Law Questions RTP

Page 140 of 296 Paper 4: Corporate Law [RTP December 2018]
NEPAL CHARTERED ACCOUNTANTS ACT, 1997 AND RULES 2061
Question No 1:
Mr. Murali Rajpakchhe has registered as member of the Institute of Chartered Accountants of
Nepal pursuant to sub-section (2) (b) of Section 16 of the Nepal Chartered Accountants Act,
1997 after passing Chartered Accountants Membership Examination of the Institute of Chartered
Accountants of Nepal in 2017 and also obtained Certificate of Practice (COP) under section 28
of the same Act. In the due course, it was found that certificate submitted by Mr. Murali was
fake on the ground that he has not passed any Chartered Accountant Examination in the Institute
of Chartered Accountants of Sri Lanka. The certificate that was submitted to ICAN was
fraudulent paper prepared by him somewhere else.
(i) State the procedures of cancellation of the membership and certificate of practice of Mr.
Murali.
(ii) What types of penalties in addition to the above is imposable to Mr. Murali?
Question No 2
How is the Council of the Institute of Chartered Accountants of Nepal constituted? Mr.
Romanson, a Chartered Accountant was elected as the Council member of the Institute in the
year 2007 pursuant to clause (a) of sub-section (3) of section 7 of Nepal Chartered Accountants
Act, 1997. He also became the President of the Institute in the Year 2009 pursuant to the Act. He
is once again contemplating of becoming President of the Institute in the upcoming Council.
Please suggest him about the validity of his contemplation according to prevailing Nepal
Chartered Accountants Act and Rules.
Question No 3:
Mr. Bhadra Lal, a Chartered Accountant was nominated by Government of Nepal as member of
the Accounting Standards Board in January, 2018. He was convicted by a court of a criminal
offence involving moral turpitude and punished for such offence in August, 2018. Consequently
the Institute (ICAN) also removed his name from the membership register. You are required to
suggest whether or not he shall be removed from the member of the Accounting Standards
Board.
Question No 4.
State the Standing (permanent) committees of ICAN and its composition as provided in Nepal
Chartered Accountants Act, 1997.
The Institute of Chartered Accountants of Nepal

THE COMPANIES ACT, 2063
Question No 5:
Dairy Development Corporation (DDC), a corporation wholly owned by Government of Nepal
is engaged in producing pasteurized milk and dairy products. It has been operating in loss since
last 7 years. Government of Nepal is contemplating of conversion of the corporation into
company. Is it possible? Please base your advise according to the provisions contained in
Companies Act, 2063.
Question No 6:
Mrs. Muna is appointed as director from the Annual General Meeting of M/S Black Pearl
Ornaments Limited on 2074/11/20 for 4 years. However, she has not submitted any disclosure
to the company where she has been appointed as director under Section 92 of the Companies
Act, 2063. In this situation, who, either company or the director is responsible for the default?
What should be the possible punishment to the accused?
Question No 7:
Kasthmandap Pashmina Udyog Limited is a company incorporated in Nepal with its registered
office at Swyambhu, Kathmandu. 85% of its paid up shares are held by shareholders who are
the permanent resident in New Delhi, India. Company Secretary called an extraordinary general
meeting with a specific agenda by publishing a notice that the extraordinary general meeting of
the company will be held in New Delhi at Oberio Hotel at 1 p.m. on 15th September, 2010. Mr
Sagar Maskey is also a shareholder. Mr. Maskey protested that the meeting cannot be held
legally as it is going to be held in New Delhi instead of Kathmandu and that sufficient notice
was not given. However, shareholders representing 85% of the shares decided that the meeting
should be held. The extraordinary general meeting was held in New Delhi as notified and passed
resolution unanimously as per agenda. Mr. Kiran Tuladhar, who is the chairman of the company
called the meeting to order and following decision, were reached.
(i) Transfer of share from Standard Chartered Bank to Nabil Bank of Kathmandu.
(ii) The board had recommended declaration of 30% dividend. However shareholders felt that it
was not sufficient and decided by majority, for 50% dividend.
(iii) Articles of association (AOA) was amended to reduce the board of directors from 7 to 5
directors.
(iv) The decision made in the extraordinary general meeting was circulated to the shareholders
after 45 days from the date of the meeting. The minute of the meeting was signed by the
Managing Director of the company.
Mr. Sagar Maskey challenged the decision reached in the extraordinary general meeting. What
is your view regarding the challenge?
Question No 9:
Nepal Hydro power, a public Limited company, which is partly owned by the Government of
Nepal, was incorporated in 2070 B.S. It operated in loss for the first two years of its
incorporation and is in consecutive profit thereafter. The reserve and surplus balance of the

company is positive. In the year 2075 the company declared 40% final dividend on its paid up
capital of Rs. 3,00,00,00,000. Such dividend was distributed to its shareholders. Give your
opinion regarding the distribution of the dividend with reference to the legal provision prescribed
by the Companies Act, 2063.
Question No 10:
Sun Cosmetics Limited, a public company, was established on 2063/12/28 and had started its
commercial production on 2064/1/12. In the meantime, the Board of Directors of the company
had appointed statutory auditor for the year 2063/64 to conduct the audit of the company.
However, the company could not hold its first annual general meeting till the end of Ashadh
2066. The Board of Directors of the company again appointed the same auditor saying that the
company had not yet conducted the first annual general meeting for the year 2064/65 and
2065/66.Explain, referring the provisions of the Companies Act, 2063, legality of the
appointment of the auditor.
Question No 11:
ABC Company Limited passed an ordinary resolution at general meeting of members to buy
back 25% of its Equity Share Capital. The Articles of the company empower the company for
buyback be made out of the proceeds of the company‗s earlier issue of Equity Shares. Whether
the company‗s proposal of buy-back is in order? What would be your answer, if buy-back only
20% instead of 25% of equity capital? Explain in the light of the provisions of the Company Act
2063.
Question No 12
Black Forest Limited is a public Limited Company. It was incorporated on 2072/2/30. The
directors of the company are not acting in the interest of the company rather using the company
for their personal benefits. Mr. Johnson Adhikari holds 11% of the paid up capital of the
company. Mr. Johnson seeks your opinion as to whether he can file a case in the court against
such director to have any rights and interests of the company enforced. Enumerate on the light of
Question No 13
Mr. Roop Lal was appointed as a director of a company in an Annual General Meeting. He took
over the office and carried out his functions as director. Subsequently, it was found that there
were some irregularities in the appointment and hence the appointment was declared invalid.
Would the duties performed by XYZ, while in office as director, be binding upon the company
under the provisions of the company Act 2063?
Question No 14:
MD Clean Power Pvt. Ltd. was in process of incorporation. Promoters of the company signed an
agreement for the purchase of certain equipment for the company and payment was to be made
to the suppliers by the company after its incorporation. Shortly, after incorporation the company
went into liquidation and the debt for the purchase of assets could not be paid by the company.
As a result suppliers sued the promoters of the company for recovery of the dues.

Examine, with reference to the provisions of the Companies Act, 2063 when the company can be
held liable for payment in the given case.
Question No 15:
Differentiate the reporting to the Company Registrar Office (CRO) under Section 51 with
Section 78 of Companies Act, 2063.
Question No 16
Mustafa Avenues Ltd, a company registered in Pakistan has registered its branch office in
Nepal on 2074/10/25. The fiscal year 2074/75 has already ended. Mr. Abbas, the legal
representative of the company in Nepal is confused whether such company is required to submit
annual accounts and documents to CRO. Explain the relevant provisions in light of the
companies Act, 2063.
Question No 17
Board of directors of Apurna Limited wants to liquidate the company voluntarily. Under what
circumstances the company can choose voluntary liquidation? Explain the procedures referring
the provisions of Companies Act, 2063.
SECURITIES ACT, 2063
Question No 18:
Ram Janam is a chief accountant of a commercial bank listed on the stock exchange. Whilst
drawing up the annual accounts, Ram Janam knows that the bank has made a better profit than
expected. On the basis of that knowledge, he buys shares of the bank before the good results are
announced. He makes a substantial profit on the share dealing. Ram Janam also discloses the fact
to his friend Basanti before they are announced. Basanti also buys shares of the bank. Whether
Ram Janam and Basanti have committed any immoral act? Explain how these problems are tried
to control under the prevailing law of Nepal?
Question No 19
Explain the business principles required to be observed by the securities business person in
carrying on the securities business as per the provisions of Securities Act, 2063.
Question No 20
After the change of government, the staff of Nepal Securities Board office demanded the
Government to remove the Chairperson of this Board, and the government said it would be
according to law. State the circumstances on which the Chairperson of Nepal Securities Board
may be removed from office by the Government of Nepal pursuant to the Securities Act, 2063.

BANKS AND FINANCIAL INSTITUTIONS ACT, 2073
Question No 21
Beauty Development Bank Limited, a national level 'B' class financial institution licensed from
NRB has been in operation since seven years. The inspection and supervision report of the NRB
carried in the year 2075 revealed that the financial position of the bank is declining since last two
years. Considering the inspection and supervision report, NRB issued a direction on 2075/6/10 to
Beauty Development Bank Limited to get merged with other bank or financial institution.
Examine the validity of the direction issued by NRB according to the provisions of Banks and
Financial Institutions Act, 2073.
Question No 22
Explain the circumstances under which banks or financials institutions may be compulsorily
liquidated under Bank and Financial Institution Act, 2063
Nepal RASTRA BANK ACT, 2058
Question No 23
How the Audit Committee as per Nepal Rastra Bank Act be formed? Define the functions, duties
and power of the Audit Committee formed under the Act.
Question No 24
Both the Deputy Governors of the Nepal Rastra Bank are retiring in Shrawan 2075. Your
appointment is sought on the following issues with regard to the new appointment.
(i) What is the tenure of service of the Deputy Governor?
(ii) How many candidates should be recommended and who are the recommending and
appointing authorities?
(iii) Can Mr. Safal, a Chartered Accountant with an M.A. in economics and having 20 years of
executive level experience in commercial banking but holding 3% stake in Grow Fast Bank Ltd.
be appointed as one of the Deputy Governors?
(iv) Can a Deputy Governor in office be removed from his post for not attending Board Meeting
of the Bank?
Question No 25
What are the punishments that may be imposed by Nepal Rastra Bank to any bank or financial
institution in case any bank or financial institution licensed from Nepal Rastra Bank, violates an
order or directives issued by Nepal Rastra Bank?
INDUSTRIAL ENTERPRISES ACT, 2073
Question No 26

What do you mean by Micro Enterprises? State the additional facilities and concessions provided
to such industries pursuant to the Industrial Enterprises Act, 2073
Question No 27
Mr. Rabilal Mathema filed an application to the Department of Industries for the registration of
biscuit and chocolate industry on 15th September, 2018. The Department refused to register the
industry on 28th September, 2018 without providing him insufficient grounds for non-
registration. He seeks your advice as to any remedy against the decision of the Department
pursuant to the Industrial Enterprises Act, 2073.
Question No 28
Explain the functions, duties and power of One Point Service Operation Committee under
Industrial Enterprises Act, 2073.
FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER ACT, 1992
Question No 29
What do you mean by Foreign Investment? Mr Neil Armstrong, a Canadian citizen residing in
Nepal for last 2 years purchased 2000 units of shares of Himalya Hydro Limited from the
secondary market. Does this transaction/investment signify foreign investment? Base your
answer on the light of Foreign Investment and Technology Transfer Act, 1992
Question No 30
There was a dispute between Devine Films Limited, a company registered in Nepal and Mr. Carl
Smith (foreign investor). You as a consultant are required to suggest mechanism for settlement
of disputed as per Foreign Investment and Technology Transfer Act, 1992
LABOR ACT, 2074
Question No 31
What are the functions, duties and power of Central Labour Advisory Council according to the
provisions of Labour Act, 2074 (Section 103)
Question No 32
Mr. Bhimsen Gurung, proprietor of Star Woods is facing labour manpower shortage to manage
his enterprises. He is thinking for appointment of part time worker in his enterprise. In this

regards you are required to advise him on the following queries according to the provisions of
Labour Act, 2074
(a) What do you mean by part time employment?
(b) What is the basis of fixing remuneration of a part time worker?
(c) Is part time worker entitled to over time payment? If yes, how is the overtime payment
determined?
(d) What are the rights of part time worker?
INSURANCE ACT, 1992 AND RULES 1993

