www.lawcommission.gov.np 
              

                                     Companies Act, 2063 (2006) 
                                                                              Date of Authentication:  
                                                                         2063.7.7 (3 November 2006) 
              1. Some Nepal Act (Amendment) Act, 2064                     2064.5.9 (26 August 2007) 
                                     Act Number 18 of the Year 2063 (2006) 
                    An Act made to amend and consolidate the law relating to companies 
              Preamble: Whereas, it  is  expedient to  amend  and  consolidate the law  relating  to 
              companies in order to bring about dynamism  in the economic development of the 
              country by promoting investment in the industry, trade and business sectors through 
              economic liberalization and make the incorporation, operation and administration of 
              companies much easier, simpler and more transparent; 
                    Now, therefore, be it enacted by the House of Representatives in the First Year 
              of the issuance of the Proclamation of the House of Representatives, 2063 (2006). 
                                                   Chapter 1 
                                                  Preliminary 
              1.      Short title and commencement: (1) This act may be called as the “Companies 
                     Act, 2063(2006)”. 
                            (2)  This  Act  shall be deemed to have come into force on 20 Ashwin 
                     2063 (6 October 2006). 
              2.      Definitions: In this Act, unless the subject or the context otherwise requires, 
                     (a)    “Company” means a company incorporated under this Act.  
                     (b)    “Private company” means a private company incorporated under this 
                            Act.  
                     (c)    “Public company” means a company other than a private company.  
                     (d)    “Holding company” means a company-having control over a subsidiary 
                            company.  
              www.lawcommission.gov.np                   
                 www.lawcommission.gov.np 
                 

                         (e)     “Subsidiary  company”  means  a  company  controlled  by  a  holding 
                                 company.  
                         (f)     “Foreign company” means a company incorporated outside Nepal.  
                         (g)     “Listed company” means public company which has its securities listed 
                                 in the stock exchange.  
                         (h)     “Company not distributing profits” means company incorporated under 
                                 Chapter 19 on conditions that it shall not be entitled to distribute or pay 
                                 to  its  members  any  dividends  or  any  other  moneys  out  of  the profits 
                                 earned or savings made for the attainment of any objectives.  
                         (i)     “Promoter”  means  a  person  who,  having  consented  to  the  matters 
                                 contained  in  the  memorandum  of  association  and  the  articles  of 
                                 association  to  be  furnished  in  the  Office  for  the  incorporation  of  a 
                                 company, signs the same in the capacity of promoter.  
                         (j)     “Officer”  includes  director,  chief  executive,  manager,  company 
                                 secretary,  liquidator  and  any  employee  undertaking  departmental 
                                 responsibility of the company.  
                         (k)     “Memorandum of association” means the memorandum of association 
                                 of a company.  
                         (l)     “Articles of association” means the articles of association of a company.  
                         (m)     “Prospectus” means a prospectus to be published by a company pursuant 
                                 to Section 23.  
                         (n)     “Share” means the divided portion of the share capital of a company.  
                         (o)     “Preference share” means a share issued as a preference share pursuant 
                                 to this Act.  
                         (p)     “Ordinary share” means a share other than a preference share.  
                         (q)     “Bonus  share”  means  a  share  issued  as  an  additional  share  to 
                                 shareholders, by capitalizing the saving earned from the profits or the 
                 www.lawcommission.gov.np                          
                  www.lawcommission.gov.np 
                  

                                   reserve  fund of a company, and this term includes the increase of the 
                                   paid up value of a share by capitalizing the saving or reserve fund.  
                           (r)     “Shareholder”  means  a  person  having  ownership  in  the  share  of  a 
                                   company.  
                           (s)     “Debenture” means any bond issued by accompany whether putting its 
                                   assets as collateral or not.  
                           (t)     “Debenture  trustee”  means  a  body  corporate  undertaking  the 
                                   responsibility for the protection of interests of debenture-holders at the 
                                   time of issuance of debentures by a company. 
                           (u)     “Register”  means  a  register  of  shareholders  or  debenture-holders 
                                   maintained under Section 46.  
                           (v)     “Seal of company” means the seal of a company to be used by it.  
                           (w)     “Securities  Board”  means  the  securities  board  established  under  the 
                                   prevailing law to regulate and manage securities.  
                           (x)     “Securities” means any shares, bonds, debentures or stocks issued by a 
                                   company,  and  this  term  includes  the  receipt  relating  to  deposits  of 
                                   securities and the rights and entitlement relating to securities.  
                           (y)     “Director” means any director of a company and this term includes any 
                                   alternate director.  
                           (z)     “Board of directors” means the board of directors of a company.  
                         (z1)      “Managing director” means a managing director of a company.  
                         (z2)      “Premium share” means a share so issued by a company as to sell it for 
                                   a value in excess of its face value.  
                           (z3)    “Net worth” means the assets of a company remaining after deducting 
                                   the paid up capital, reserve, fund or free reserve of whatever designation 
                                   to  which  shareholders  have  right  or  all  other  liabilities  other  than 
                                   goodwill, if any, of the company as well as loss provisions , if any, from 
                                   the total assets of the company for the time being.  
                  www.lawcommission.gov.np                               
               www.lawcommission.gov.np 
               

                       (z4)   “Consensus agreement” means an agreement made unanimously by all 
                              the  shareholders  of  a  private  company  existing  for  the  time  being  in 
                              respect of the operation of the company.  
                       (z5)   “Office”  means  the  Company  Registrar’s  Office  set  up  by  the 
                              Government of Nepal for the administration of companies.  
                      (z6)    “Register” means the Registrar of the Office.  
                      (z7)    “Independent director” means any independent director appointed under 
                              Sub-section (3) of Section 86. 
                       (z8)   “Court”  means  the  commercial  bench  of  a  court  specified  by  the 
                              Government  Nepal  by  a  notification  in  the  Nepal  Gazette,  with  the 
                              consent of the Supreme Court.  
                       (z9)  “Close relative” means a partition shareholder in joint family or husband, 
                              wife,  father,  mother,  mother-in  -law,  father-in-  law,  elder  brother, 
                              younger  brother,  elder  sister,  younger  sister,  sister-in–law  ,(elder  or 
                              younger brother’s wife), brother-in–law , sister–in–law, brother-in- law, 
                              (husband of elder sister), uncle, aunt,  maternal uncle, maternal aunt, son, 
                              daughter, daughter-in-law ,grand–son, grand-daughter, grand-daughter-
                              in– law or son-in–law . 
                       (z10)  “Prescribed” or “as prescribed” means prescribed or as prescribed by the 
                              Government of Nepal by a notification   in the Nepal Gazette. 
                                                        Chapter 2 
                                               Incorporation of Company 
               3.    Incorporation  of  Company:  (1)  Any  person  desirous  of  undertaking  any 
                       enterprise  with  profit  motive  may,  either  singly  or  jointly  with  others, 
                       incorporate a company for the attainment of one or more objectives set forth in 
                       the memorandum of association. 
                              (2) There shall be a minimum of seven promoters for the incorporation 
                       of a public company.  
               www.lawcommission.gov.np