The government has introduced significant changes to the Companies Act, aiming to modernize corporate practices and strengthen Nepal’s stock market. These reforms, as announced by Finance Minister Bishnu Prasad Paudel, are designed to replace outdated provisions and foster smoother corporate operations, contributing to economic growth.
Key Highlights of the Amendments
- Support for Startups:
- Startups can now allocate 40% of shares to venture capital firms and 20% to individual investors, enabling easier access to funding.
- Consultants for Private Companies:
- Private companies are allowed to hire consultants, enhancing their efficiency and operations.
- Advisers for Public Companies:
- Public companies, including financial institutions, can appoint advisers to improve decision-making.
- Simplified Premium Share Issuance:
- Private companies no longer need approval from the Office of the Registrar of Companies to issue premium shares.
- Simplified Company Deregistration:
- Non-operational companies can now cancel their registration by publishing a 35-day public notice if no claims are raised.
Benefits and Impacts
Minister Paudel expressed optimism about the amendments, highlighting that umbrella organizations in the private sector have welcomed these changes. The reforms are expected to:
- Boost startups by increasing access to venture capital and individual investors.
- Improve efficiency in both private and public companies by allowing them to hire consultants and advisers.
- Reduce bureaucratic hurdles, particularly in share issuance and company deregistration processes.
The amendments also reflect the government’s focus on improving capital expenditure and ensuring prompt payment to contractors.
Commitment to Global Standards
On the international front, the government is implementing measures to prevent Nepal from being included on the Financial Action Task Force’s (FATF) risk list for money laundering. Minister Paudel assured that Nepal is actively working to uphold its global reputation through strong preventive actions.
Economic Progress
Minister Paudel noted that economic indicators are steadily improving, reflecting genuine progress under the current administration. He emphasized that these figures are accurate and highlight a positive shift after a period of economic decline.
The amendments to the Companies Act mark a significant step forward for Nepal’s corporate landscape, paving the way for greater transparency, efficiency, and economic growth.