Question No 33
Moon Life Insurance Company Limited applied for registration as a Life Insurer with the
Insurance Board on 2074/11/10. The Board issued the registration certificate to Moon Life
Insurance on 2074/11/30. Due to some internal problems, Moon Life Insurance has not
commencement its business yet. The Chairman of the Board is contemplating for cancellation of
registration of Moon Life Insurance. He seeks your opinion as to advise him whether the Board
can cancel the registration of Moon Life Insurance in this regard as per the provisions of
Insurance Act, 1992.
Question No 34
Explain the provisions relating to Fund of Insurance Board and Accounts and Audit of the Fund.
Question No 35
Explain the composition of Insurance Tariff Advisory Committee as per the provisions of
Insurance Act, 1992. Explain the functions, duties and power of the Tariff Advisory Committee
as provided in Insurance Rule, 1993
AUDIT ACT, 2048
Question No 36
Explain the powers of Auditor General as per Audit Act, 2048.
Question No 37
Himal Power Limited is a company established by twenty nine shareholders having fifty seven
percent assets ownership of Government of Nepal. Chief Financial Officer (CFO) informed the
Managing Director (MD) of Palpa Power Company Limited that there are certain procedure as
per the Audit Act, 2048 to be followed while appointing the auditor and conducting the audit.
However, the MD argued that auditor will be appointed by the AGM. Advise with reasons who
is correct; CFO or MD?
INTERNATIONAL FINANCIAL TRANSACTIONS ACT, 2054
Question No 38

The governor of Nepal Rastra Bank is confused about formation of International Financial
Transactions
Accreditation Committee. Please advise the governor.
Question No 39
Explain the functions, duties and power of Accreditation Committee as per the International
Financial Transactions Act, 2054.
COOPERATIVE ACT, 2074
Question No 40:
Explain the functions of National Cooperatives Federation pursuant to Cooperatives Act, 2074
Question No 41
Explain the functions, duties and power of the Preliminary General Meeting pursuant to
Cooperatives Act, 2074
INSOLVENCY ACT, 2073
Question No 42
DGK Ltd. is facing insolvency proceedings from its creditors and the court has appointed an
inquiry official under Section 10(3) on the basis of an application made under Section 4(1).
Elaborate the area of inquiry for the official and the provision regarding management of the
company during inquiry period as per the Insolvency Act, 2063?
Question No 43
Explain voidable transactions under Insolvency Act, 2063.
Question No 44
Sickwell Limited could not pay its creditors. Creditors went to the court and the court issued an
order requiring the company to pay to the creditors. Forty days have passed since the court
issued such order still the company did not pay to the creditors. Give your legal opinion whether
the company can be called as insolvent or not.
MONEY LAUNDERING PREVENTION ACT, 2064
Question No 45
Government of Nepal has enacted Money Laundering Prevention Act, 2064 for the prevention of
laundering of money (assets) earned through criminal proceeds. What activities are considered as
money laundering offence under the Money Laundering Prevention Act, 2064?
Question No 46
Explain Suspicious Transactions Reporting (STR) obligations of the Reporting entity as
prescribed in Money Laundering Prevention Act, 2064.
Question No 47

Explain the functions, responsibilities and power of Financial Information Unit (FIU) under
Money Laundering Prevention Act, 2064.
PUBLIC PROCUREMENT ACT, 2063 and RULES 2064
Question No 48
Explain the objective of the Public Procurement Act, 2063.
Question No 49
State the matters to be mentioned in the notice on invitation to bid or prequalification proposal
under the Public Procurement Act, 2063.
BANKING OFFENSE AND PUNISHMENT ACT, 2064

Question NO 50
State the main banking offences under the Banking Offence and Punishment Act,2064?
Question No 51
State the objectives of enactment of Banking Offence and Punishment Act, 2064.
FOREIGN EXCHANGE REGULATION ACT, 2019

Question NO 52
Ms. Sarina Mahat had worked in different offices of World Bank in South American countries
and has earned five million US Dollars. Ms. Sarina is now retiring next month and planning to
come to Nepal. She needs advice on the provisions relating to maintaining/keeping of foreign
exchange obtained by her in the course of her employment.
Question No 53
Explain the provision on reward to be provided to the informant under Foreign Exchange
(Regulation) Act, 2019.
ARBITRATION ACT, 2O55
Question NO 54
Mention the process of appointment of arbitrator under the Arbitration Act, 2055
Question No 55
Mention the grounds for disqualification of an arbitrator under Arbitration Act, 2055.
FINANCIAL MEDIATOR ACT, 2058

Question No 56
Discuss the procedure of licensing to Financial Mediators under the Financial Mediator Act,
2058:

Page 112 of 296 Paper 4: Corporate Law [RTP June 2018]
Questions
NEPAL CHARTERED ACCOUNTANTS ACT, 1997 AND RULES 2061

1. Mr. Johnson, a Sri Lankan citizen passed CAP III level examinations from the Institute of Chartered
Accountants of Nepal in the year 2016. He wants to practice accountancy profession in Nepal. He
seeks your opinion in this regard. Please advise him in this regard as per Nepal Chartered
Accountants Act and Rules.
2. How is the disciplinary committee of the Institute of Chartered Accountants of Nepal constituted?
Explain its functions, duties and powers.
3. Mr. Rabindra Lal, a Chartered Accountant was elected as the council member of the institute
pursuant to clause (a) of subsection (3) of section 7 of the Nepal Chartered Accountants Act, 1997
on 2073/1/10. It was held that he has not abided by the conduct referred to in Section 34 of the Act.
Explain whether Rabindra Lal shall cease to hold his office of council and how will the vacancy if
any be full filled under Nepal Chartered Accountants Act, 1997.
4. Explain the provisions of punishment as provided in Nepal Chartered Accountants Act, 1997.
THE COMPANIES ACT, 2063
1. The Skylark Public Limited was incorporated on 2072/10/10. There are 7 directors in the company.
The company has issued 550,000 equity shares of Rs. 100 each and the paid up equity capital of the
company is Rs. 38,500,000 (550,000 shares of Rs 70 each). The company is operating in profit since
the year of its incorporation. The Chairman of the company is considering buy back of the shares of
the company. On the light of the Companies Act, 2063 state the provisions of buy back of shares by
the company. Is the approach of the chairman valid?
2. The Moon Limited was incorporated on 2071/4/20. The paid up capital of the company is Rs.
50,000,000. It operated in profit in the year 2071 and 2072. In the year 2073 and 2074, the company
incurred huge loss owing to trade recession. The managing director of the company is considering
reduction of share capital. Please advise the managing director on the light of Companies Act, 2063.
3. Zebra Limited was incorporated in 2072/2/10. The capital structure of the company consists of paid
up capital of Rs. 25,000,000. The company is considering issuance of preference shares in the year
2074. Please advise the company in the light of Companies Act, 2063 regarding the issuance of
preference shares by the company.
4. Mr. RK had purchased 49 percent shares of XYZ Pvt. Ltd on January 22, 2010 from Mr. Ram Kumar
Giri soon after commencement of business on January 5, 2010. On May 1, 2010 the company went
into liquidation. The creditors of the company had provided services worth Rs. 50.00 lac prior to
incorporation of the Company on the basis of a consensus agreement of the promoters which states
that the expenses incurred prior to incorporation would be borne by the Company. The consensus
agreement has not been ratified by the company after incorporation although Mr. R was a witness to
the consensus agreement. Now, the creditors claim that Mr. R is also liable along with other
promoters. However Mr. RK claims that the remaining promoters along with Mr. Giri are liable since
he was not a party to the consensus agreement. Advise Mr. R in the light of the relevant provisions of
the Company Act 2063 on the above issue and the consequences?
5. Sun Cosmetics Limited, a public company, was established on 2063/12/28 and had started its
commercial production on 2064/1/12. In the meantime, the Board of Directors of the company had
appointed statutory auditor for the year 2063/64 to conduct the audit of the company. However, the
company could not hold its first annual general meeting till the end of Ashadh 2066. The Board of
Directors of the company again appointed the same auditor saying that the company had not yet
conducted the first annual general meeting for the year 2064/65 and 2065/66. Explain, referring the
provisions of the Companies Act, 2063, legality of the appointment of the auditor.
6. The shareholders of Evergreen Public Limited adopted special resolution in the general meeting for
the voluntary liquidation of the company. Accordingly Mr. Narayan Shrestha, a Chartered Accountant
was appointed as the liquidator of the company. Mr. Narayan is unaware about his role of liquidator.
You as a consultant are required to suggest Mr. Narayan of his powers and duties as a liquidator on
the light of Companies Act, 2063.
7. White Garden Limited is a public Limited Company. It was incorporated on 2072/2/30. The directors
of the company are not acting in the interest of the company rather using the company for their
personal benefits. Mr. Johnson Adhikari holds 11% of the paid up capital of the company. Mr.
Johnson seeks your opinion as to whether he can file a case in the court against such director to have
any rights and interests of the company enforced. Enumerate on the light of Companies Act, 2063.
8. XYZ, a public limited company was incorporated on 2074/4/10. Its registered office is situated in
Baneshwor-10, Kathmandu. It has two subsidiary companies. The first fiscal year of the company is
near to end. Mr. Hari Bhakta, finance director of the company seeks your help regarding the
documents of its subsidiary companies to be enclosed with its financial statements. Please advise the
director in the light of Companies Act, 2063.
9. Explain in the light of Companies Act, 2063 the matters that may be provided for in a consensus
agreement of a private company.
10. American Software Limited is a company incorporated in USA. It has adopted massive expansion
strategy. Accordingly it is intending to open its branch office In Nepal. The company has hired you as
a legal consultant. The company seeks your advice as to the documents required to be prepared and
submitted to the Company Registrar Office for the registration of branch office in Nepal. Enumerate
as per the provisions of Companies Act, 2063.
11. Explain the circumstances in which attendance or voting in meeting is restricted under companies
Act, 2063.

1. Explain ‗Insider trading‘ and the persons likely to be involved in insider trading under the provisions
of securities Act, 2063.
2. Explain the business principles required to be observed by the securities business person in carrying
on the securities business as per the provisions of Securities Act, 2063.

