be converted
into a public company and vice versa.
d) A not profit distributing company also can be established under the
company act.
Documents requiredto establisha company
Memorandum of Association and Article of Association, Agreement among
promoters if any, license from concerned organization if required by law,
citizenship certificates of promoters in case if natural person and
registration certificates in case of organization, application to CRO, required
fees.
Foreign investors should produce the document of approval from the
Department of Industries and agreement of joint venture investments.

Major features of the act:


Promote the institutional good governance,
Protection of investors / shareholders through financial discipline.
Simplify and make flexible the company's operation and
management / government control has been reduced
Not for profit distributing company can be established.
Company has a power as the natural person.
Provision of Commerce Court (Tribunal)
Provision of Company Board (having jurisdiction power) and Company
Advisory Board.
Shareholders having 5% or more than 5% amount of total share are
called Fundamental Shareholders, and theirs name should be disclosed in the
financial statements.
Share of own company can buy back in special conditions
Office of the Company Registrar (CRO)

Powerful regulator for company administration, supervision and control.


Can punish the company who breaches the prevailing rules and regulation.

Can examine all documents of the company anytime and anywhere.

Restriction / Compliance by Company laws:


No one is allowed to use word "Company" without registration in CRO.
Should send the report of each general assembly's decision
Should submit the share allotment report.
Documents to be submitted by company to CRO
Audited financial report after completion of 6 months from Shrawan(i.e.
end of Paush),
In case of foreign establishment, within 3 months after completion of the
audit report.

Private Company:
No limitation of minimum capital, not necessary to disclose the audit and
annual report to public
Single person can be a shareholder of the private co.

Public Company

Minimum capital should be Rs. 10 million

Minimum shareholders 7 person and no bar to maximum shareholders

Recruitment of Company Secretary is compulsory,

Banking and Financial institutions, insurance, mutual fund, Retirement


Fund, Capital market related company should be registered as a public
company,

If number of shareholders of private company surpass 50 the company


should change to public company,

Must publish the details of the company (Bibaranpatra) at the time of


public issue of share capital.

Can raise debenture


Special decision to be made by General Assembly in the following
cases
To raise the authorized capital, to change the amount of share capital, to be
merged or to take merged, to change objectives, to issue share in discount,
to change status of company from private to public and vice versa, to issue
bonus shares.
Company Accounts:
Language of the accounts may be either in Nepali or in English, double entry
system, based on NAS and GAAP, books accounts should be kept in
registered office and other places as per allowed by the CRO, should prepare

and submit to CRO--audited financial statement including Balance Sheet,


Income statements, Cash Flow statements.
Company Audit:
Auditor should be appoint by Annual General Assembly (AGM), should form
an Audit Committee (3 members) by a listed company having capital Rs. 30
million, one member of the Committee should be expert in any field of
commerce, finance, management, accounts or audit.

Registration Fees of Private and Public Co:


Authorized Capital
Upto1 million
Above 1 to 5 million
Above 5 to 2.5 million
Above 2.5 to 10
million
Above 10 to 20 million
Above 20 to 30 million
Above 30 to 40 million

Private Co.
1000
4500
9500
16000

Above 40 to 50 million
Above 50 to 60 million
Above 60 to 70 million
Above 70 to 80 million
Above 80 to 90 million
Above 90 to 100
million
Above 100 million

28000
31000
34000
37000
40000
43000

Additional Rs. 100


million
Above Rs, 500 million

19000
22000
25000

Fees Rs.
Public Co.
15000

40000

Rs.30/ per .1
million
Additional Rs.30000
Rs. 3000 / per Rs. 100 million