Citizen Investment Trust Act, 2047 (1991)


Published: 1991

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Citizen Investment Act, 2047 E

Citizen Investment Trust Act, 2047 (1991)
Date of Authentication and Publication
2047-12-4 (18 March 1991)
Amendments:
1. Citizen Investment Trust (First Amendment)
Act, 2054 (1997)
2054-9-2
(17 Dec. 1997)
2. Income Tax Act, 2058 (2002) 2058-12-19
(1 April 2002)
3. Republic Strengthening and some Nepal Laws
Amendment Act, 2066 (2010)
2066-10-7
(21 Jan. 2010)

Act Number 25 of the Year 2047 (1991)
An Act made to establish and provide for Citizen Investment Trust

Preamble: whereas, for economic development of country, it is expedient to
provide for provisions to establish Citizen Investment Trust in order to increase
opportunities of investment upon encouraging including general public for
capital saving and to bring dynamism in the development of capital market
Now, therefore, be it enacted by His Majesty King Birendra Bir Bikram
Shah Dev, with consultation and consent of Council of Minister , pursuant to
Article 129 of the Constitution of Kingdom of Nepal.



Chapter-1
Preliminary
1. Short Title and commencement: (1) This Act may be called "Citizen
Investment Trust Act, 2047 (1991)"
(2) This Act shall come in to force immediately.
2. Definition: Unless the subject or the context otherwise requirs, in this
Act,-
(a) "Trust” means Citizen Investment Trust established pursuant to
Section 3.
(b) "General Meeting" means general meeting of shareholders called
pursuant to Section 21.
(c) "Committee" means Board of Directors of the Trust constituted
pursuant to Section 25.
(d) "Chairperson" means Chairperson of the Committee.
(e) "Director" means member of Committee and this expression
includes Chairperson of the Committee also.
(f) "Executive Director" means Executive Director of the Trust
appointed pursuant to Section 42.
(g) "Share" means divided part of share capital of the Trust.
(h) "Shareholder" means person having ownership in share of the Trust.
(i) "Share Certificate" means certificate issued by the Trust to
shareholder for purchasing the share of Trust.
(j) "Loan" means loan to be provided as per the terms and conditions
determined by the Trust upon taking any movable or immovable


collateral or mortgage or other security or guarantee as may be
required
(k) "Debenture" means debenture issued by the Trust with or without
placing the Trust's assets as security.
(l) "Bond" means debt bond issued by the Government of Nepal
pursuant to Domestic Borrowing Act, 2059.
(m) "Security" means share, stock, cash, debenture, debenture stock and
debt bond issued by the Government of Nepal and this expression
also includes deposit related receipt of stock as well as right and
letter of authority (Adhikar Patra )relating to stock.
(n) "Investment" means investment made in share or debenture and
other securities of any corporate body.
(o) "Investment Account Scheme" means investment account scheme
operated by Trust pursuant to Section 15.
1(p) "Citizen Unit Scheme" means citizen unit scheme operated by Trust
pursuant to Section 16 and this expression also includes capital
fund accumulated by collecting from general depositor and
investors and the scheme to manage such capital fund also.
(q) "Unit" means unit issued to collect capital under Citizen Unit
Scheme.
(r) "Unit Holder" means any individual or corporate body having
ownership in unit of the Trust.
(s) "Unit Certificate" means certificate issued bythe Trust to Unit
Holder in consideration of making investment in Citizen Unit
Scheme. 1 Amended by the First Amendment.


(t) "Technical Sub- Committee" means technical sub- committee of
specialists constituted pursuant to Section 43.
(u) "Corporate body" means Bank, Public Company, Idustry or similar
other Governmental or Non Governmental Organization established
as corporate body as per the prevailing law.
2(u1) "Trustee" means Committee, Sub-committee of Trusts or member of
such Committee or Sub-committee or Officer employee of the Trust
as prescribed by the Trust pursuant to Section 43a to manage capital
fund accumulated by collecting from depositor and ivestors as per
the terms and conditions of concerned scheme or, to fulfill obligation
created by agreement held with any other corporate body in this
regard.
(v) "Prescribed" or "as Prescribed" means prescribed or as prescribed in
Bye-laws made under this Act.
Chapter-2
Establishment, Capital and Management
3. Establishment of Trust: (1) A Trust called ‘Citizen Investment Trust’
shall be established.
(2) Trust shall be an autonomous and corporate body having
perpetual succession.
(3) Trust shall have its own separate Seal for its ac and activities.
(4) Trust may, subject to this Act, acquire, posses , hold, sell and
manage otherwise movable or immovable property.
2 Inserted by the First Amendment.