1. Nepal Rastra Bank may apply to the court for compulsive liquidation of any bank or financial
institution. Explain the circumstances/situations required to be prevailed in any bank or financial
institutions for compulsive liquidation as per Banks and Financial Institutions Act, 2073.
.
2. Excellence Development bank (a national level ‗B‘ class institution licensed from Nepal Rastra
Bank) is operating in profit continuously since last 6 years. It intends to upgrade in ‗A‘ class Bank. In
this regards it seeks your opinion. Explain the provisions of conversion of lower class financial
institutions into higher class banks or financial institutions as per Banks and Financial Institutions
Act, 2073.
Nepal RASTRA BANK ACT, 2058
1. CA. Vishrut Gautam was appointed as the Governor of Nepal Rastra Bank on 2074/10/10. He seeks
your opinion as to the provisions of prohibition on vested personal interests applicable to the
Governor, Deputy Governor or directors of Nepal Rastra Bank as per Nepal Rastra Bank, 2058.
2. How does Nepal Rastra Bank mobilize Foreign Exchange Reserve?
3. What are the punishments that may be imposed by Nepal Rastra Bank to any bank or financial
institution in case any bank or financial institution licensed from Nepal Rastra Bank, violates an order
or directives issued by Nepal Rastra Bank?

1. Mrs. Radhika Tamang is thinking to establish an Industry in Banepa-10, Kavre. She seeks your
opinion as to whether women entrepreneur are provided additional facilities and concessions. Advise
her as per Industrial Enterprises Act, 2073
2. Enumerate the objective of Industrial Enterprises Act, 2073.
3. Explain the functions, duties and power of Industry and Investment Promotion Board under
Industrial Enterprises Act, 2073.

1. Mr. Tata Maco, a German Citizen is considering for investment in Nepal. He seeks your opinion
whether he can avail Nepalese Visa in this regard.
2. There was a dispute between Sparrow Liquor Limited, a company registered in Nepal and Mr. John
Fernandis (foreign investor). You as a consultant are required to suggest mechanism for settlement of
disputed as per Foreign Investment and Technology Transfer Act, 1992
LABOR ACT, 2074

1. Green Garments Limited was established on 2070/10/10. It has been operating at 60 % of its normal
production capacity and in loss since its incorporation. The managing director of the company is
thinking to engage skilled Pakistani citizens to increase the production of the company. The company
seeks your opinion as to the recruitment of foreign citizen. Explain the relevant provisions as per
Labour Act, 2074.
2. What are the deductions allowed from the remuneration to be obtained by the worker or employees as
per Labour Act, 2074?
INSURANCE ACT, 1992 AND RULES 1993
1. Sun Life Insurance Company Limited has not submitted the actuary report to the Insurance Board
since last 3.5 years. The Insurance Board opposes to renew the certificate of registration of the
Insurer. Is the opposition of the Board valid?
2. The Insurance Board cancelled the registration of Moon General Life Insurance Company Limited
due to frequent violation of the act and the rules framed under the act. Explain the order of priority in
settlement of liabilities as per Insurance Act, 1992.
3. Explain the composition of Insurance Tariff Advisory Committee as per the provisions of Insurance
Act, 1992
AUDIT ACT, 2048

1. Explain the powers of Auditor General as per Audit Act, 2048.
2. Dairy Development Corporation Limited, a corporation wholly owned by the Government of Nepal
has not audited its books of accounts for the last two financial years. The shareholders of the
company feel that the Auditor General could not perform the audit due to his time constraint and
hence decided to appoint Mr. Hero Pandey, a practicing Fellow Chartered Accountant, as its auditor
in its AGM.
i) Is his appointment valid?
ii) Will your answer be the same if Hero Pandey is appointed by the Auditor General as his assistant
to complete the audit of the corporation?

1. What are the activities prohibited to be carried by International financial entities as per the
International Financial Transactions Act, 2054.
2. Explain the functions, duties and power of International Financial Transactions Promotion Board as
per the International Financial Transactions Act, 2054.
COOPERATIVE ACT, 2074

1. What are the eligibility criteria for membership of a cooperative society as per Cooperative Act,
2074?

1. Who are the persons entitled to apply to the court for insolvency proceedings against any company as
per Insolvency Act, 2063?
2. Explain voidable transactions under Insolvency Act, 2063.
3. Explain ‗Offense‘ under Insolvency Act, 2063.

1. Explain the documents and records to be maintained by the Reporting Entity under the Money
Laundering Prevention Act, 2064.
2. Explain Suspicious Transactions Reporting (STR) obligations of the Reporting entity as prescribed in
3. Explain the functions, responsibilities and power of Financial Information Unit (FIU) under Money
Laundering Prevention Act, 2064.
PUBLIC PROCUREMENT ACT, 2063 and RULES 2064

1. Explain the objective of the Public Procurement Act, 2063.
2. Identify the steps to be undertaken by public entity before placing order for procurement of goods
pursuant to the Public Procurement Act, 2063 and Public Procurement Rules 2064.

1. State the main banking offences under the Banking Offence and Punishment Act, 2064?
FOREIGN EXCHANGE REGULATION ACT, 2019
1. Ms. Sarina Mahat had worked in different offices of World Bank in South American countries and
has earned five million US Dollars. Ms. Sarina is now retiring next month and planning to come to
Nepal. She needs advice on the provisions relating to maintaining/keeping of foreign exchange
obtained by her in the course of her employment.
ARBITRATION ACT, 2O55

1. Mention the process of appointment of arbitrator under the Arbitration Act, 2055.
FINANCIAL INTERMEDIARY ACT, 2055
1. Discuss the procedure of licensing to Financial Mediators under the Financial Mediator Act, 2058:
Revision Questions:
NEPAL CHARTERED ACCOUNTANTS ACT, 2053 AND RULES, 2061
1. Mr. Sher Bahadur Thapa, a Nepalese national qualified as a Chartered Accountant from the Institute of
Chartered Accountants of Pakistan (ICAP) in the year 2017. He returned to Nepal in January, 2019. He is
contemplating to obtain membership of ICAN. Is it possible? Please advise him under Nepal Chartered
Accountants Act, 1997.
2. The Institute of Chartered Accountants of Nepal (ICAN) received a letter containing a complaint
against Mr. Hero, a member of ICAN that he conducts audit in partnership with Mr. Smart, a ‘B’ Class
RA member of the Institute. How and what action the Council of ICAN can take against Mr. Hero & Mr.
Smart under Nepal Chartered Accountants Act, 2053?
COMPANIES ACT, 2063

3. Dream Garden was incorporated as a private limited company on 2068/2/20. It had profitable business
from the year of its registration to the year 2071. In the year 2072 it was converted into a public limited
company. The company also changed its name as Heaven Garden Public Limited in the year 2073 as per
the provisions of the Act. The extract of Balance Sheet of the company as on 2076/3/32 is as follows:
Liabilities Amount (Rs) Assets Amount (Rs)

Capital 1,25,00,000 Fixed assets 1,30,00,000
Reserve & Surplus (1,00,00,000) Current assets 45,00,000
Loan & outsider liabilities 1,50,00,000
Total 1,75,00,000 Total 1,75,00,000
In the light of the above balance sheet, you are required to provide the legal solutions on the following
questions:
(i) Is there any responsibility on the part of the directors?
(ii) State the punishment if any imposed to the directors under the Companies Act, 2063 in case of failure
to comply the responsibility of (a)
(iii) What shall be the consequences if the above figures in the balance sheet are occurred due to malafide
(bad) intention of any director/s?
4. Globe Limited is a subsidiary company of World Limited. Global Limited sold some of its property. It
has hired you as a consultant to advice in the following matters:
(i) If Globe Limited or World Limited need to inform the Company Registrar's Office (CRO) about sold
property. When and under what conditions does a company need to inform the acquisition or sold of
property to the Office of Company Registrar?
(ii) Explain the matters to be provided to CRO in this respect.

5. Lali Gurans Stock Exchange Limited is a body corporate having obtained the license to operate the
stock exchange from the Securities Board of Nepal since 2072. In the year 2076 Shrawan, it became
insolvent being unable to repay credit to creditors. In this regards you are required to advice the following
matters:
(i) Explain the circumstances/situations in which the Securities Board may revoke (cancel) license
obtained by any stock exchange or securities business.
(ii) Can the Securities Board cancel the license of Laligurans Stock Exchange Limited on the ground of
being insolvent?

6. Bank X and Bank Y have obtained theoretical approval of merger from Nepal Rastra Bank. Now, the
two banks are required to make arrangement on different matters as provided in the Banks and Financial
Institutions Act, 2073 and required to make agreement. Explain the matters to be included in such
agreement.
NEPAL RASTRA BANK ACT, 2058

7. Nepal Rastra Bank has declared Xina Bank Limited as a problematic institution pursuant to section
86(B) of Nepal Rastra Bank Act, 2058. State the possible actions NRB may take upon Xina Bank Limited
under NRB Act, 2058.
AUDIT ACT, 2075

8. What do you mean by Corporate Body? Explain the provisions relating to audit of Corporate Body.
Explain it pursuant to the provisions of Audit Act, 2075.

9. Yeti industry has been in operation from 2068. The company operated in profit up to the year 2071. It
was in loss from the year 2072 to 2075 with production level of 50% during these years. Ram Lal, the
managing director of the company is contemplating that his industry be classified as sick industry and it
shall obtain facilities and exemptions accordingly. You are required to advise Mr. Ram Lal citing the
legal provisions of Industrial Enterprises Act, 2073.

10. Parrot Industry is an industry established under the Industrial Enterprises Act, 2073. Mr. John, a
Japanese investor has invested in 12 % of share capital of the industry. A dispute has arisen between Mr.
John and the Industry regarding foreign investment. You are hired as a consultant of the industry to
advice regarding the dispute settlement mechanisms citing the legal provisions of the Foreign Investment
& Technology Transfer Act, 2075.
INSURANCE ACT, 2049

11. Lumbini General Insurance Company Limited has been given order to cancel the registration by
Insurance Board. The following are the liabilities of the company. However the company could only
realize Rs. 600 million from its assets on liquidation. You have been appointed as a liquidator of the
company. How do you settle the following liabilities in the priority basis?
(i) Loan amount 150 million
(ii) Amount due to the Board 120 million
(iii) Amount due to GON 30 million
(iv) Dues to the employees 35 million
(v) Insurance claim 250 million
(vi) Amount of liquidation 15 million
LABOUR ACT, 2074 AND RUES, 2075

12. Explain the provisions relation to formation of Labour Coordination Committee and its functions,
duties & powers under the Labour Laws.

13. Explain the facilities and privileges available to International Financial Entity under the International
Financial Transactions Act, 2054.
COOPERATIVES ACT, 2074 & RULES 2075

14. Explain the provisions relating to formation and functions, duties and powers of Accounts
Supervision Committee under the Cooperatives Act, 2074.

