KATHMANDU: The legality of the Kathmandu Upatyaka Khanepani Limited (KUKL) has been at stake because it has not submitted its annual reports yet except for its first year into being.

It's been nine years since the state-owned water utility responsible for the water supply and sanitation in the Kathmandu Valley was registered at the Office of Company Registrar.

KUKL is obliged to submit its annual audit report, decisions of the annual general meeting among others to the Office of the Company Registrar annually.

According to the Company Act, the organisations not submitting their audit reports annually for three years in succession would be scrapped automatically. But since the government is the major shareholder of the KUKL, it has been pardoned for nine years.

According to Secretary at the Ministry of Drinking Water and Sanitation, Bhim Prasad Upadhyay, the Tax Office would have scrapped the Limited if it had not paid its taxes but the government provided the KUKL some 70 million to clear its tax.

The loss of KUKL has surpassed Rs 400 million as it suffers Rs 200 millions of loss annually. The Limited currently has Rs 450 million as an authorised capital while its paid-up capital stands at Rs 20.5 million, according to Secretary Upadhyay.

Registrar at the Office of Company Registrar (OCR,) Geeta Kumari Humagain, said that all the companies registered at the OCR have to renew their registration annually. "Those failing to renew their registration for three years in succession will be scrapped," she said.

However, KUKL's General Manager Mahesh Prasad Bhattarai shared that the organisation has already held annual general meeting and prepared audit report of five years since he assumed office 16 months ago.

He reaffirmed his commitment to preparing audit reports of all remaining years by the end of 2017 and to submit all the required papers to the concerned authorities for the KUKL to strengthen its legal status.