(5) The Trust may sue from its own name and it may be sued in the
same name.
(6) Head Office of the Trust shall be located at Kamandu and the
Trust may open branches inside or outside Nepal and may appoint agent or
representative.
4. Share Capital and Shareholder: (1) Authorized capital of the Trust shall
be Eighty Million Rupees and the amount shall be divided into Eight
Hundred Thousand shares at the rate of One Hundred Rupees each.
(2) Issued capital of the Trust shall be Forty Million Rupees and
Paid up capital shall be Twenty Million Four Hundre Thousand Rupees.
Share of the amount shall be distributed as per the following division:
(a) Government of Nepal 10 Percent
(b) Nepal Rastra Bank 40
(c) Nepal Stock Exchange Ltd 10
(d) Other Bank and financial Institutions 20
(e) General Public 20
(3) While selling and distributing share of the Trust pursuant to
Clauses (d) and (e) of Sub- Section (2), it shall hve to be done subject to
Securities Act, 2063.
Provided that, the Trust shall take approval of the Government
of Nepal while selling or distributing share to any foreign Bank or
Financial Institution or foreign citizen.
(4) The Provisions relating to invitation for application of share, call
for payment of allotted share and distribution of share certificate shall be as
prescribed.


(5) Each share shall be indivisible and shareholder shall be entitled
to cast one vote for each share owned by him/her in Ge eral Meeting.
(6)The Liability of shareholder shall be limited to the extent of the
value of the share owned by him/her.
5. Addition or Reduction may take place in Share Capital: Committee
may, upon taking prior approval of the Government of Nepal, be entitled to
add or reduce 3share capital of Trust, distribution and composition threof as
may be required
6. To be published Prospectus: The Trust shall publish Prospectus as
prescribed setting out the prescribed details before issuing its share or
debenture for sale.
7. Application of Share: Individual or corporate body who intends to
purchase share of the Trust shall make an application in such a manner and
format as prescribed.
8. Share Certificate: (1) Every shareholder shall be given share certifica e in
such a format as prescribed for the share owned by him/her.
(2) Particulars to be set out in the share certificate and other
provisions relating to certificate shall be as presc ibed.
9. Issuance of Debenture: (1) In case issuance of debenture is required,
Committee may, subject to Sub Section (2) and (3), issue debenture upon
publishing Prospectus pursuant to Section 6. (2) Prior approval from the
Government of Nepal or from the Authority as prescribed by Government
of Nepal shall have to be obtained by the Trust in case the debenture is to
be issued by keeping movable or immovable asset of Trust as security.
3 Amended by the First Amendment.


(3) In case the debenture has been issued without keeping the asset
of Trust as security, it shall be notified to the Government of Nepal within a
period of Seven days of such issuance.
(4) Notwithstanding anything contained in the prevailing law, the
Trust may take loan from other creditor also to the extent of the value of
the security already provided to previous creditor by disclosing the previous
creditor and the amount of loan.
(5) Trust shall keep separate book maintaining the name and
address of each creditors owning the debentures issued by it, amount of
debenture and other required details.
10. Transfer and transmission of Shares: (1) Ownership of Share of the
Trust may be, subject to this Act, transferred or given in security or
mortgage as good as movable asset.
(2) In case any others’ entitlement to share is to be established by the
death of any shareholder or by insolvency of assets caused by creditor
or by transfer of ownership in share to other pursuant to Sub Section (1)
or, by any other means, if such person submits an application to the
Trust along with the evidence thereof, transmission of such share shall
be given effect in his/her name as prescribed.
(3) Other provisions relating to transfer and transmis ion of
ownership of share shall be as prescribed.
11. Register book of Shareholder: (1) Trust shall register each shareholder's
name in a register book in the prescribed format upon setting out the details
as prescribed.
(2) In case the share is transferred to anyone or given as security, or
transmission of share is to be given effect pursuant to Section 10, the same


shall also be recorded in the register book as referred to in Sub-section (1)
and the register shall be made up to date.
12. Power to take loan and Grant: Trust may take loan and grant to
increase its capital.
Provided that, Trust shall take approval from theGovernment of
Nepal while taking loan from any foreign bank or Organization.
13. Payment for Share Amount: (1) Shareholder shall pay the amount called
for share in a manner as prescribed.
(2) In case any shareholder fails to pay the amount p rsuant to sub-
section (1), Trust may recover the amount from the dividend of share by
freezing the share remained in the name of such shareholder and the
dividend thereof to be distributed ,or may forfeit such share as prescribed.
(3) In case share is so forfeited pursuant to Sub- ection (2), Trust
may sell or transfer or terminate the share by any other means as
prescribed.
14. Owner in Share and Debenture: Trust shall consider the owner of share
and debenture of the Trust to the person whose name h s been registered in
its register book.
Chapter-3
Investment Account Scheme and Citizen Unit Scheme
15. Operation of Investment Account Scheme: Trust may constitute and
operate Investment Account Scheme in the name of investors to invest in
various sectors subject to the condition as prescribed.
16. Operation of Citizen Unit Scheme: As a Trustee, Trust may operate
citizen Unit Scheme of various nature and types as prescribed with the