15. Sriman was appointed as the liquidator of ABC Limited. During his working period he found that
certain transitions as carried out by the company were voidable. Considering the provisions of the Act, he
has made application to the Court to declare these transactions void. Enumerate the powers of the Court in
Relation to Voidable Transactions.
ASSET (MONEY) LAUNDERING PREVENTION ACT, 2064 & RULES 2073

16. Define Domestic Politically Exposed Person. Explain the special provisions for identification of
Politically Exposed Person (PEP) as provided in Asset (Money) Laundering Prevention Act, 2064.
PUBLIC PROCUREMENT ACT, 2063 AND RULES 2064

17. Public Procurement Rules, 2064 (Rule, 32) provides that if a Public Entity is to invite a bid by
determining pre-qualification, it shall have to prepare prequalification documents before inviting a bid.
State the matters to be included in such pre-qualification documents.
ARBITRATION ACT, 2055

18. Explain the powers of the Arbitrators exercised in the arbitration process as provided in Arbitration
Act, 2055.

19. Define ‘Dhukuti Transactions’ and state the punishments relating to offense of ‘Dhukuti transactions’
pursuant to Banking Offenses and Punishment Act, 2064.
ACT RELATING TO INSTITUTIONS ACTING AS FINANCIAL INTERMEDIARY, 2055
20. Explain the provisions relating to merger of a financial intermediary institution under Financial
Intermediary Act, 2055?
FOREIGN EXCHANGE (REGULATION) ACT, 2019 (1962)
21. Green Apparels Limited, a garment exporter makes arrangements to receive the payments from the
White Company Limited, a Japan based company for the garments exported after a month than that of the
prescribed time limit. There has been a very cordial business relationship between these two companies
since a decade. Will action of Green Apparels limited justified?
REVISION QUESTIONS
Question No. 1.
Mr. Sharma, a FCA member of ICAN was appointed as manager of ABC Trading Ltd. On 2067-12-1.
He discontinued his job on 2068-12-1. As he had a good relation with the company and its
management, the general meeting of the company appointed him as auditor of the company for
the fiscal year 2069/2070 on 2069-9-29. Mr. Sharma signed the audit report on 2070-9-20. Mr.
Sharma is alleged to have given statement without due care and Mr. Shrestha an engineer who
has no connection with the company filed a complaint at ICAN against Mr. Sharma on 2075-1-25.
Decide in accordance with Nepal Chartered Accountants Act and Rules.
(a) Did Mr. Sharma commit misconduct?
(b) Can Mr. Shrestha file such complaint? Explain with considering time limitation as prescribed in
Nepal Chartered Accountants Rule, 2061?
Question No. 2.
Explain the circumstances in which the Council may remove the name of member from the
Membership Register pursuant to Nepal Chartered Accounts Rule, 2061.
Question No. 3.
Explain the duties and responsibilities of the members to be abided in carrying accounting
profession pursuant to Nepal Chartered Accountants Rule, 2061.
Question No. 4.
Mr Rajesh Sharma FCA has charged a fee for representing his client M/S Annapurna Fabrics Private
Limited in Tax settlement commission on the expected relief to his client as a result of the
settlement commission. Is this arrangement is in accordance with the Nepal Chartered Accountant
Act, 2053?
COMPANIES ACT, 2063

Question No. 5.
D Ltd. was incorporated in accordance with the Company Act, 2063 (2006). It has 100
shareholders. The Articles of Association (AOA) provides the quorum for the proceedings of the
meeting of the company at least 10 shareholders of the total shareholders representing more
than 60 percent of the total numbers of allotted shares of that company present either in person
or by proxy. Further, it also provides that the matters relating to increase the authorized capital of
the company should be presented in general meeting of the company as a special resolution. It
has got its license to commence its business in February 1, 2011. As the company law and its rules,
company intended to increase its authorized capital. However, AGM of the company could not be
hold except first annual general meeting even the pressure of the shareholders. It is said to be
that the shareholders of the company are the owner of the company. So, in relation to the
Companies Act, 2063 (2006) solve following problems with the help of the facts or the legal
provisions of the Companies Act.
(i) How can the shareholders compel to the company to hold annual general meeting? Explain the
legal provisions.
(ii) The Company called annual general meeting due to the pressure of the company's
shareholders and passed resolution to increase authorized capital having presence 6 in numbers
that represents only 40% shareholders of the total numbers of allotted share of that company. Is
the resolution passed is valid or any else?
Question No. 6.
A Company was in the process of incorporation. Promoters of the company signed an agreement
for the purchase of certain furniture for the company and payment was to be made to the
suppliers of furniture by the company after incorporation. The company was incorporated and the
furniture was used by it. Shortly after incorporation, the company went into liquidation and the
debt could not he paid by the company for the recovery of money. Examine whether promoters
can he held liable or company be liable for payment under the following situation:
i. In case of a Public Limited Company?
ii. In case of a Private Limited Company?
Question No. 7.
A consensus agreement concluded between Mr. A, B, C and D the promoters of Babarmahal
Resort Private Limited making a provision that general meeting of the company shall not be held.
The consensus agreement was submitted to the Company Registrar Office with the application of
incorporation of the company. What shall be the consequence of the above provision mentioned
in consensus agreement?
Question No. 8.
PQR Limited has a paid up capital of Rs. 30 lacs, Reserves of Rs. 10 lacs and total loans of Rs. 70
lacs in its balance sheet. The company desires to buy back its capital amounting to Rs. 10 lacs.
Examine the legality of the extent of the proposed buyback by PQR Limited.
Question No. 9.
Kanchanjanga Public Company, having its registered office in Kathmandu, calls its Annual General
Meeting at Kathmandu. A notice mentioning the place, date and agenda were published by the
company in Himalayan Times on 15th October, 2018, calling the meeting will be held on 8th
November, 2018. No other public notice was made by the company for its Annual General
Meeting. Seven percent of the shareholders of the company attended the meeting in person and
decided on the agenda. Considering that the meeting was not an adjourned meeting, state your
findings on the following issues referring to the provisions of the Companies Act, 2063.
(i) Irregularities committed by the company on entire proceedings mentioned above.
(ii) Validity of the resolutions passed by the meeting.
Question No. 10.

The Board of Directors of a company has filed a complaint with the Institute of Chartered
Accountants of Nepal against their statutory auditor for his failing to attend the Annual General
Meeting of the Shareholders in which audited financial statements were considered. Examine,
what is the validity of such complain with reference to Companies Act, 2063 and Nepal Chartered
Accountants Act, 2053?
Question No. 11.

The board of directors of Gagan Aviation Ltd. decided to operate Aircraft Maintenance, Repair and
Overhaul (MRO) Service in joint venture with London Aeronautics and to sell its 55% shares. The
majority of the shareholders opposed this resolution and in the general meeting, with more than
2/3 majority, they disapprove the directors' action. Advise the directors about the validity of their
action and the dealing with London Aeronautics.
Question No. 12.

Explain the functions, duties and powers of Audit Committee pursuant to Companies Act, 2063.
Question No. 13.

Himal Power Limited is a company partially owned by Government of Nepal with paid up capital of
Rs. 100 million. The Managing Director of the company is confused whether the company is
required to have company Secretary. Please advise him whether the company is required to have
company secretary and also mention the qualification of the company secretary pursuant to the
Question No. 14.

Explain the provisions relating to transactions between associated companies as provided in

Question No. 15.
Out of 7 members of the Securities Exchange Board of Nepal, six members except chairperson
have decided to remove chairperson from the Board. Give your opinion based on Securities Act,
2063.
Question No. 16.

The Securities Business persons are required to observe defined business principles in carrying out
their business. Explain the business principles to be observed by the Securities business persons as
provided in the Securities Act, 2063.
Question No. 17.

Explain False Trading and the punishment to be imposed on persons involved in such trading
pursuant to Securities Act, 2063.

Question No. 18.
What are the activities permitted to be carried by Infrastructure Development Bank as provided in
Banks and Financial Institutions Act, 2073?
Question No. 19.

State the order of priority in settlement of liabilities of a bank or financial institution undergoing
voluntary liquidation as provided in Banks and Financial Institution Act, 2073.
Question No. 20.

Explain the activities deemed to be an offense under Banks and Financial Institutions Act, 2073.

Question No. 21.
In the year 2073/2074, the collected revenue of Government of Nepal was Rs. 60 million, the
value of the overdraft from the Nepal Rastra Bank and the total value of the Government bond (all
types) earned by the Nepal Rastra Bank in the year 2074/75 were Rs. 5 million and Rs. 8 million
respectively. Examine the case in terms of the specific provisions of the Nepal Rastra Bank Act,
2002.
Question No. 22.

What are the circumstances in which banks or financial institutions shall be deemed problematic?
AUDIT ACT, 2048

Question No. 23.
Office of the Auditor General appointed Suresh & Associates, chartered accountancy firm, as an
assistant auditor to conduct the audit of a corporation fully owned by Government of Nepal. Mr.
Umesh, proprietor of the firm thinks that he shall have to audit independently. Mr. Umesh started
to bargain for the remuneration with the client. Can he perform audit independently and ask
remuneration from client? Give your opinion based on relevant provisions of the Act.
Question No. 24.

Mention the provisions relating to appointment and qualification of Auditor General of Nepal as
provided in Constitution of Nepal, 2072.

Question No. 25.
Chameli Tea Estate of Fikkal is producing tea leaves in a small scale since May 12, 2016. However,
the estate was producing tea leaves without getting the permission from the concerned offices of
the Government of Nepal. As a result the government of Nepal is investigating and planning to
impose action against this tea estate. Elaborate the possible action that the Authorities can take
against the tea estate considering the legal provisions of the Industrial laws.
Question No. 26.

Explain National Priority Industries under Industrial Enterprises Act, 2073.
Question No. 27.

Agni industry has been in operation from 2065 Sharwan; however, industry is in consecutive losses
since its establishment. Council of Ministers, Government of Nepal thinks that it will be more
beneficial to protect the employment of industry's worker or employee rather than to liquidate
the company, consequently, Government of Nepal decided to nationalize the industries. Give your
opinion based on the relevant provisions of the law.

Question No. 28.
Mention repatriation procedures of loans and interest by an industry established in Nepal with
foreign loans under the Foreign Investment and Technology Transfer Act, 1992.
Question No. 29.

What are the different types of visa available to foreign Investor as per Foreign Investment and
Technology Transfer Act, 1992?
Question No. 30.

Explain the provisions of punishment under Insurance Act, 1992.
Question No. 31.

An Insurance Board was formed under Section 3 of the Insurance Act, 2049 where Mr. Kishor Rai
was appointed as chairperson. He as a newly appointed chairperson asked you to submit a note
on the procedure how the meeting of Insurance Board is held as per section 5 of this Act. Explain
it.
Question No. 32.

Differentiate between principle of Subrogation and principle of Contribution in Insurance
business.
LABOUR ACT, 2074 AND RUES

Question No. 33.
Explain the duties of Employer towards transport workers pursuant to Labour Act, 2074.
Question No. 34.

Explain the provisions relating to formation and function, duties and powers of Labour Relation
Committee pursuant to Labour Act, 2074.

Question No. 35.
Mention the provisions relating to maintenance of Secrecy by the Accreditation Committee
pursuant to the International Financial Transactions Act, 2054.
Question No. 36.

Explain the formation of Accreditation Committee pursuant to International Financial Transactions
Act, 2054.
COOPERATIVES ACT, 2074

Question No. 37.
Discuss the various exemptions and facilities which are granted to the co-operative societies
under the Co-operative Act, 2074.

Question No. 38.
The creditors of Badmas Company Limited had filed to the court for the insolvency of the
company. The court upon its hearing made the order to institute insolvency proceedings of the
company. You are requested to advise Mr. Fantus, director of the company regarding suspension
of transactions of the company after the issue of such order of the court pursuant to Insolvency
Act, 2063.
Question No. 39.

The court issued order for restructuring of the Bindas Company Limited after studying the report
submitted by the Inquiry Officer. It appointed Mr. Ram Lal as Restructuring Manager of the
company. You are asked him to advise the restructuring programs of the company pursuant to
Insolvency Act, 2063.

Question No. 40.
Explain the typical process involved in Money Laundering.
Question No. 41.

Money Laundering and Terrorist financing both are considered as predicate offenses under the
Money Laundering Prevention Act, 2064. Explain the basic differences between the two offenses.

Question No. 42.
What are the non-compliance in the bills that results in non-processing of the bills as provided in
Public Procurement Act, 2064.

