KATHMANDU, Jan 12: The government has decided to issue three ordinances to incorporate a number of provisions to promote investment in the country.
The late Friday night meeting of the cabinet decided to forward the ordinances related to Nepal Act, land and investment to the president for endorsement. At a time when the government has been criticized for showing apathy to address the ongoing economic problems, the government has come up with a 17-point solution to address these issues under three segments.
The government has introduced the ordinances to allow startups to issue up to 40 percent of the sweat shares to the individuals contributing to innovative ideas and promoting such businesses. In a number of cases as of now, the main originators and promoters of such business have been forced to leave the companies after some point. By validating the startups as a form of investment, the government has turned up to safeguard the interest of the individuals associated with such businesses while promoting more startups in the country.
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A sweat equity share is a type of compensation that a company gives to its employees or directors in exchange for their work. Employees who receive sweat equity shares become owners of the company and have the right to vote at shareholders’ meetings, receive dividends and shares from the company.
By amending the existing Company Act 2006, the government is introducing provisions related to the sweat equity. The individuals contributing to the intellectual property, value addition, service generation, goodwill promotion, know-how sharing and technical knowledge transfers will be eligible to receive sweat equity from the companies concerned, according to the new provision in the Company Act.
The revised act also talks about setting a limit of the sweat shares to be issued to the associated individuals. In case of the general enterprises, the threshold of sweat shares is up to 20 percent, while it is up to 40 percent for startups companies.
Among other facilitations to attract investors, the government has come up with plans to ease procedures for the private companies while transforming shares or closing the businesses.
If a private company’s assets exceed its liability, the company can issue primary shares at premium price by taking direct approval from their general meeting. Such companies also do not have to submit three-year audit reports to the authority concerned while issuing their shares at premium prices.
A private company pursuing to convert into public limited will not have to take separate approval from the Office of the Company Registrar. In order to minimize hassles to shut down a company, the government talks about waiving the accrued fines and other liabilities.
Likewise, the government has considered allowing Nepali IT companies to invest and open their branches in foreign countries. These types of firms will also be allowed to bring in their revenue that they earned from the international market.
Home Minister Ramesh Lekhak said that the government amended a few laws through the ordinances for the sake of the country’s economic development. “The ordinances can help ensure administrative reforms, ease in doing business and good governance,” said Lekhak, speaking at a program on Saturday.