purpose to provide expert investment management service to depositors and
to distribute higher benefit.
17. Privilege of Government of Nepal: (1) Government of Nepal, by
publishing a Notification in Nepal Gazette, may order Government Office
and corporate body as prescribed in such notification to deposit amount of
equivalent percentage as prescribed compulsorily in the Investment
Account Scheme for the duration as prescribed under the same notification
by deducting from monthly remuneration to be received by the employee
and workers working in their Office or body
(2) It shall be the duty of concerned Office or coporate body and
employee and workers working with such Office or Body to abide by the
Order pursuant to sub-section (1).
418. Provision for Depositing amount in Investment Account Scheme or
Citizen Unit Scheme: (1) A Nepali Citizen residing inside and outside of
the Country or any other foreign investor may deposit the amount as
prescribed by the Trust in Investment Account Scheme or Citizen Unit
Scheme.
(2) Nepalese residing in a foreign country or any other foreign
investor while depositing amount in Investment Account Scheme and
Citizen Unit Scheme pursuant to Sub- Section (1) may deposit in
convertible foreign currency also.
(3) The Trust shall take prior approval from Government of Nepal
and Nepal Rastra Bank before operating Investment Account Scheme or
Citizen Unit Scheme with the condition to repatriate the amount of foreign
currency to be deposited in said scheme only in the foreign currency.
4 Amended by the First Amendment.


19. Dividend to be Shared: (1) Rate of dividend to be provided in each Fiscal
Year in the amount compulsorily deposited in the Investment Account
Scheme pursuant to Section 17 shall be as prescribed by the Government of
Nepal by publishing Notice from time to time.
(2) Payment of amount deposited in Investment Account Scheme
pursuant to Section 17 and amount of dividend to be provided in such
amount pursuant to Sub Section (1) shall be as prescrib d.
(3) In case the Trust fails to pay the amount pursuant to Sub Section
(2) the amount shall be paid by the Government of Nepal.
(4) The Trust shall, upon deducting such expenses a prescribed
from the income generated through the investment of amount accumulated
into Investment Account Scheme or Citizen Unit Scheme pursuant to
Section 18, the amount as prescribed to be deposited for service charge, risk
investment reserve fund, dividend Equalization Fund 5and capital
depreciation of resources of investment, distribute residual amount
proportionately to the concerned investors as dividend.
20. Unit Certificate: (1) Trust shall provide Unit Certificate to each Unit
Holder in such a format as prescribed.
(2) Subject to the prevailing law, Unit Certificate may be exchanged
or transferred.
(3) Procedures relating to transfer, transmission or exchange of unit
certificate shall be as prescribed.


5 Amended by the First Amendment.


Chapter-4
General Meeting and Board of Directors
21. General Meeting: (1) Preliminary General Meeting shall be held within
One year of the establishment of the Trust. Thereafter, Annual General
Meeting shall be held each year within Six months of completion of fiscal
year.
(2) For holding General Meeting pursuant to Sub Section (1)
Shareholders shall be notified before at least Twenty one days of the
proposed meeting along with the venue, date and time hereof and such
notice shall be published also in the major newspapers of Nepal.
(3) Quorum for General Meeting shall be deemed to have been
constituted, if Ten percent of total shareholders are present by in person or
by proxy upon making representation of Sixty percent of total share
numbers.
(4) In case the Meeting could not hold due to the absence of the
number of shareholders as referred to in Sub Section (3), there shall be no
bar for holding meeting in case Five shareholders who are qualified to cast
vote are present in person at the Meeting called next time by giving at least
a Seven days notice and represent Thirty Three percent shares of the total
number of shares.
(5) Participation in the Meeting, voting right and other provisions
relating to Meeting shall be as prescribed.
22. Voting Right while Appointing Director: (1) While casting votes to
appoint Director, each shareholder shall have the right to cast vote in the
number which comes after multiplying the number of Directors to be
appointed by the number of shares the shareholder has owned and the