Question No. 43.
Mention the grounds which disqualify a person to become an arbitrator under Arbitration Act,
2055.

Question No. 44.
Mention the lending activities to be considered as offense under Banking Offenses and
Punishment Act, 2064.
Revision Questions:

1. Green City Resorts Limited was incorporated on 2076/10/10 and obtained certificate to commence
business from the Company Registrar Office on 2077/01/15. Mr. Ram Shrestha was appointed as an
auditor of the company by the board of directors of the company to audit its accounts of the Fiscal Year
2076-2077. Ram Shrestha committed certain offences in the course of auditing the accounts of the
company. The company removed him and complained this matter to Institute of Chartered Accountants of
Nepal (ICAN). Green City Resorts Limited has sought your advice on the following questions:
(i) Is the appointment of Mr. Ram Shrestha valid?
(ii) What are the punishments imposed against the auditor for his offences under the Companies Act,
2063? (iii) What action the Council of ICAN can take against the auditor, in this case?
(iv) Suggest the remedies if any available to Mr. Ram Shrestha against the action taken by Council of
ICAN.
2. Mr. Clever has registered as Chartered Accountant member of Institute of Chartered Accountants of
Nepal (ICAN) after passing Chartered Accountants Membership Examination of the Institute in 2018 and
got Certificate of Practice under Section 28 of the Nepal Chartered Accountants Act, 2053. In the due
course, it was found that certificate submitted by Mr. Clever was false on the ground that he has not
passed any Chartered Accountant Examination in the Institute of Chartered Accountants of Pakistan. The
certificate that was submitted to the Institute of Chartered Accountants in Nepal was fraudulent paper
prepared by him somewhere else.
(i) State the procedures of cancellation of the membership and certificate of practice of Mr. Clever?
(ii) What types of penalties is attracted to Mr. Clever?
COMPANIES ACT, 2063

3. Himalayan Garments Limited has been operating in profit for the last 3 years. The Board of Directors
of the company felt that changed conditions are not favorable to the company’s long term prospects and
thus decided that the company be liquidated voluntarily. Explain in the light of Companies Act, 2063:
(i) What are the conditions for the company to voluntarily liquidate?
(ii) What is the procedure for voluntary liquidation of the company?
(iii) What would be the consequences if it is discovered, during the process of liquidation, that the
company is not able to pay its liabilities in full?
4. Sky Inc. is a foreign company registered with the Company Registrar’s Office (CRO) pursuant to
Chapter- 16 of Companies Act, 2063. His legal representative in Nepal is unaware about books of
accounts, annual report and auditing requirements of such company. Advise him on the light of

5. List the securities business person that require to specify at least one person to act as an agent. Explain
the procedures for becoming a formal agent of a securities business person in the light of Securities Act,
2063.

6. Pralahad Gautam is Deputy General Manager of Sambriddhi Bank Limited. The shares of the bank are
listed in the stock exchange. Pralahad knows that the bank has made a better profit than expected. On the
basis of that knowledge, he buys shares of the bank before the good results are announced. He makes a
substantial profit on the share dealing. He also discloses the fact to his friend Shyam Sharma before they
are announced. Shyam also buys shares of the bank. Whether Pralahad and Shyam have committed any
immoral/unethical act? Explain how these issues are addressed and tried to control under the prevailing
laws of Nepal?

7. Deena Bank Limited (‘A’ class bank licensed by Nepal Rastra Bank) has been facing financial
problems from the last two years. It has not been able to operate smoothly. The loan assets quality of the
bank is not good and its liability also exceeds the net assets. The bank is also subject to frequent
violations of Rastra Bank directives. In the light of the given information answer the following questions:
(i) Can Deena Bank Limited subject to control by Rastra Bank and subject to resolution (settlement)?
(ii) If Rastra Bank takes Deena Bank under its control and appoints Special Administration Team to
initiate the work of resolution, explain the role of directors and chief executive officer of the bank in the
resolution process.
AUDIT ACT, 2075

8. Share structure of Mustang Hydro Energy Limited is as follows:
Mustang People 20%
Other Nepalese 10%
Dairy Development Corporation 70%
The management of Mustang Hydro Energy Limited has written a letter to the Institute of Chartered
Accountants of Nepal (ICAN) for audit of the books of account of the company for 2076/77. ICAN has
handed over the letter to the office of the Auditor General of Nepal. Who has the authority to appoint
auditors of Mustang Hydro Energy Limited? Justify your answer referring the provisions of Audit Act,
2075.
9. Mr. Shyam Sundar is running a beer industry (situated at Panchkhal, Kavre) for last 2 years. The entire
beer is sold within the country. The industry wants to expand its production base for which it requires
additional land. Due to his limited land, Mr. Shyam wants to avail government land on lease. You are
required to advice Mr. Shyam Sundar provisions relating to availing government land on lease for
operation of industry. Also advice Mr. Shyam Sundar whether he can avail government land on lease for
the operation of his industry.
10. Explain the procedure a foreign investor can invest in Nepal according to the Foreign Investment and
Technology Transfer Act, 2075? State the foreign investment approving authority under the Act.
INSURANCE ACT, 2049

11. General Insurance Company Limited, a newly established general insurance company obtains
insurance contract of Everest Hotel for the F/Y 2077/78 by quoting rates lower than the prescribed rates.
In the previous fiscal year, the hotel was insured with Himalayan General Insurance Company Limited.
Sanima General Insurance is contemplating whether the unethical deal can be sued. Advise highlighting
the provisions of Insurance laws/regulations.
LABOUR ACT, 2074 AND RULES, 2075

12. Sky Lark Garments Limited has been run by 90 staffs. The total staff consists of 50 permanent staffs
and labors and 40 (50) daily wages temporary staffs. The recruitment of the daily wages staffs was done
in the lot of 20 (25) persons twice whereas recruitment of 50 permanent staffs was done in the lot of 30,
10 and 10 thrice. The industry faces financial problems in its operation. The management of the industry
decides to close down a part of its plants and also decides to retrench all its daily wages staffs and 20
permanent staffs for the period of 6 months:
(i) Which lot of permanent staffs will be retrenched in the normal situation?
(ii) What is the compensation payable to the retrenched staffs?
(iii) Will the amount of compensation be same if the factory is seasonal and the staffs have been lay off
for off season?

13. The Revenue Investigation Commission has filed a case to the court against Clever Hedge Funds
Limited, an international financial institution licensed by the implementation committee. Can the court
direct the Implementation Committee to submit documents pertaining to Clever Hedge Funds Limited? Is
the Implementation Committee obliged to furnish the information to the court?
COOPERATIVES ACT, 2074 & RULES 2075

14. During the course of inspection of the Sandar Cooperatives Bank Limited, it was observed that it has
not complied with the directives issued by Nepal Rastra Bank. As a consequence of violation of Rastra
Bank directives, Nepal Rastra Bank suspended the board of directors of the Sandar Cooperatives Bank.
Give your opinion as to the validity of the actions of the Rastra Bank pursuant to the cooperatives laws.

15. Ram Sharan Bhandari was appointed as a restructuring manager pursuant to the order of the court to
implement the restructure scheme of the Gurans Resorts Limited. He duly called the meeting of the
creditors to discuss the details of restructuring program and accordingly a resolution was adopted on
restructuring scheme submitted by Mr. Ram Sharan Bhandari. Mr. Hari Sharma (an unsecured creditor) is
not satisfied with the resolution adopted by the creditors and contemplating to challenge the decision. Is
there any validity in his contemplation?
ASSET (MONEY) LAUNDERING PREVENTION ACT, 2064 & Rules 2073

16. Explain Enhanced Customer Due Diligence (ECDD). Mention the categories/types of customers in
which a reporting entity shall follow appropriate measures of enhanced customer due diligence in
establishing business relationship or conducting transaction. Answer shall be based on the provisions of

17. What is a two-stage bidding? Explain the legal provisions of two-stage bidding as provided in Public
Procurement Act, 2063.

18. Ram and Shyam had an agreement to settle their civil case through arbitration. The dispute was
referred for arbitration proceedings. The arbitrators pronounced their decision on 2077/5/5 and notified
the parties on the same date. Ram was not satisfied with the decision taken by the arbitrators. Suggest him
remedial measures if any in this regards in the light of Arbitration Act, 2055.

19. During the lock down period announced by Government of Nepal, Ms. Rohini Shrestha formed a
group of 20 Chartered Accountants ladies. On the basis of mutual understandings, they raised fund of Rs.
2 lakhs each and agreed to provide loan to each other. Is this transaction an offense on the light of
Banking Offenses and Punishment Act, 2064?
FINANCIAL INTERMEDIARY SOCIETIES ACT, 2055 (1999)
20. Explain whether Financial Mediator should be a company registered under the Companies Act, 2063 or
not.
21. Explain the duties of importer in the light of Foreign Exchange Regulation Act, 2019
AUDIT ACT, 2075

Answer to Question no 9
Article 240(1) of the Constitution of Nepal, 2072 has laid down provisions regarding the appointment of
Auditor General. It provides that the President of Nepal shall on the recommendation of the Constitutional
Council, appoint Auditor General. The term of office of the Auditor General shall be six years from the
date of appointment.
As per the provisions provided in Article 240(6) of the Constitution of Nepal, the qualification of Auditor
General shall be as follows:
(a) Having experience in the special class of Government of Nepal or having at least 20 years of
experience in audit related work after having obtained a bachelor's degree in management, commerce
or accounting from recognized university by the Government of Nepal or having passed a chartered
accountancy examination,
(b) Not being a member of any political party at the time of appointment,
(c) Having attained the age of 45 years, and
(d) Being of high moral character.
Mr. Lokman Tamang is a CA having over 25 years of experience in audit. Considering Mr. Tamang, not
being a member of any political party, attained the age of 45 years and having high moral character, he is
qualified for the appointment.
The constitution provides that the President of Nepal shall on the recommendation of the Constitutional
Council, appoint Auditor General. In the given case, the Auditor General is appointed on the
recommendation of the ICAN. Thus, the appointment is invalid.

