Corporations Act, 2021 (1964)


Published: 1964

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The Croporations Act, 2021
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Corporations Act, 2021 (1964)
Date of Royal Assent and Publication:
2021.6.17(02-10-1964)
Amending Acts: Date of Authentication and Publication
1. The Repeal and Amendment Act, 2022 (1966) 2022.12.10(23-03-1366
2. The Corporations (First Amendment) Act,
2030(1973)
2030.5.15(31-8-1973)
3. The Judicial Administration Reforms Act,
2031(1974)
2031.4.18(2-8-1974)
4. The Judicial Administration Reforms (Fourth
Amendment) Act, 2043(1986)
2043.7.24(10-11-1986)
5. The Administration of Justice Act, 2048(1991) 2048.2.16(30-5-1991)

61. The Republic Strengthening and Some Nepal Laws
Amendment Act, 2066(2010)
2066.10.7.(21-1-2010)

Act Number 23 of the year 2021(1964)
………………..2

Preamble:
1 This Act came into force on 15 Jesta 2065(2009). 2 Deleted by Republic Strengthening and Some Nepal Laws Amendment Act, 2066(2010).

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Whereas, it is expedient to make some necessary provisions and bring about
uniformity in relation to the corporations to be established by the Government of
Nepal;
Now, therefore, His Majesty King Mahendra Bir Bikram Shah Dev has, on
the advice and with the consent of the National Panch yat, made this Act.
1. Short Title, Extent and Commencement: (1) This Act may be cited as the
“Corporations Act, 2031(….).”
(2) It shall come into force at once.
2. Definitions: In this Act:
(a) "Corporation" means a corporation established pursuant to
Section 3.
(b) “Board of Directors” or “Director” in relation to any
Corporation means the Board of Directors or Director of the
Corporation.
(c) “Concerned Department” means the concerned department of
the Government of Nepal or any other department or authority
specified by the Government of Nepal publishing a notice in
the Nepal Gazette.
3. Establishment of Corporation: (1) The Government of Nepal may, if it
appears necessary or appropriate to gat act such as done by any Company as
is contributive to the health, facility or economic interest of the people
generally, establish and form any Corporation, by publishing a notice in the
Nepal Gazette, setting out the following matters:
(a) Name of the Corporation,
(b) Place and address of head office of the Corporation,
(c) Objectives of the Corporation,

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(d) Names, addresses and occupations of the Board of Directors of
the Corporation.
(2) The Corporation shall be an autonomous body corporate with
perpetual succession3 and shall have a separate seal of its own for all of its
activities.
(3) The Corporation may, like an individual, acquire, use, and
otherwise transfer any movable and immovable property.
(4) The Corporation may sue by its name and be also sued by the
same name.
4. Board of Directors: (1) Each Corporation shall consist of the Directors
nominated by the Government of Nepal in such a number as specified by the
Government of Nepal. The Director designated by the Government of Nepal,
from amongst the Directors, shall be the chairperson.
(2) The Directors shall hold office during the pleasure of the
Government of Nepal.
(3) If the office of a Director falls vacant because of his or her
death, resignation or any other cause, and the Government of Nepal fills the
vacancy by nominating any other person, a notice thereof indicating the
name, address and occupation of such Director shall be published in the
Nepal Gazette.
5. Disqualification for Director: Any of the following persons shall not be
eligible to be a Director of a Corporation:
(a) A person who has not attained the age of twenty o e years,
(b) A person who is insane;
3 Amended by Repeal and Amendment Act, 2022(1966).

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(c) A person who is convicted by a court of an offens of any kind
of theft or cheating or corruption or unauthorized
embezzlement or misuse of assets in his or her custody and
sentenced for the same,
(d) A person who has become insolvent or got declard insolvent;
or
(e) A person who has personal interest of any kind in any contract
or transaction of the Corporation.
6. Powers and duties of Board of Directors: The Board of Directors shall
exercise all such powers and perform all such duties as a Corporation may
have pursuant to this Act or the bye-laws framed uner this Act.
7. Alteration in objects or functions of Corporation: (1) If, at any time, it is
necessary to make alteration in any objects of a Corporation or in any acts
specified to be done by a Corporation, the Board of Directors make a report,
along with the reason for the same, to the Government of Nepal for approval,
and if such a report is made and the Government of Nepal holds it to be
reasonable, it may give approval for such alteration.
(2) After approval is given by the Government of Nepal pursuant
to sub-section (1), a notice shall be published in the Nepal Gazette and in
leading newspapers about the amended objects and acts of the Corporation,
and the objects or acts of the Corporation may be altered only after the
publication of such a notice.
8. Fund of Corporation: (1) There shall be one Corporation fund consisting of
the following amounts, and all amounts required to be spent on behalf of the
Corporation shall be chargeable on the fund:
(a) Amounts given as grants by the Government of Nepal or other
person to the Corporation, and

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(b) All amounts received by the Corporation from its assets or
transactions or loans of the Corporation.
(2) All cashes of the Corporation shall be created to an account by
the name of “Corporation fund” to be opened with the Nepal Rastra Bank in
a place where such Bank is situated, and with any other local bank in a place
where such Bank is not situated.
9. Accounts etc. of Corporation: (1) All records, books of accounts of the
incomes and expenses and accounts of a Corporation shall be maintained as
prescribed by the Government of Nepal.
(2) The accounts of incomes and expenses of the Corporation shall
have to be got audited each year by an auditor appointed by the Government
of Nepal, and it shall be the duty of each Director or employee to give any
such document or information as required by such an auditor in the course of
performing his or her duty.
(3) After examining the books of accounts, the auditor shall
prepare an audit report setting out, inter alia, the following matters, and
submit a copy of the report to the Government of Nepal and other copy to the
Corporation:
(a) Whether the matters required to be included in the profit and
loss account prepared by the Corporation have been so i cluded
or not, and whether the statements of accounts reflect the true
economic condition of the Corporation or not,
(b) Whether the accounts of incomes and expenses submitted are
due or not,
(e) Whether any document, explanation or information s ught has
been given or not, and if so given, whether it is satisfactory or
not,

