LLBB 4th by Deepak Kumar Khatiwada
Regulatory Bodies over the Company.
A regulatory body is like a professional body but it is not membership organization and its primary
activity is to protect the public. Unlike professional bodies, it is established on the basis of legal
mandate.
Regulatory bodies exercise a regulatory function, that is imposing requirements, restrictions
and conditions, setting standards in relation to any activity and securing compliance or enforcement of
directives, by laws or regulation. Regulatory bodies are organization setup by Government with
responsibilities to monitor guide and control various industry sector in the interest of protecting
consumers or stakeholders.
In the Case of Company the following entity/ bodies are the main regulatory bodies.
1. Company Register Office
2. Company Law Board
3. Inland Revenue office
4. Court
1. Company Register Office: CRO is a main regulatory body of the company. Generally it regulate
all the matters relating to the company. All Nepalese Company register to the CRO and regulate the
administration, financial sector by monitoring the documents of the company and issuing necessary
directives.
for the administration of company, the government setup the office named Company Registrar Office
and appoint a government officer known as Registrar. Registrar is a high level Govn. officer H/She
was a chief of the OCR, he monitor the activities of the ever companies and has the power to issue
directives, such directive is mandatory for the company.
In our Nepales Companies Act, 2063, there are so many provisions in different section, which shows
how the OCR regulate and control the activities of companies.
a. sect 4 shows OCR have power to incorporate company
b. Sect 16. Functions and duties of Registrar: (1) It shall be the duty of the Registrar to implement
this Act and carry out company administration.
(2) The Registrar may frame and issue necessary directives for the implementation of this Act and the
carrying out of company administration related functions in an effective or systematic manner: and it
shall be the duty of each company and officer to abide by such directives.
(5) Notwithstanding anything contained elsewhere in this Section, nothing in this Section shall be
deemed to limit the direction given by any regulatory body to a company under the prevailing law or
the authority to be exercised by that body in respect of such company under the prevailing law.
c. In the following event, the company must take prior approval by OCR:
i. Conversion of the Company
ii. Ammendment of MoA and MoA ( name claused)
iii. Issue of share at premium.
iv. If company wish to convene its AGM out side the district of registered office
d. The company must send required particular, report and document to the OCR with in time given.
e. 24. Before issuing the securities of the Public Com. Prospectus must me register to the OCR.
f. 31 . Description of shareholders after allotment
g. 34.4, Information of debenture
h. 43. Transfer of share and debenture
i. 51.3. After holding of AGM, inventory of share, debenture and loan
j. 65.12. Redemption of preference share.
k. 78 Particulars of AGM with Audit report.
Company Law Board:
169. Provisions relating to Company Board: (1) Pending the designation of a court by the
Government of Nepal pursuant to the provisions contained in this Act, the Government of Nepal shall,
by a notification published in the Nepal Gazette, form a three –member Company Board, consisting
the Chairperson and member, as follows:
171. Dissolution of Company Board: (1) The Company Board formed pursuant to Section 169 shall
ipso facto be dissolved on the date on which the Government of Nepal designates the Court as
referred to in this Act, by a notification published in the Nepal Gazette. In 2064 BS, The government
of Nepal has published notice in Nepal Gazettee and designates 'Court'. “Court” means the
commercial bench of a High court specified by the Government Nepal , with the consent of the
Supreme Court.
The Appellate Court Regulation 2048 rule no 10 a (eight amendment 2064.12.4) has been constituted
Commercial Bench. Now High Court Regulation section 2 J define the term commercial Bench.
Inland Revenue office:
The Inland Revenue Department (IRD) is currently responsible for the enforcement of Tax Laws
and administration of the following taxes: Income Tax, Value Added Tax, Excise Duty, Health Tax,
Education Service Fee and duties like Entertainment fee (Film Development Fee).
IRD carries out the following functions:
1. Tax Administration
2. Tax Policy
3. Tax Payer Services
4. Registration, Revenue Collection
5. Tax audit
6. Tax Enforcement and investigation
7. Review & Appeal
8. Tax Refund
9. Advance Ruling
10. Tax Treaty and International Taxation
11. Excises and Liquor Administration
12. Monitoring of non-tax
Inland Revenue office is a Government office established by Government for the collection of
revenue. In relation to company affairs the IRO does not interferes day to day activity but IRO may
regulate the financial activities of any company .
IRO issued a PAN and VAT no of any company.
Maintain the PAN , VAT record.
After the incorporation every company necessarily registered its name with IRO and received
PAN, VAT no.
Every year after the expiry of financial a company prepare its annual accounts and audited
them, than after submitted such Annual Financial Statement to the IRO for the tax propose.
Income Tax Act, 2058 sect 101 has provides the right to IRO to amend the tax assessment
within 4 years.
Court:
Constitution of Nepal Article 127 : There shall be the following 3 courts in Nepal.
(a) Supreme Court, (b) High Court, and (c) District Court.
sub articles (2) States In addition to the courts under clause (1), judicial bodies may be formed at the
Local level to try cases under law or other bodies as required may be formed to pursue alternative
dispute settlement methods.
In relation to the Company, section 2 z8 Court means The commercial bench of a court specified by
the Government of Nepal by a notification in Nepal Gazette, with the consent of the supreme court.
The Government of Nepal has published the notice in Nepal Gazettee on 2064 and designate appeal
court Commercial bench as a court.
There are several provision in company law about the court in relation to the company.
Court has right to here the dispute relating to company.
Court interpreted status and propound the principle ; Limited Liability, Ultra Vires, Indoor
management, Corporate Veil, Minority Protection, determine fiduciary duties etc are the main
principles established by court.
Transmission the share by operation of law.
Court order is necessary at the time of reducing the share capital
Court protectd the rights and interests of Minority share holders.
in certain circumstance AGM may be called by order of the court
Court play important role for maintaining the corporate governance
Company may liquidate by the order of the court on the recommendation of liquidator.
Imposing penalty and fine to the directors and officers