Section 5 of Industrial Enterprises Act, 2073 provides that on receipt of the application for registration of
industry, the Industry registration Body shall, after making necessary examination regarding the compliance
of required documents as per the Act and regulation thereof, issue registration certificate as prescribed to
the Industry within 15 days from the date of application for registration. If, it is found that the applicant has
failed to comply required formalities as required by the Act or Rules or failed to submit the required
documents, the Industry Registration Body may refuse to register the industry with reasons thereof.
If the Industry registration Body refuses the registration of industry as above, the applicant not satisfied
with the decision, may make an appeal to the Ministry within thirty days from the receipt of issue of notice
of refusal. The Ministry has to decide the matter after necessary examination against the appeal within thirty
days of receipt of application.
In the given case the Department has notified Mr. Ram Lal the decision of refusal of registration of industry
on 2076/7/28. He has approached for legal advice on 2076/9/5 i.e. after 36 days from the date of notification
of refusal of registration of the industry. The time limit for making appeal to the Ministry is within thirty
days from the receipt of issue of notice of refusal. The time limit for making appeal has expired. Thus, Mr.
Ram Lal cannot seek any remedy against the decision of the Department.
field of economic, monetary, banking, finance, commerce, management, commercial law and from among
the Deputy Governors. Government of Nepal, the Council of Ministers shall, out of the names
recommended by the Committee, appoint one person to the Office of Governor.
Section 20 provides provisions relating to qualifications required for appointment of Governor. In order to
be appointed to the post of Governor, a person shall have to meet the following qualifications:
(a) A Nepalese citizen.
(b) Having higher moral character.
(c) Having work experience in economic, monetary, banking, financial and commercial law sectors after
having attained at least master's degree in economics, monetary, banking, finance, commerce,
management, public administration, statistics, mathematics and law. "Work experience" means the
experience of works in the post of special class of Government of Nepal or of the Bank or in the post
of a university Professor or in the post of Executive Chief of class ‘A’ of a commercial bank or of a
financial institution or in the equivalent post or in the post higher than those in terms of the order of
protocol.
(d) Not disqualified under Section 21.
Section 21 provides provisions relating to disqualifications for appointment of Governor. Following

persons shall not be eligible for appointment to the Office of the Governor:
(a) Member or official of a political party, or
(b) The person blacklisted in relation to transaction with a commercial bank or financial institution,
or
(c) An official currently engaged in any commercial bank or financial institution, or
(d) A person having five percent or more shares or voting right in a Commercial Bank or financial
institution, or
(e) A person rendered bankrupt for being unable to pay debts to creditors, or
(f) An insane person, or
(g) A person convicted by a court in an offence involving moral turpitude.
CA. Maha Prasad Adhikari is past deputy governor of Nepal Rastra Bank and has also served Rastra Bank
for 28 years before becoming deputy governor. Thus, he is renowned name in banking.
Considering the implications of section 20 regarding his qualification, he holds Masters Degree in
Management and possesses the required work experience.
Considering the implications of section 21 regarding his disqualifications, he should hold five percent or
more shares or voting right in a Commercial Bank or financial institution. He holds 4.5 % equity shares of
Machapuchchhre Bank Limited. So he is not disqualified
Considering the combined implications of section 15, 20 and 21, CA. Maha Prasad Adhikari is eligible for
the post of Governor of Nepal Rastra Bank.
(c) Detail description as to whether to continue the current financial transactions of the bank or financial
institution or to revoke them,
(d) Decision or order of the court,
(e) Details of the actions taken for compensation from the Director, official or employee for the offences
and other unlawful acts they have committed,
(f) Details description as to classification of claims and priority order of payment,
(g) Plan of sale and liquidity of the main asset or group of assets of the BFI,
(h) Liabilities of the bank or financial institution and table of details of the probable payment to be made
to depositors and creditors within the upcoming 90 days,
(i) Costs and expenses of the mandatory liquidation,
(j) Other details as prescribed by the Rastra Bank.
Once the liquidation plan is approved by the court, the plan shall have to be made available to the creditors
of the bank or financial institution for inspection, whose claims are stated in the plan. The Liquidator shall,
in order to settle the claims according to the liquidation plan, publish and broadcast public notice stating
the nature, quantity and priority order for payment of the claims.
(i) Clause (f) of sub-section (2) of section 13 of Banks and Financial Institutions Act, 2073 provides that
the amount of capital bought back by the Bank or Financial Institutions shall not exceed 20% of the sum of
its total paid up capital and general reserve. Thus, the Bank can buy back shares representing Rs.
12,00,00,0000 of its capital.
Clause (e) of sub-section 2 states that the total debts of the Bank or financial institution shall not be more
than twice the sum of its capital and general reserves after the buy back. Since the total debts stand at Rs.
90,00,00,0000, the sum of capital and general reserve after buy back cannot be less than Rs. 45,00,00,0000
i.e. capital up to Rs. 15,00,00,0000 could be bought back. However, because of the restrictive provision of
clause (f) of sub-section (2), the Bank can only buy back 12,00,0000 equity shares.
(ii) The Bank should complete buy-back of shares within six months of the date of approval from Nepal
Rastra Bank or within twelve months from the date of passing special resolution by the General Meeting
whichever is later (sub-section 5).
(iii) As per sub-section (8) of section 13 of the Act, the amount of shares bought back by the bank or
financial institution shall be cancelled within 120 days from the date of buy back. Thus, Hamro
Development Bank cannot re-issue such shares to its employee but has to cancel them within 120 days.

Section 15 of Nepal Rastra Bank Act, 2058 provides that Government of Nepal, the Council of Ministers
shall appoint Governor on the basis of the recommendation of the Recommendation Committee formed by
it. While making recommendation for the appointment of Governor, the Recommendation Committee shall
recommend to Government of Nepal, the Council of Ministers the names of 3 persons renowned in the
or the objective mentioned in Sub-section (1) may make an application to the Office pursuant to
section 4.
(3) The number of promoters promoting such company shall be at least five and after the incorporation
of such company, it may have any number of its members, with a minimum of five members.
(4) The membership of a company incorporated pursuant to sub-section (1) shall not be transferable in
any manner. The membership of any person or body shall ipso facto be terminated in the event of
death, cancellation of registration or dissolution of such member or amalgamation of such member
with another body or company.
(5) Except with the prior approval of the Office, a company incorporated pursuant to Sub-section (1)
shall not add words such as “company”, “ limited “’ or “private limited” at the end of its name.
(6) A company registered pursuant to Sub-section (1) shall obtain approval of the Office to expand its
branch.

Section 96 of Securities Act, 2063 provides that if any person individually or in association with others
commits any of the following acts to affect directly or indirectly the transaction in securities, such a person
shall be deemed to have affected stock exchange:
(a) To increase the market price of securities issued by any company with the intent to encourage others
to purchase or sell the securities or to avoid the purchase or sale of such securities,
(b) To decrease the market price of securities issued by any company with the intent to encourage others
to purchase or sell the securities or to avoid the purchase or sale of such securities,
(c) To stabilize the market price of securities issued by any company with the intent to encourage others
to purchase or sell the securities or avoid the purchase or sale of such securities.
Section 101(2) provides that a person who commits any offense referred to in section 96 (activities deemed
to have affected stock exchange), fine of Rs. 50,000 to Rs. 100,000 or with imprisonment for a term not
exceeding 1 year or with both punishments shall be imposed and where anyone has suffered any loss or
damage from such an act, such loss or damage has also to be recovered.

Section 88 of Banks or Financial Institutions Act, 2073 provides that the liquidator shall classify the claims
into claims accepted, partially accepted or rejected and record separately with segregation of it in different
title.
Section 90 provides that the liquidator shall, within 30 days after completion of classification of the claims
pursuant to section 88, prepare detail action plan of the liquidation of the said bank or financial institution
and submit it to the court for approval and information thereof shall be given to the Rastra Bank as well.
The following matters shall be incorporated in the liquidation plan:
(a) Details description of the assets and liabilities of the BFI and its nature and quantity,
(b) The past and projected income and expenditure of the bank or financial institution,
COMPANIES ACT, 2063

Section 158(1) of Companies Act, 2063 provides that a foreign company shall make an application
accompanied by the prescribed fees to the Company Registrar Office for the cancellation of its registration
in the following circumstances:
- If the foreign company wishes to close down the transaction which it is carrying on in Nepal and get
its registration canceled, or
- Where the competent authority acting in accordance with the prevailing law prohibits such company
from carrying on the transaction or business within Nepal.
Civil Aviation Authority of Nepal (CAAN) is a regulatory authority to regulate airlines business in Nepal.
It has published a notice to prohibit foreign airlines company to operate in Nepal. Thus, by referring to the
provisions of section 158(1) of the Companies Act, 2063, registration of Himalayan Airlines is bound to be
cancelled in Nepal.
Himalayan Airlines is required to follow the following procedures for the cancellation of its registration
(section 158):
 It shall make an application accompanied by the prescribed fees to the Company Registrar Office
(CRO) for the cancellation of its registration.
 It shall also submit, along with the application, an evidence and proof confirming that there is no
liability due and payable by such company to any person, organization or governmental or non-
governmental body in Nepal.
 In order to inquire whether the evidence and proof that there is no liability and payables are true or
not, Company Registrar Office shall publish at least twice in a national daily newspaper a notice
inviting claim, accompanied by evidence on any liability if any due and payable by the company to
any person within a period of 21 days.
 Where any person makes claim in pursuance of the notice published by the CRO, the concerned
company shall submit to CRO evidence or proof showing the settlement of such claim. Where the
claim made against such company cannot be settled from the assets of such company situated in
Nepal, such company shall settle the same from its assets situated outside Nepal.
 Where no claim is made by anyone within the specified time limit or a proof is submitted showing
that the claim made has been settled, CRO shall strike the name of such company off the foreign
company register and give information thereof to the concerned company.
Section 166 of the Companies Act, 2063 provides following provisions relating to establishment of
company not distributing profits:
(1) Notwithstanding anything contained elsewhere in this Act, any company may be incorporated to
develop and promote any profession or occupation or to protect the collective rights and interests of
the persons engaged in any specific profession or occupation or to carry on any enterprise for the
attainment of any scientific, academic, social, benevolent or public utility or welfare objective on the
condition of not distributing dividends.
(2) Any person or trustee of a public trust registered pursuant to the prevailing law or any other corporate
body incorporated pursuant to the prevailing law who wishes to register a company for the attainment
Answers/Hints:
Section 16(3) of the Nepal Chartered Accountants Act, 2053 provides that the membership of Registered
Auditor shall, subject to Section 18, be granted to a person who has obtained the certificate of auditor of
class ‘B’, ‘C’, or ‘D’ pursuant to the Auditors Act, 2031 (1975) at the time of the commencement of this
Act.
Section 19(3) of the Act provides where a person having possessed the qualification to obtain the
membership pursuant to sub-section (3) of Section 16 desires to have his or her name registered in the
membership of the Institute, he or she shall submit an application to the Institute no later than Six months
after the date of the commencement of Sections 29 and 49 of this Act, by Government of Nepal upon
notification in the Nepal Gazette. A person who fails to submit an application for the membership within
that period shall not be entitled to obtain the membership as referred to in this Act.
Section 29 and 49 of the Act was made applicable by Government of Nepal with effective from 2059/04/01
as published in Nepal Gazette dated 2059/04/01.
By inferring the above legal provisions of the Act, Mr. Mohan Lama should have applied for the
membership of Registered Auditor within the period of 6 months from 2059/04/01. But he has applied for
membership on Falgun, 2076. The time limitation for applying of membership is expired. Thus, the Council
of ICAN cannot issue Mr. Mohan Lama Membership of ICAN.
Pursuant to section 22(1) of Nepal Chartered Accountants Act, 1997, the Council may issue an order to
remove the name of any member from the membership register in any of the following circumstances:
(a) If the member is convicted by a court of a criminal offence involving moral turpitude and punished
for such offence,
(b) If the member fails to pay the fees required to be paid to the Institute,
(c) If the member fails to abide by the professional conduct referred to in this Act and the Rules
framed under this Act,
(d) If the member becomes insane, or
(e) If the member dies.
Further, sub-section (2) provides that if a person whose name has been removed from membership pursuant
to sub-section (1) makes an application, accompanied by a reasonable ground to again obtain membership,
the Council may decide to grant membership by re-registering his or her name, upon receipt of the fees as
prescribed. The fee is prescribed in Rule 48 (Normal fees + 40% extra charges) and he/she should have
completed Continued Professional Education (CPE) hours pursuant to Rule 55(1) of Nepal Chartered
Accountants Rules, 2061.
Thus, Mr. Ramu Sherchan can restore his name in the membership register upon payment of the
membership fees and completion of the required Continued Professional Education (CPE) hours.

