Nepal Government Introduces Key Amendments to Companies Act to Boost Market Transparency

The government has recently implemented significant amendments to the Companies Act to enhance the transparency and functionality of Nepal’s stock market. Finance Minister Bishnu Prasad Paudel explained that these changes aim to replace outdated provisions, facilitating smoother corporate operations and contributing to economic growth.

Minister Paudel emphasized the steady improvement of economic indicators under the current government, noting that the positive trend reflects genuine progress. He assured the public that these figures have not been manipulated to create a more favorable image, adding that the country is now moving in a positive direction after a period of negative economic performance.

The amended Companies Act introduces several reforms, including provisions that benefit startups and private companies. Startups can now allocate shares to venture capital firms and individual investors, enabling greater access to funding. Additionally, private companies are now allowed to hire consultants, helping them improve operational efficiency. Public companies, such as banks and financial institutions, can appoint advisers to enhance decision-making.

The amendments also streamline the process for private companies to issue premium shares, eliminating the need for approval from the Office of the Registrar of Companies. Furthermore, a new procedure for the cancellation of company registration has been introduced, allowing non-operational companies to publish a public notice for 35 days before their registration is revoked if no claims are received.

Minister Paudel expressed confidence that the amended law would benefit the private sector, noting that umbrella organizations had welcomed the reform. The government is also focusing on improving capital expenditure and ensuring that contractors receive payments without delay.

On the international front, Paudel reassured that Nepal is actively working to avoid being included in the Financial Action Task Force's (FATF) risk list for money laundering. The government is committed to implementing preventive measures to protect Nepal’s global reputation.

The key amendments include:

i. Startup Share Administration: Startups can now allocate up to 40% of shares to venture capital firms and 20% to individual investors.
ii. Consultants in Private Companies: Private companies can hire consultants to enhance operations.
iii. Advisers to Public Companies: Public companies, including financial institutions, can appoint advisers for expert guidance.
iv. Premium Share Issuance Simplified: Private companies are no longer required to get approval from the Office of the Registrar of Companies to issue premium shares.
v. Company Registration Cancellation Procedure: Non-operational companies can cancel their registration after publishing a 35-day public notice.