KATHMANDU, Nov 19: Minister for Industry Nabindra Raj Joshi tabled the Company Act (First Amendment) Bill 2016 at the parliament on Friday.
The amendment bill has provisioned a number of reforms to improve doing business environment and ease firms registration process. Similarly, there is a provision that offers easy exit facility to entrepreneurs who want to shut down their businesses. Likewise, it relieves promoters of defunct companies of the liability of fees and fines piled up for several years.
The offer, however, will be valid only for a year from the publication of the law in the Nepal Gazette following authentication by the President.
Sources say about 50,000 such firms may enjoy the scheme.
The amendment bill has also raised the paid-up capital threshold for firms, requiring compulsory formation of three-member auditors committee for auditing of their financial operations, to Rs 100 million from existing Rs 30 million. Likewise, a firm can now donate up to Rs 100,000 in a fiscal year up from Rs 50,000 in the existing law.
The draft law has a number of measures to regulate firms that report bloated administrative cost to show them in loss. It has also introduced stringent provisions for promoters and executives issuing loans or providing financial assistance to their relatives and standing as a guarantor for them.
Similarly, the amendment bill has capped administrative cost of firms not distributing profit in the past year at 25 percent of their annual expenditure. This measure is believed to tighten screws on unscrupulous firms reporting loss by showing bloated meeting allowance and other unnecessary costs.
With the introduction of online company registration three years ago, Nepal's doing business indicator had progressed by five points.
The bill has also legalized the online company registration system.