KATHMANDU, Dec 17: The government is mulling to reduce the number of documents required for registration of new companies, to make things simpler for both domestic and foreign investors.

Currently, firms that wish to get license for public limited companies, in particular, have to undergo a lengthy registration procedure at the government offices. Apart from producing several other documents, firms need to acquire approval for the article of association and the article of memorandum, which normally take over a week.

Madhav Paudel, chairman of the Law Commission, told Republica that the commission has recently asked the government to shorten the steps for registering a public limited company. “We have sought to remove the need for article of association and sent a draft proposal in this regard to the Ministry of Industry, Commerce and Supplies,” said Paudel.

Targeting to encourage foreign investment to fill the country's resource gap, the government has initiated the process to minimize procedural hurdles, together with enforcing a number of related laws. 

As of now, the government has enacted Foreign Investment and Technology Transfer Act, the Investment Board Act and Safeguards, and Anti-Dumping and Countervailing Act, among others. Likewise, the government has brought into operation the one-stop service center that houses 14 government agencies to provide related services under one roof.

Paudel said the commission has also proposed to introduce provision to provide license certificate to the firms on the same day they get their companies registered at the Office of Company Registrar. At present, the firms need to fulfill some post-registration procedures such as sending notification of registration and details of shareholders and board of directors to the concerned government agencies before starting operation. 

“In addition, we also think that the minimum capital requirement barrier for private firms should be removed, while limiting the capital requirement for public limited companies at a minimum of Rs 10 million,” Paudel said.

“The ministry also thinks that the current provisions of article of association and article of memorandum have created duplication in documentation, creating unnecessary hassles to the investors,” said a source at the Ministry of Industry, Commerce and Supplies requesting anonymity.

The commission has also sought a revision of the government law allowing foreign direct investment in select primary goods. "Foreign investment should be left open for products on which the country heavily depends on imports,” said Paudel giving example of fisheries, stating that the country largely depended on imported fish to meet the domestic demand.

Earlier, the government had tried to open up foreign investment on some agricultural products. But it had to step back following protests from the private players.

 
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