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(f) Whether the manner of maintaining the accounts of the
Corporation is proper or not, and
(g) Such other matters as the auditor considers necessary.
10. Power of Government of Nepal to give direction: If the Government of
Nepal considers necessary so to do for proper management and well
operation of a Corporation, it may give necessary direction to the
Corporation, and it shall be duty of the Corporation t abide such a direction.
11. Liaison with Government of Nepal: In making contact by the Corporation
with the Government of Nepal in the course of performing its activities or in
giving direction by the Government of Nepal to the Corporation pursuant to
Section 10, such contact or direction shall be made or given through the
concerned Department.
12. Saving of officers against loss or damage: The Directors or employees of
the Corporation shall not be held individually liabe for any loss or damage
caused or to be caused from any act done or purported to be done by them in
good faith in the course of performing their duties n accordance with this
Act or the bye-laws framed hereunder.
13. Punishment: (1) If a person who has the duty to maintain, prepa nd
submit any statements, accounts, reports or other documents pursuant to this
Act or the bye-laws framed under this Act, knowingly or with ulterior
motive, conceals the truth and state a false matter in such accounts or report
or other documents or alters the contents or attempts to do such an act, that
person shall be liable to the punishment of imprisonment for a term not
exceeding three years or a fine of up to three thousand rupees or with both
punishments.
(2) If any Director or employee of the Corporation causes loss to
the Corporation by doing any act knowingly or recklssly or with ulterior

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motive by doing any act other than that set forth in sub-section (1), such a
Director or employee shall be liable to the punishment of imprisonment for a
term not exceeding one year or a fine of up to one thousand rupees.
(3) If any person obstructs the auditor appointed pursuant to
Section 9 or any other authorized official with hisor her business or does not
provide, except for any reasonable reason, such document, explanation or
information to the auditor or official as demanded, such a person shall be
liable to the punishment of a fine of up to one thousand rupees.
(4) If the Corporation has suffered any loss or damage from any
offence punishable under this Section, the amount of such loss or damage
shall also be recovered from the offenders on the pro rata basis.
14. Dissolution: The Government of Nepal may, if it considers necessary to
dissolve any Corporation, dissolve the Corporation by publishing a notice in
the Nepal Gazette, and after the notice has been published accordingly:
(a) All assets and liabilities of the Corporation shall devolve on the
Government of Nepal,
(b) All contracts and agreements concluded with the Corporation,
except those concluded with mala fide intention, shall be
deemed to have been concluded with the Government of Nepal.
14A.4 To hand over assets and liabilities of dissolved Corporation to other
organization or Corporation: If any Corporation is dissolved pursuant to
Section 14, the Government of Nepal may, by publishing a notice in the
Nepal Gazette, hand over all such assets and liabilit es of the dissolved
Corporation as may be dissolved to the Government of Nepal to any
organization formed pursuant to other prevailing Nepal law or to any
Corporation formed pursuant to this Act with the consent of that organization 4 Inserted by First Amendment with effect from first Shrawan of the year 2030(1973).

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or Corporation, and if the hand-over of assets and liabilities is so made, any
contract and agreement concluded with the dissolved Corporation shall be
deemed to have been concluded with the organization or Corporation to
which the assets and liabilities of the dissolved Corporation, and the
provisions of Nepal law relating to the organization r Corporation to which
such hand-over has been made shall apply in that respect.
15. Cases and trial of cases: (1) Any case punishable under this Act may be
filed only by a complaint of the Corporation or conerned Department, and
even though no complaint has been filed by any one in r lation to the matter
falling under its jurisdiction pursuant to sub-section (2), the concerned
Department may institute case.
(2)5 The concerned Department shall have power to try and settle
cases relating to the offense punishable under sub-section (3) of Section 13,
and an appeal may be made to the Court of Appeal 6ag inst any judgment or
final decision made by the concerned Department.
(3) An appeal may be made to the Court of Appeal7 against any
judgment or final decision made by the concerned Department pursuant to
sub-section (2).
Provided that a fine of two hundred rupees or less than that is imposed
by such a judgment or decision, no appeal may be made.
16. Powers to frame bye-laws: (1) Each Corporation may frame its bye-laws in
order to accomplish the objectives of this Act and manage its acts and
actions.
5 Amended by Judicial Administration Reforms (First Amendment) Act, 2043(1986). 6 Amended by Administration of Justice Act, 2048(199). 7 Amended by Administration of Justice Act, 2048(199).

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(2) Without prejudice to the generality of the powers conferred by
sub-section (1), such Corporation may frame bye-laws on the following
matters, in particular:
(a) Acts to be done by the Corporation, and manner for doing such
acts,
(b) The manner of and procedures for performing the business of
the Board of Directors,
(c) Matters relating to branches or sub-branches of the
Corporation,
(d) Appointment, promotion, facilities, discipline and other terms
of service of the employees of the Corporation,
(e) Operation of the fund of the Corporation,
(f) The procedures for and power to make contract or agreement to
be made on behalf of the Corporation,
(g) Procedures for using the seal of the Corporation,
(h) Such other matters as may be necessary to carry out its
activities by the Corporation in a systematic manner.