19. Can any of the parties of the arbitration demand for removal of arbitrator? Explain in the light of
Arbitration Act, 2055.
20. NIC Bank approved term loan of Rs. 40 million (to be disbursed into 4 half yearly installments) to
Graphite Hotels Private Limited. Accordingly the Bank disbursed first installment of 10 million
immediately. The Managing Director of the hotel approached the bank for disbursement of second
instalment after 6 months. The bank refused to disburse the loan showing the position of its tight C/D ratio.
The hotel is unable to complete its project due to shortage of fund and suffered loss. Is banking offense
attracted in the case and state the punishment if any pursuant to Banking Offenses and Punishment Act,
2064?
FINANCIAL INTERMEDIARY SOCIETIES ACT, 2055 (1999)
21. Deprox Nepal, an association registered under Association Registration Act, 2034 (1977) is carrying out
the activities of financial intermediation after obtaining license from Nepal Rastra Bank since last 2 years.
It has supplied micro credit according to the norms specified by the Rastra Bank. One of its borrower has
caused default in repayment of micro credit. Highlight the powers of the Deprox Nepal for the recovery of
the micro credit.
22. Xemi Limited exported the Nepalese handicrafts worth $ 40 million to France after duly filling the
declaration form that such amount will be brought in Nepal within a period of four months.
(i) What will be the legal course of action if the Company receives only $ 35 million because the goods
amounting to $ 5 million found defective and are returned to Nepal?
(ii) Will your answer be the same if the Company does not receive money within the prescribed period of
four months?
Questions:
Nepal Chartered Accountants Act, 2053 & Regulation, 2061
Question No. 1
A complain has been lodged to the Institute of Chartered Accountants of Nepal against a
member holding Certificate of Practice accusing that he had obtained an audit of a company
by sharing audit fee as commission to a few shareholders of the company 5 years ago. Now,
give your opinion upon possible actions that may or may not be taken against him in
accordance with Nepal Chartered Accountants Act, 2053 & Rules, 2061.
Companies Act, 2063

Question No. 2
Ms. Numa is one of shareholders of a public company ABC Ltd which has issued 100,000
unit shares with par value of Rs. 1,000. She has subscribed 1,000 units of shares and paid Rs.
600 each till date. Now, the company is in need of fund because its officer level employees
are demanding staff loan. So, its Managing Director decided to call remaining Rs. 400 of the
par value from its shareholders giving 7 day notice. Then, Ms. Numa failed to pay the called
amount within the stipulated time. Later on, the Managing Director forfeited her shares on the
ground of being failure to pay the called amount. In this regard, give your opinion upon the
plan and action of the Managing Director in accordance with Companies Act, 2063.
Question No. 3
Ms. Yuma has a share certificate of a private company ABC Pvt Ltd. As per the share
certificate, she owns 100 unit of shares from lot no. 1 to 100. Now, she wants to sell her
entire shares to a buyer. However, the company denied to transfer her shares to the buyer on
the ground that as per its shareholder register, the share lot no. 1 to 100 is owned by Sima, not
Yuma. In this regard, give your opinion upon legal ownership of the share lot no. 1 to 100
and legal validity of such denial in accordance with Companies Act, 2063.
Question No. 4
A Board of Directors meeting of ABC Ltd held on 2078-05-05 decided, inter alias, following
agenda:
a) To pay Rs 2,000 per shareholder as AGM Transportation Allowance to those
shareholders who attend at the AGM to be held on 2078-06-06.
b) To issue bonus share immediately (i.e. before AGM) instead of interim dividend, out of
Free Reserves and Land Revaluation Reserve as disclosed in audited annual financial
statements of F/Y 2077.78.
In this regard, give your opinion regarding the legal validity of Board of Directors decision in
accordance with Companies Act, 2063.
Securities Act, 2063 and Rules

Question No. 5
Suffer Ltd, a company listed in Nepal Stock Exchange Ltd, is in huge loss. However, Mr. X,
the General Manager of the listed company caused to publish a quarterly financial report in
its website disclosing a huge profit with a mala fide intention to incite investors for
purchasing shares of his company. Later on, an unknown complaint filed to the Securities
Board of Nepal which in turn filed case to the District Court against Mr. X through its
investigating authority. The case is in litigation at district court for last 6 months. Meanwhile,
Mr. X left the job of the listed company and Hire Ltd wants to appoint him as its General
Manager. Now, give your opinion regarding the activity of Mr. X and Hire Ltd in accordance
with Securities Act, 2063.
Banks & Financial Institutions Act, 2073

Question No. 6
The Board of Directors of Kanchan Bank Ltd are feeling stressed to govern its banking
operation. Hence, they are desirous to liquidate the bank voluntarily. However, they are not
clear about legal provisions prescribed about the circumstances and procedure for the
voluntary liquidation in the prevailing laws. So, suggest them the legal provisions to be
complied with for the voluntary liquidation of the bank pursuant to Banks & Financial
Institutions Act, 2073.
Nepal Rastra Bank Act, 2058

Question No. 7
There are 7 incumbent directors in the Board of Directors of the Nepal Rastra Bank. A Board
meeting of Nepal Rastra Bank held on 2078-05-05 at presence of majority of directors (i.e. 4
out of 7) viz. governor, deputy governors and secretary of the Ministry of Finance, ignoring
other 3 directors. Give your opinion regarding the validity of such meeting held at majority of
directors in accordance with Nepal Rastra Bank Act, 2058. Will your answer be different if
the post of other 3 directors had remained vacant?
Industrial Enterprises Act, 2076

Question No. 8
Kanyam Chelibeti Agro Farm is an industry established under Industrial Enterprises Act,
2076. The industry is wholly owned by female entrepreneurs. Hence, 15 Ropani of land was
acquired by the industry for the agro product cultivation at exemption of land registration
charge. Later on, its owners felt that the land yields higher return if huts are constructed on it
and rented them for earning revenue. Now, give your opinion to the Farm in accordance with
Industrial Enterprises Act 2076, if it can work as per its plan
Foreign Investment & Technology Transfer Act, 2075

Question No. 9
Mr. Michael is a Canadian nationality who is interested to establish an industry in Nepal. He
wants to know about services available to the foreign investors in Nepal. Now, enumerate
him the services which are available to the foreign investor from the Single Stop Service
Centre as per Foreign Investment & Technology Transfer Act, 2075.
Labour Act, 2074

Question No. 10
Ms. Rima, the Chief Executive of Pathivara Hotel is frustrated of high labour turnover. So,
she is planning to hire 4 Chefs from a labour supplier. However, she is not aware about legal
provision regarding the hiring of workers from labour suppliers. So, suggest her in
accordance with Labour Act, 2074.
Insurance Act, 2049 & Rules, 2049

Question No. 11
Mr. Clever has been working as an insurance agent of Safe Life Insurance Ltd. He has been
involved in issuing life insurance policies aggressively by giving threats to insurance policy
holders. Suddenly, he got a notice from the Insurance Board that his agent license has been
cancelled on the ground of violating the code of conduct issued by the Board for agents. Give
your opinion regarding the action of the Insurance Board in accordance with Insurance Act
2049 & Rules, 2049.
International Financial Transactions Act, 2054

Question No. 12
Ishita Trading Company is a license holder entity which has obtained license to carry on
international financial transactions from the Accreditation Committee under International
Financial Transactions Act, 2054. The company is planning to bring US $ 5 million out of
which 1 million to be used for investing in shares of Nepalese companies & remaining 4
million for investing in foreign countries. Suggest the entity if it can bring and use it in
accordance with International Financial Transactions Act, 2054.
Cooperatives Act, 2074 & Rules, 2075

Question No. 13
Rich Saving & Credit Co-operative Society Ltd, Kathmandu published a notice of change in
interest of credit from 14.50% to 15.00% with effect from Bhadra 1st, 2078. Then, its
members demanded to decrease the interest rate but it denied on the ground that the interest
rate shall be charged as decided by the Board of Directors of the Cooperative Society. In this
regard, give your opinion regarding such interest rate on credit of the Cooperative Society in
accordance with Cooperatives Act, 2074 & Rules, 2075.
Insolvency Act, 2063

Question No. 14
Poor Ltd has been unable to settle liabilities to its creditors. Hence, its creditors has filed case
to the court to institute insolvency proceedings. Accordingly, as per the request of plaintiffs,
the court ordered to initiate the insolvency proceedings. Later on during the litigation, Nepal
Electricity Authority disconnected the electricity power supply of the company on the ground
that it defaulted to pay the electricity bill for a long period. Give your opinion regarding the
action of NEA in accordance with Insolvency Act, 2063.
Money Laundering Prevention Act, 2064

Question No. 15
Mr. Fast, a beggar, after 1 week of begging at roads acquired a bungalow worth of Rs. 15
crore at New Baneshwor, Kathmandu in 2071. Recently, in Bhadra 2078, the Department of
Money Laundering Investigation filed a case at court against him to confiscate the property
complaining that the money received for acquiring the bungalow has been acquired from
illicit origin. However, Mr. Fast advocates that the bungalow was acquired out of donation
received. Also, he questions how the department files such case against him after 7 years of
such property acquired. Give your opinion, regarding the action of the Department and
defense of Mr. Fast in accordance with Money Laundering Prevention Act, 2064.
Public Procurement Act, 2063 & Rules, 2064

Question No. 16
Ms. Najma is a newly appointed official designated for preparing procurement plans of a
public entity. Suggest conducts of officials to be abided by her in accordance with Public
Procurement Act, 2063.
Audit Act, 2075

Question No. 17
Mechinagar Municipality intends to maintain its books of account at international standard.
So, it is planning to hire a foreign consultant for developing its receipts, cash book and other
accounting documents of international level. Can a municipality independently develop and
use its own such accounting documents? Give your opinion in accordance with Audit Act,
2075.
Arbitration Act, 2055

Question No. 18
Ram, a house owner and Sita, a tenant concluded a house rent agreement for a house at
Koteshwor, Kathmandu with effect from September 1st, 2021. They have mentioned in the
contract that any dispute related to it shall be settled through arbitration. The contract states
that the house rent amount of Rs 100,000 per month shall be paid at the end of each month.
Accordingly, the house owner Mr. Ram demanded house rent of Bhadra, 2078 at the last date
of the month. In that case, the tenant Ms. Sita refused to pay it on the ground that September
month has not been expired and today is just September 16, 2021 but Ram rejected her
objection. So, a dispute arose between them. Now, advise them to settle their dispute in
accordance with Arbitration Act, 2055. Would your answer be different if they had not
mentioned about the arbitration in the agreement?
Banking & Offence Punishment Act, 2064

Question No. 19
Mr. Sincere is a member holding certificate of practice. He has a client, a single shareholder
company, who pays a good portion of his total audit fees. The client has incurred loss in F/Y
2077.78 and has already issued an audit report as well. Now, the single shareholder of the
company is planning to obtain housing loan in his name for constructing a residential house.
He wants to show the audit report of his company as an income source. So, the shareholder
requested him to issue a new audit report of F/Y 2077.78 with accounting profit of Rs. 3
million just for presenting it to a bank as a source of his income. He states that he have
managed all other documents except the audit report. He advises to copy-paste the same
UDIN of the first audit report in the second audit report as well and assures no one is going to
check about it. Now, suggest Mr. Sincere if he can issue such second audit report in
accordance with Banking Offence & Punishment Act, 2064.
Acts relating to Institutions acting as Financial Intermediary, 2055