shareholder so voting may cast all the votes to a single candidate or more
than one candidates in the manner he/she prescribes.
(2) Notwithstanding anything contained in Sub -Section (1), in case
the Government of Nepal and corporate bodies nominate Directors pursuant
to Section 25, shall not be entitled to cast vote in the election to be held as
per this Section.
23. Matters to be Submitted and discussed in the General Meeting: (1)
Committee shall submit audited Balance Sheet and profit and loss account
of last fiscal year in the Annual General Meeting.
(2) The shareholder or shareholders representing at least Five
percent of total number of votes, who intend/s to submit any agenda in the
General Meeting for discussion and decision may submit an application to
the Chairperson before issuance of notice for the General Meeting.
(3) In addition to the agenda submitted pursuant to Sub -Section (1)
and (2), General Meeting shall discuss accounts of the trust, Committee
Report, Auditor Report, profit to be distributed to shareholders,
appointment and remuneration of 6Director and Auditor.
(4) Notwithstanding anything contained in Sub Sections (1), (2)
and (3), Committee shall submit report on details of the transactions that
the Trust has done before convening of the meeting in the preliminary
General Meeting convened pursuant to sub- section (1) of Section 21.
(5) Other provisions regarding Agenda to be discussed in the
General Meeting, Discussion and decision shall be as prescribed.
24. Special General Meeting: (1) Committee may, if it deems necessary, call
Special General Meeting.
6 Amended by the First Amendment.


(2) In the course of auditing of the Trust, the Auditor, if deems
necessary for a reason to convene Special General M eting, may request
with the Committee to call such Meeting and Committee shall have to call
Meeting accordingly.
(3) Committee shall call Special General Meeting of the Trust if
shareholder holding at least Ten percent of total paid up capital of the Trust
or at least Twenty Five percent of shareholders of the total number of
shareholders request to call Special General Meeting by an application to
the Trust.
(4) During the inspection or by any other reason if it deems
necessary to call Special General meeting, the Governm nt of Nepal may
cause to call such meeting through the Committee.
(5) Notice shall be issued by giving at least Seven days' time while
calling Special General Meeting as per this Section.
25. Formation of Board of Directors: (1) There shall be a Board of Directors
having at least nine directors in the Trust.
(2) The following Directors shall remain in the Committee pursuant
to Sub-section (1):
(a) A person nominated from Nepal Government Director
(b) A person nominated from Nepal Rastra Bank Director
7(c) A person nominated from Nepal Stock
Exchange Ltd
Director
(d) A person nominated or elected from amongst Director
7 Amended by the First Amendment.


other Financial Institutions
(e) A person elected from amongst the public
shareholders
Director
(f) Three persons nominated by Government of
Nepal from amongst the individuals having
special knowledge and experience in field of
Industry Trade or Capital market or from
amongst the investors
Director
(g) Executive Director of the Trust Director

(3) Government of Nepal shall designate the Chairperson from
amongst the Directors nominated or elected pursuant to Sub -Section (2)
(4) Officer staff of the Trust designated by the Committee shall
function as a Secretary of the Trust.
(5) Tenure of Directors shall be Five years and they may be re-
nominated or elected as the case may be.
(6) Notwithstanding anything contained elsewhere in this Section,
Government of Nepal or Concerned Institution may change the Directors
nominated pursuant to Sub Section (2) at any time.
(7) In case any post of Director falls vacant befor completing the
tenure, the post shall be fulfilled for the residual period following the same
process which was initially followed to fulfill.
8(8) Notwithstanding anything contained elsewhere in this Section,
Government of Nepal, by publishing a Notification in the Nepal Gazette,
8 Inserted by the First Amendment.


may change the number of the Directors to be elected from amongst the
shareholders, as per the necessity, in case any chage has been made in the
share capital of the Trust pursuant to Section 5.
26. Disqualification to be appointed in or hold the post of Director: (1) Any
of the following persons shall not be eligible to be nominated or elected in
the post of Director:
(a) Not attained 21 years of age,
(b) Insane or mad,
(c) Insolvent because of being unable to repay the debt of
creditor.
(d) Punished by the Court convicting in the accusation of
theft or fraud, or any kind of embezzlement or misuse
of the asset remained in his/her responsibility in an
unauthorized manner,
(e) Having any kind of conflict of interest in the tender or
contract of the Trust or,
(f) Serving in the post of Director at any Bank or
Financial Institution.
9(g) Individual or Institution serving in the position of
member or representative of Securities market.
(2) No person shall hold the post of Director:
(a) If one is disqualified to be nominated or elected in the
post of Director as referred to in Sub Section (1),
9 Inserted by the First Amendment.


(b) If remains absent for three consecutive meetings of the
Committee without a notice with appropriate reasons
to the Committee,
(C) If commits any act against the Committee or the
decision thereof,
(d) If resignation tendered by him/her is approved,
(e) If the Court decides that he/she committed any
dishonest or malafide act or activity in the Trust, or
(f) If commits any offence punishable under this Act.
(3) Notwithstanding anything contained in Sub Section (1) an (2),-
(a) Disqualification mentioned in Clauses (a) and (b) of
Sub Section (1) shall not be applicable against any
person until so proved by Government Doctor.
(b) In case approval of the Government of Nepal
received, person mentioned in Clause (e) of Sub
Section (1) may be nominated in or hold the position
of Director.
(c) The person shall be given an appropriate opportunity
to submit evidence for clarification before
disqualifying such person to be nominated or elected
to or serving in the post of Director.

