House okays Company Act Amendment Bill

Kathmandu, March 15

The Parliament on Tuesday passed the amendment bill of the Company Act with a provision that requires private telecommunication service providers with paid-up capital of more than Rs 50 million to turn into a public company within the next two years.

With such provision in the new law, such private telecom operators will have to issue shares to the public in near future.

Except Nepal Telecom (NT), other five telecom service providers in Nepal are owned by the private sector. Among the private sector-owned telecom operators in the country, paid-up capital of United Telecom Ltd (UTL), Nepal Satellite Telecom and Ncell exceeds Rs 50 million.

Registrar Prem Kumar Shrestha said that such a provision was introduced for private telecom operators as they have comparatively higher direct every day linkage with the public.

Similarly, the amended bill of the Company Act has also given exit chance to such domestic and foreign firms in Nepal that are registered but are no longer in operation. As per the new law, any defunct firm can exist by paying 0.5 per cent of its paid-up capital or 0.5 per cent of due taxes that such companies owe to the government (whichever is less) in the next two years.

“As per information available to us, there are thousands of such small firms that are registered but have remained defunct. Such provision aims to facilitate the exit procedure of the firms that owe large dues to the government but want to exit,” Minister for Industry Nabindra Raj Joshi informed a press briefing on passage of amended Company Act here today.

The newly amended bill of the Company Act has also given validity to online registration of companies and use of digital signatures. Similarly, the new Company Act has also increased the upper limit of number of promoters in a company from 50 to 101. The government has also introduced a provision whereby promoters of any company can participate in their annual general meeting (AGM) through video conference.

“Amendments in the Company Act are basically inclined to simplify entry, operation and exit of any firm in the country,” added Joshi.

Major highlights

  • Private telecom operators need to go public within two years
  • Defunct firms can exist by paying 0.5pc of its paid-up capital or 0.5pc of due taxes, whichever is lower
  • Online registration of companies and use of digital signatures validated
  • Upper limit of number of promoters expanded to 101 from 50
  • Promoters allowed to participate in AGM through video conference