Question No. 20
Phungling Financial Care, an institution, has been operating as a financial intermediary after
obtaining license from Nepal Rastra Bank. In order to expand the working area, financial
strength & transactions of the institution, majority of its members attended in the Annual
General Meeting of F/Y 2074/75 resolved to merge it with another institution Myanglung
Financial Support. Is this decision valid? Would your answer be different, if the institution
had resolved to merge with another social organization which has not obtained license of
financial intermediary from Nepal Rastra Bank? Give your opinion in accordance with Acts
relating to Institutions acting as Financial Intermediary, 2055
Foreign Exchange Regulation Act, 2019

Question No. 21
Mr. Yatri, an entrepreneur, has purchased US $ 1,000 from a licensee for his business trip to
Maldives. Suddenly, his business trip got cancelled. So, he is planning to sell it to his clients
who are in need of such foreign exchange. Suggest him in accordance with Foreign Exchange
Regulation Act, 2019.
1. Mr. Arun Sharma, is a Registered Auditor (Class B) member of the Institute of

Chartered Accounts of Nepal (ICAN) holding Certificate of Practice (COP) as well.
He passed Chartered Accountancy Professional (CAP-II) Examination of ICAN in
December 2020 and Joined for articleship training under Kumod & Assocaites,
Chartered Accountants. The articleship deed was entered accordingly. ICAN
registered the articleship deed. Mr. Arun is undergoing articleship and carrying
accountancy profession as well. Examine the validity of the action of ICAN & Mr.
Arun Sharma pursuant to the Nepal Chartered Accountants Laws.
2. Mr. Piyush Goyal, a Chartered Accountant holding Certificate of Practice (COP) has
charged fee for representing his client M/S Sitaram Dairy Private Limited in Tax
settlement commission on the expected relief to his client as a result of the settlement
commission. Is this arrangement is in accordance with the Nepal Chartered
Accountant Act, 2053?
COMPANIES ACT, 2063
3. Green Agro Forestry Industries Private Limited has paid up capital of five million
rupees. It had turnover of rupees 110 million in FY 2076/77. The Board of Directors
of the Company has got the financial statements prepared and approved on Ashwin
10, 2077 that included balance sheet, profit & loss account and cash flow only. The
company held its annual general meeting on Kartk 10, 2077. Following general
agendas were presented and approved by the annual general meeting:
(i) Approval of the financial statement & audit report for FY 2076/77.
(ii) Appointment of the auditor for FY 2077/78
Do you think that the agendas as presented to the annual general meeting were
complete? Give your opinion as to the validity of the annual general meeting referring
the provisions of Companies Act, 2063.
4. Mr. X, Chairperson of Old Age Support House (Company not distributing profit)
wishes to transfer whole of its assets to Women’s Legal Aid, a NGO. Mrs. Y (wife of
Mr. X) is the chairperson of the Women’s Legal Aid. The AOA of the house provided
that upon the dissolution of the company, the general meeting shall have power to
decide on the transfer of the remaining assets of the company. Mr. X, Chairperson,
presented a resolution to amalgamate the House with the Aid. But the general meeting
refused to amalgamate. Then Mr. X, Chairperson, proposed to liquidate the House and
transfer the assets to the Aid. The general meeting of the house passed the proposal
presented by Mr. X, Chairperson. Give your opinion whether resolution passed by the
general meeting can be implemented according to the Companies Act, 2063.
5. Happy Company Limited having paid up capital of Rs. 10 million, General Reserves
of Rs. 8 million, Exchange Equalisation Reserve of Rs. 1.2 million and Retained
Earnings of Rs. 3.5 million decides to invest Rs. 13 million in Joy Company Ltd.
Examine the validity of the investment decision in the light of the provision of the
Companies Act, 2063? Would your answer remain the same if Joy Company Limited
was a subsidiary of Happy Company Limited?
6. Securities business person after making a contract of purchase or sale or exchange of

securities has to making a contract note as per Section 77 of the Securities Act, 2063.
State the particulars to be mentioned in the contract note and distribution of the same.
7. Can depositors of the bank or financial institution apply for mandatory liquidation of
the concerned bank or financial institution? Explain your answer on the light of Banks
and Financial institutions Act, 2073.
8. Nepal Rastra Bank (NRB) has sustained loss during the fiscal year 2076/2077. You
are required to advise the CFO of NRB for the allocation of such loss citing the legal
provisions of Nepal Rastra Bank Act, 2058.
AUDIT ACT, 2075
9. Ram & Hari Associates, Chartered Accountants is appointed as an assistant auditor by

the Auditor General Office to conduct the audit of a corporation fully owned by Sudur
Paschim Province. Mr. Ram, partner of the firm thinks that he shall have to audit
independently. Mr. Ram started to bargain for the remuneration with the client. Can
he perform audit independently and ask remuneration from client? Give your opinion
based on provisions of the Audit Act, 2075.
10. What is Corporate Social Responsibility (CSR)? Explain CSR responsibilities of

Industries as prescribed by the Industrial Enterprises Act, 2076.
11. What is national treatment of foreign investment? Explain the provisions on ‘National
Treatment of Foreign Investment pursuant to the Foreign Investment & Technology
Transfer Act, 2075.
INSURANCE ACT, 2049 (1992)
12. Pashupati Biscuits Limited insured its stock with Himal General Insurance Limited.
Annual insurance premium for the fiscal year 2077/78 is Rs. 6 million. The company,
due to its unfavorable cash flow, could pay Rs. 3 million through bank and arranged a
bank guarantee of the remaining premium amount. Accidentally after 2 months, stock
of the company got damaged by fire and the company claimed for compensation with
the insurance company. But the insurance company has denied to pay full
compensation on the ground that premium was not fully paid. Give your opinion
referring the provisions of the Insurance Act, 2049.
LABOUR ACT, 2074 AND RULES
13. Explain the provision relating to formation of “minimum wage fixation committee”
and fixation of minimum wage pursuant to the Labour Act, 2074.
14. Gemini Incorporations Limited, a mutual fund company incorporated in Japan, 2.5
years before is interested to carry out international financial transactions in Nepal.
You have been appointed as a consultant for this purpose. Advice Gemini
Incorporations limited in the following matters:
(i) What are the processes of obtaining License by the International Financial Entity
under the International Financial Transactions Act, 2054?
(ii) Can Gemini Incorporations obtain License to carry out international financial
transactions in Nepal?
COOPERATIVES ACT, 2074
15. Bindass Cooperatives Limited registered under the Cooperatives Act, 2074, has not
been carrying out its business since last 2.5 years. The Registrar of the cooperatives is
contemplating to cancel the registration of the Bindass Cooperatives Limited on this
ground. Advice the Registrar on the following matters pursuant to the provisions of
Cooperatives laws of Nepal?
(i) Does the Registrar have power to cancel the registration of Bindass Cooperatives
on the ground of not carrying out its business for last 2.5 years?
(ii) State the order of priority in payment of liabilities if the registration of the Bindas
Cooperatives Limited is cancelled pursuant to (i).
16. The court has decided to issue order for restructuring of the Bindas Company Limited
after studying the report submitted by the Inquiry Officer. You are asked to suggest
the possible restructuring programs of the Bindas Company Limited pursuant to
Insolvency Act, 2063.
17. Money Laundering Prevention Act, 2064 has been promulgated with the objective to
prevent laundering of criminally earned assets and prevention of financing of
terrorism. Accordingly it is the responsibility of the Reporting Entity for identification
and verification of its customers. On the light of the statement, you are required to
provide the answers to the following questions pursuant to the provisions of Money
Laundering Prevention Act, 2064:
(i) Can Reporting Entity rely on a third party for its customer identification and
verification?
(ii) What are the situations in which identification and verification of a customer
made by a third party shall not be acceptable for reporting entity?
18. State the conditions under which the procurement process under the Public
Procurement Act, 2063 need not be applied. How the procurement proceedings are
undertaken on such conditions?
19. State the provisions relating to number of arbitrators and the circumstances in which a
court can appoint arbitrator(s) pursuant to the Arbitration Act, 2055?
20. State the provisions relating to delivery of notice to a foreign individual in connection
with the offenses under the Banking Offense and Punishment Act, 2064.
FOREIGN EXCHANGE (REGULATION) ACT, 2019
21. State the duties and responsibilities of the Investigating officer pursuant to the Foreign
Exchange (Regulation) Act, 2019.

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Page 140 of 296 Paper 4: Corporate Law [RTP December 2018]

NEPAL CHARTERED ACCOUNTANTS ACT, 1997 AND RULES 2061

The Institute of Chartered Accountants of Nepal

THE COMPANIES ACT, 2063

The Institute of Chartered Accountants of Nepal

The Institute of Chartered Accountants of Nepal

SECURITIES ACT, 2063

The Institute of Chartered Accountants of Nepal

BANKS AND FINANCIAL INSTITUTIONS ACT, 2073

Nepal RASTRA BANK ACT, 2058

INDUSTRIAL ENTERPRISES ACT, 2073

The Institute of Chartered Accountants of Nepal

FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER ACT, 1992

LABOR ACT, 2074

The Institute of Chartered Accountants of Nepal

INSURANCE ACT, 1992 AND RULES 1993

AUDIT ACT, 2048

INTERNATIONAL FINANCIAL TRANSACTIONS ACT, 2054

The Institute of Chartered Accountants of Nepal

COOPERATIVE ACT, 2074

INSOLVENCY ACT, 2073

MONEY LAUNDERING PREVENTION ACT, 2064

The Institute of Chartered Accountants of Nepal

PUBLIC PROCUREMENT ACT, 2063 and RULES 2064

BANKING OFFENSE AND PUNISHMENT ACT, 2064

FOREIGN EXCHANGE REGULATION ACT, 2019

ARBITRATION ACT, 2O55

FINANCIAL MEDIATOR ACT, 2058

The Institute of Chartered Accountants of Nepal

NEPAL CHARTERED ACCOUNTANTS ACT, 1997 AND RULES 2061

THE COMPANIES ACT, 2063

SECURITIES ACT, 2063

BANKS AND FINANCIAL INSTITUTIONS ACT, 2073

Nepal RASTRA BANK ACT, 2058

2. How does Nepal Rastra Bank mobilize Foreign Exchange Reserve?

INDUSTRIAL ENTERPRISES ACT, 2073

2. Enumerate the objective of Industrial Enterprises Act, 2073.

FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER ACT, 1992

LABOR ACT, 2074

INSURANCE ACT, 1992 AND RULES 1993

AUDIT ACT, 2048

INTERNATIONAL FINANCIAL TRANSACTIONS ACT, 2054

COOPERATIVE ACT, 2074

INSOLVENCY ACT, 2063

2. Explain voidable transactions under Insolvency Act, 2063.

3. Explain ‗Offense‘ under Insolvency Act, 2063.

MONEY LAUNDERING PREVENTION ACT, 2064

PUBLIC PROCUREMENT ACT, 2063 and RULES 2064

1. Explain the objective of the Public Procurement Act, 2063.

BANKING OFFENSE AND PUNISHMENT ACT, 2064

FOREIGN EXCHANGE REGULATION ACT, 2019

ARBITRATION ACT, 2O55

FINANCIAL INTERMEDIARY ACT, 2055

COMPANIES ACT, 2063

Liabilities Amount (Rs) Assets Amount (Rs)

SECURITIES ACT, 2063

BANKS AND FINANCIAL INSTITUTIONS ACT, 2073

NEPAL RASTRA BANK ACT, 2058

AUDIT ACT, 2075

INDUSTRIAL ENTERPRISES ACT, 2073

FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER ACT, 2075

INSURANCE ACT, 2049

LABOUR ACT, 2074 AND RUES, 2075