27. Remuneration and Allowance of Directors: (1) Meeting allowance to be
received by the Directors for attending in the meeting shall be as
prescribed.


(2) If any Director works as a full timer in the Trust, monthly
remuneration, daily and traveling allowance for such Director while doing
job of the Trust, shall be as prescribed.
28. Power of Board of Directors: (1) Subject to this Act or Bye-law framed
there under, Committee shall have the duty to manage overall business of
the Trust, to exercise powers and to fulfill duties and to operate, direct,
supervise and control the general administration of the Trust.
(2) Committee may delegate any or all powers conferred on it to any
Director, Sub- Committee, Executive Director or any Officer staff of the
Trust.
29. Meeting of the Committee: (1) Meeting of the Committee shall be held on
the date, venue and time prescribed by the Chairperson.
(2) Meeting of the Committee shall be held Eight times in a year and
gap between two meetings shall not be more than Two months.
(3) Notwithstanding anything contained in Sub Section (2), if at least
one third Directors, along with the agenda to be discussed, requests in
writing, Chairperson shall call the meeting of the Committee within Seven
days.
(4) No meeting of the Committee shall be held unless at least more
than half of the Directors are present.
(5) Chairperson shall preside over the meeting of the Committee and
in his/her absence, Director selected by the Directo s from amongst
themselves shall chair the meeting of the Committee.
(6) Decision of the majority shall prevail in the meeting of the
Committee and the person presiding the meeting may exercise casting vote
in case of tie.


(7) Details of the Directors present in the meeting, agenda discussed
and decision made thereon shall be recorded in a sep rate register.
(8) Committee itself may determine other matters relating to the
meeting of the Committee.
30. Liability of Directors: (1) If the Committee knowingly or by negligent,
incurs or causes loss to the Trust, such loss shallbe recovered prorata from
the asset of each director.
Provided that, the Director who has objected in writing on the act
which caused loss or was unaware that such act is likely to be happened
shall not be liable to bear such loss.
(2) Except in accordance with the approval of Government of Nepal,
no Director shall perform or cause to perform such a t to be benefited
personally through the Trust.
(3) A Director shall be individually liable to such act or activity
which is beyond his/her jurisdiction.
31. Recognition of the work already completed: In case any provision of
this Act relating to election or nomination of any Director has not been
complied with and such information came to know there after, the act and
activity preformed by such Director before such information coming into
notice shall not be void on ground of this reason only.
Chapter-5
Functions, duties and powers of the Trust
32. Function and duties of the Trust: Trust may, subject to this Act, perform
the following functions:-


(a) To operate Citizen Unit Scheme of various nature and types as
prescribed as a trustee with the purpose to provide more return to the
depositors by providing expert investment service.
(b) To invest the deposit collected from voluntary or compulsory
Investment Account Scheme run by the Trust in the way to benefit
the investors.
(c) To underwrite shares of various corporate, whether singly or jointly
with other Bank or Financial Institution, as determined by the Trust.
(d) To provide facility of bridge financing or lend to c rporate bodies.
(e) To assume ownership of Securities by investing and re investing in
Security of various type.
(f) To provide expert consultation service on regarding financial
system, and savings of corporate body and alternate opportunities of
investment.
(g) To carry out business as a broker subject to Securities Act, 2063.
(h) To encourage corporate body to issue Securities and provide
required services as Primary Issuer and sales manager.
(i) To provide credit to purchase Securities to the inv stors participated
in Investment Account Scheme run by the Trust.
(j) To Participate or assist in the constitution, management and control
of corporate body where the Trust has invested.
(k) To invest in bonds issued by the Government of Nepal from the
amount collected through Citizen Unit Scheme or Investment
Account Scheme or from its own source.
(l) To Provide Term Loan to corporate body.


(m) To constitute subsidiary company as per necessity for the
development of capital market.
10(m1) To provide consultation service relating to capit l market and to
conduct training and other works related thereto.
(n) To invest the deposit collected through Unit Scheme from Nepali
Citizen residing in foreign country in foreign Securities after taking
approval from Nepal Rastra Bank.
(o) To Levi management fee, service fee, commission, brokerage
commission and other fees for the service rendered by the Trust.
(p) To carry out banking transaction with foreign banks with the
approval of Nepal Rastra Bank.
(q) To Purchase or receive or own or take in rent movable, immovable
or any other assets by repaying price at once or ininstallment or in
credit or by any other manner and to sell or exchange the movable
or immovable assets remained in its ownership.
(r) To provide approval to work as per the terms and condition of
security or commitment provided as a trustee in relation to fulfilling
the liability as per contract or agreement of commitment of any
corporate body or to perform the work as per the same.
(s) To accept, or provide approval to hold any movable or immovable
asset in security or deposit or hypothecation or collateral and accept
any agreement or contract or any instruments or documents as per
necessity and put conditions for the c protection of its interest and
for utilization as per the purpose of the facility provided by it.
10 Inserted by the First Amendment.


(t) To perform other ancillary works to come in the course of fulfilling
duties and exercising of powers as per this Act.
1132A. Trust may work as a Debenture Trustee: (1) Trust may perform function
as a trustee relating to the debenture issued or tobe issued by a corporate
body.
(2) While performing function of a Trustee pursuant to Sub -Section
(1) Trust shall meet the procedure as prescribed.
1232B. Trust may work as a Custodian: (1) Trust may, on behalf of foreign or
domestic investors, perform the functions of taking custody, buying, selling
or causing to buy or sell of securities or transferring, registering, de-
registering of purchased or sold securities and colle ting interest or
dividend.
(2) While performing the function of a Custodian pursuant to Sub-
section (1), Trust shall meet the procedure as prescribed.
33. Power to put Conditions: (1) Trust, while doing business with, or
providing loan to any corporate body, may cause to execute document
upon putting such condition as per necessity for the protection of its interest
and for the appropriate utilization of the loan or facility provided by it.
(2) Notwithstanding anything contained in the prevailing law, while
causing to execute documents pursuant to Sub Section (1), Trust may fix
any pay back date, prescribe condition to pay back the principal and interest
of the loan utilized by the borrowing corporate body from the asset
accepted as security and from the Guarantor in case the term and condition
fixed by the Trust violated.
11 Inserted by the First Amendment. 12 Inserted by the First Amendment.


(3) Trust, while providing loan to any corporate body, may put
condition of providing loan gradually in installment i the form of cash,
cheque or letter of commitment or letter of credit by causing to execute the
documents for the entire loan amount calculating interest from the date
when the corporate body receives the installment.
(4) While putting conditions pursuant to Sub Section (1), Trust
may even put condition of appointing Director in the Board of Directors of
any corporate body and if such condition is effected, notwithstanding
anything contained in this Act or prevailing law, such condition shall
prevail.
34. Special Rebate for the Trust: (1) Stamp duty or registration fee shall
not be levied to the Trust for the transactions of accepting collateral by
causing to execute document from borrowing corporate body or
Guarantor or, for transferring the property accepted as collateral in the
name of the Trust or in the course of purchasing or selling immovable
property by the Trust .
(2) In case all the amounts could not be recovered from the
collateral accepted through the document, the Trust, may recover such
overdue from the other assets of the borrowing corporate body in
accordance with the prevailing law.
(3) Power of Trust over the collateral accepted through the
document shall not be terminated only for the reason that the Trust did not
initiate any proceeding within the period mentioned in the said document
to seize the collateral, or recover the loan.
(4) In a condition of default in installment, the power of Trust to
receive interest and additional fee ,or to sell col ateral shall not be affected
only for a reason that collateral was seized, possessed, given in rent or


lease or provided to else in the condition to distribu e the profit as per the
condition mentioned in the collateral deed.
35. Power of the Trust in Case of breach of Agreement: (1) In case any
corporate body breaches the terms and conditio of document executed
for the Trust by not repaying, as per the agreement, a y debt, its interest
and amount taken as advance or in case the Committee considers that there
is reasonable ground to take control over the operation of financial
transaction of such body , despite the time limitation to clear the loan not
being expired, Trust may recover its amount by controlling the
management or financial transaction of borrowing corporate body or seize,
possess, rent or lease the collateral accepted in consideration of the loan or
other assets of such body or sell the said property by auction through
open bids or by sealed bids or by negotiation
(2) In case the collateral provided by the borrowing corporate body
pursuant to Section (1) or other asset of the said body sold through
auction by open bids or calling sealed bids upon taking possession, after
recovering the amount by the Trust, it shall return back the residual
amount to the concerned corporate body
(3) In case the asset of the borrowing corporate body sold pursuant
to Section (1) through auction by open bids or calling sealed bids, or the
said asset could not be sold by auction despite th efforts of time and
again, or the trust decided to take the ownership of the asset by itself as it
occluded if sold in the received value that is not being in the interest of the
Trust; the Office authorized for registration and to give effect transmission
shall register and give to effect transmission of such asset in the name of
the person taking through auction or of the Trust as the case may be.
36. Power to Call Back the payment of loan Before Expiring the pay back
date: Notwithstanding anything contained in agreement or c ntract or


other document ,the Trust, in the following situation, before the expiry of
the pay back date, may call back payment of the amount it has to receive
from the borrowing corporate body by providing a notice in writing:
(a) In case the Committee considers that the borrowing corporate body
has provided false or ambiguous particulars about any matter in the
application of loan.
(b) In case the borrowing corporate body fails to perform the terms and
condition mentioned in the debt agreement done withthe Trust.
(c) In case the Committee considers that the borrowing corporate body
is unable to repay the debt or advance remained on it.
Chapter-6
Account, Reserve and Dividend of Trust
37. Account of Trust: (1) Trust shall duly maintain register of its account in
Nepali. Trust, for its convenience, may keep the account in English
language also along with the Nepali.
Provided that, the account maintained in Nepali shall be considered
authorized, if two accounts are so maintained.
(2) In the account to be maintained pursuant to Section (1) details
of investment made by the Trust, given and taken dbt ,financial
transaction , each income and expense, buy and sale of goods and asset and
liability of Trust shall be mentioned in such a manner that the actual
picture of the act and activities of Trust could be seen clearly.
(3) Notwithstanding anything contained in Section (2), separate
account shall be maintained for the Investment Account Scheme and
Citizen Unit Scheme operated by Trust.


(4) Except otherwise approved by the Government of Nepal,
account pursuant to this Section shall not be placed anywhere other than
the Office of the Trust and in case a Director intends to inspect the
account , may inspect it at any time .
(5) Other cash reserve of the Trust except the amount prescribed by
the Committee shall be kept only at any Commercial Bank where such a
Commercial Bank is available.
(6) Trust shall keep update records by collecting breakdown of
accounts from its Branches in each Three months.
38. Balance Sheet and Profit and Loss Account: Trust, within Three months
of the end of the fiscal year, shall submit its balance sheet and profit and
loss account upon signing it by Executive Director, Chief Accountant and
at least two Directors of the Trust, to Government of Nepal.
39. Audit: Account of the Trust shall be audited by Auditor General or the
Auditor designated by him/her.
40. Reserve fund: Trust shall establish a Reserve fund by separating at least
Twenty percent amount from the net profit each year earned from its capital
and service.
41. Distribution of Dividend: Dividend may be distributed to shareholders
only after compensating the loss, if any of preliminary or of previous year
and transferring amount into reserve fund pursuant to Section 40 from the
net profit earned by Trust.
Chapter-7
Miscellaneous
42. Provision of Staff: (1) Government of Nepal may appoint an Executive
Director to conduct day to day functions of the Trust.


(2) Tenure of Executive Director shall be Five years. Government of
Nepal may extend tenure of the Executive Director again for Five years.
(3) Committee may appoint Advisor, Officer and Staffs required to
conduct the functions of the Trust smoothly.
(4) Remuneration, facility and other terms of service of Executive
Director, Advisor, Officer and Staffs appointed pursuant to Sub- Sections
(1) and (2) shall be as prescribed.
43. Technical Sub- Committee: (1) Committee may, as per the requirement,
constitute various technical sub- committees to smoothly conduct the
function of Trust, for better management of Citizen U it Scheme and
Investment Account Scheme.
(2) Functions, duties and powers of the Sub- Committees constituted
pursuant to Sub Section (1) shall be as prescribed.
1343A.Trust may designate Trustee: (1) Trust may designate Committee, Sub-
Committee or member of such Committee, Sub -Committee or any Officer
staff of Trust to function as a Trustee, upon givin authority to exercise
the powers and responsibility conferred on it, in order to manage for
investment of, as per the condition of related Scheme, the capital fund
accumulated from depositors and investors pursuant to this Act or to
discharge obligation as per agreement done with any other corporate body
in this regard.
(2) Functions and duties of the Trustee designated by the Trust
pursuant to Sub Section (1) shall be as prescribed.
13 Inserted by the First Amendment.



44. Oath to be Taken: Each Director, Executive Director, Advisor, member
of Technical Sub- Committee and Officer and Staffs, before resuming their
Office, shall take oath as prescribed.
45. Power of the Government of Nepal to withhold Committee: (1) In case
the Committee fails to discharge duties to be performed by it pursuant to
this Act, Government of Nepal, by publishing a Notification in Nepal
Gazette, may withhold the Committee for a period of One year in
maximum.
(2) In case the Committee is withheld pursuant to Sub Section (1),
Government of Nepal may designate any person, committee of persons or
Institution to perform all the functions and business of the to be performed
pursuant to this Act.
(3) All the functions and business performed under this Act and Bye
-law made there under by Person, Persons' Committee or Institution
designated to perform the functions and business of Committee pursuant to
Sub-section (2) shall be equally valid as if done by the Committee
constituted pursuant to this Act.
46. Liaison with Government of Nepal: Trust shall liaise with Government of
Nepal through the Ministry of Finance.
47. Annual Report: Trust shall, within the period of Nine months from the
end of Fiscal Year, submit Auditor's report and repo t relating to the
functions and business of the Trust to the Government of Nepal.
48. Government of Nepal may issue Order or Direction: Government of
Nepal may, keeping in view the monetary and capital m rket situation of
the country and interest of investors, issue requird Order or Direction and
it shall be the duty of the Trust to abide by such Order or Direction.
49. Nepal Rastra Bank may issue Order or Direction: Nepal Rastra Bank,
with the purpose to increase the effectiveness of the Trust and keeping in


view the monetary situation of the Country, may issue required Order or
Direction from time to time. It shall be the duty of the Trust to abide by
such Order or Direction.
50. Inspection and inquiry: (1) l Government of Nepal may appoint Inspector
to inspect the functions and business of the Trust.
(2) Inspector appointed pursuant to Sub Section (1) may inspect all
accounts and documents remained at the Trust.
(3) Inspector appointed under this Section shall submit Inspection
Report to the Government of Nepal.
51. 14…………….
52. Privilege of the Trust: Trust may prescribe terms and conditions on
Savings Fund, Investment Management and other services under
Investment, Citizen Unit Scheme and Investment Account Scheme
provided by it under this Act, and fix the commission, service fee and
charges to be levied there under.
53. Security of Debt Investment of Trust: Notwithstanding anything
contained in the prevailing law, in case any corporate body in which the
Trust has made investment dissolved, first claim over the asset of such
body shall be of the Trust.
54. Secrecy to be Maintained: (1) Notwithstanding anything contained in the
prevailing law, particulars of relationship between Trust and Customers and
business or accounts of Trust shall not be provided to others except the
concerned.
(2) Notwithstanding anything contained in Sub Section (1), it shall
not be deemed to have been violated the secrecy of business or accounts of
the Trust if provided to Court in the course of any case or other legal
14 Repealed by the Income Tax Act, 2058.


proceedings, to Auditor during audit or to the Inspector appointed for the
inspection during inspection.
(3) While inspecting business or accounts of Trust, Court, Auditor or
any other shall not violate secrecy of business or accounts of the Trust.
55. Dissolution of Trust may happen: The Trust may be dissolved in the
following situation:
(a) In case Nepal Government considers that the Trust is incapable of
repaying the amount to be refunded to the Unit holders under Citizen
Unit Scheme and investors under Investor Account Scheme, of
repaying other debt to be repaid or in performing functions as per
this Act.
(b) In case Government of Nepal decides to dissolve the Trust on any
reasonable ground.
56. Appointment of Liquidator: (1) Government of Nepal shall appoint
Liquidator in case the Trust is to be dissolved pursuant to Section 55.
(2) The duties and powers of the Liquidator appointed pursuant to
Sub- Section (1) shall be as good as the Government Liquidator pursuant
to Company Act, 2063
(3) The Liquidator shall receive remuneration or allowance from the
Trust as prescribed by the Government of Nepal.
57. Order of Priority of Paying liability: Payment of liability shall be made
in the following priority while liquidating the Trust.
(a) Expense incurred during Liquidation,
(b) Remuneration and other residual amount to be receivd by staff or
workers of the Trust,
(c) Amount of Investment Account Scheme, Citizen Unit Scheme and
Group Savings Project,


(d) Debt amount, and
(e) Amount to be repaid to Government of Nepal.
58. Penalty: (1) 1) Anyone, knowingly, if mentions or causes to mention false
statement in any particulars or certificate or in any receipt or any other
document of collateral provided to the Trust for the purpose of the Trust's
investment or loan or other facility provided by the Trust pursuant to this
Act and if the Trust suffers any loss, such person hall be liable to
compensate such loss and be fined up to Five Thousand Rupees or be
imprisoned not exceeding One year or the both.
(2) In case anyone violates confidentiality pursuant to Section 54,
shall be liable to pay a fine up to Three Thousand Rupees or be imprisoned
up to Three months or the both.
(3) In case anyone hinders or obstructs the Inspector appointed
pursuant to Section 50 while doing his/her functions of inspection or
without any appropriate reason does not provide document for inquiry, such
person shall be subject to a fine upto Two Thousand Rupees or
imprisonment up to Two months or the both.
(4) In case anyone publishes name of the Trust in any prospectus or
advertisement without obtaining written approval of the Trust, shall be
subject to a fine up to One Thousand Rupees or imprisonment up to One
month or the both.
59. Power to make Bye-law: Trust may, subject to this Act, frame the required
Bye-laws to manage its internal act and activities upon obtaining approval
from the Government of Nepal.