This is the fifth part of a multi-part series documenting all the relevant points of The Company Act of Nepal 2063. Find the previous part here.

Every shareholder cannot be the operator of the business. They need to be selected by voting. The directive states each company must provide the number of operators. The operator's appointment has different provisions and must be performed per the provisions.  

The accounting information has to be provided to all the stakeholders. However, the shareholders have every right to be notified of account details. The directive of the Act with section and sub-section with details are written below.

48. Number of Operators to Be Specified

(1) Each company must disclose the number of operators of the company in the regulations. It cannot be mentioned that there will be at least this many directors on the company's Board of Directors.

49. Provision Regarding Independent Operators

(1) Only public companies will have to appoint independent moderators.

(2) If there is a public company with up to seven directors, at least 1 independent director shall be appointed among the 7 members. If there are eight or more directors, at least two independent directors should be appointed to the Board of Directors.

(3) An independent operator shall be appointed in a public company other than the bank and financial institution from the general meeting of such a company.

(4) For the appointment of an independent director pursuant to subsection (3), the company's Board of Directors shall submit the names of at least three more qualified persons to be appointed as independent directors as a proposal in the general meeting. Such a proposal should also mention the personal details, qualifications and experience of the proposed persons and other related matters.

(5) Pursuant to subsection (4), a person approved by the majority of the General Assembly from among the persons shall be appointed to the post of Independent Director.

(6) The public company may make separate provisions in the regulations regarding the additional qualifications required to be appointed to the independent operator only to those not ineligible to be appointed as independent directors as per the Act.

(7) If any company or organization has invested in the shares of another public company, the officials of such company or organization or the advisors or employees receiving regular remuneration or the shareholders shall not be eligible to be appointed as independent directors in the public company.

(8) An independent operator's functions, duties, rights and responsibilities will be like other operators.

(1) For the purpose of clause (c) of subsection (2) of section 89 of the Act, to be appointed as an independent operator, at least 10 years of experience in the related field is required, and the operator must have gained experience working in the field related to the subject.  

51. Cannot Be an Operator in Another Public Company With the Same Purpose

(1) No managers of the company, basic shareholders, employees, auditors or a person holding the post of advisor may not be appointed as a director in another public company with the same objective.

But such a person of a private company may be an operator in another private company with the same objectives.

52. Provision Relating to Alternate Directors

(1) As the organization is a shareholder of the company, in the absence of the operator representing such organization, an alternate operator may be appointed to participate in the board of directors' meeting and to vote. But no natural person operator will be allowed to appoint an alternative operator in their place.

(2) The right to appoint an alternate operator shall be vested only in the organization, but the operator representing the organization shall have the right to appoint its alternate operator.

(3) If the operator fails to remain in their post for the entire team due to the practice of being an appointed alternate operator, they will be replaced only by the organization that appoints such alternate operators. The operator representing such an organization will not have that right.

53. Procedure for Removal of the Operator From the General Meeting

(1) If any shareholders representing at least 5% of the total number of votes want to remove any operator from the post of chairman before the expiration of their term, the basis and the reason for removal must be clearly stated. They have to submit it to the company the day before. The Board of Directors itself will not be allowed to make such a proposal.

(2) Upon receipt of the proposal pursuant to subsection (1), the company shall send the notice of such proposal to the concerned operator and include it in the subject matter (agenda) of the general meeting.

(3) In the notice pursuant to subsection (2), if there is any reason why they should not be removed from the moderator post, they should give written notice at least 21 days before the general meeting to submit their defence in writing.

(4) If the concerned operator requests to send the written counterclaim to the shareholders, the company shall send a copy of such counterclaim to all the shareholders. But such a protest must be at least 10 days from the date of the ten general meetings, and it should be submitted to the company's registered office in advance.

(5) The concerned operator may, if they so desire, read out the proceedings of their defence in the general meeting and may, if there is an additional matter in their defence, be allowed to keep it in the general meeting.

(6) If the court decides that they have abused their right to defend themselves from the conduct mentioned by the operator in their written counterclaim from the petition filed by the company or any other concerned person, the written counterclaim submitted by them shall not be sent to the shareholders.

(7) Without fulfilling the procedure provided in this Article, if the operator is removed from the post, it will be invalid.

54. Regular Remuneration

(1) For the purpose of the Act, regular remuneration means a fixed amount (daily, weekly, fortnightly or monthly) received from the company in cash or in the form of cash or commodities for the services rendered to the company by any operator, managing director or chief executive officer or other officials to remember.

55. Interest in the Appointment of Officers

(1) For the purpose of clause (b) of subsection (1) of section 92 of the Act, the managing director of a company, company secretary, or any other operator having any kind of interest in the appointment of other office bearers, the following conditions exist:

a. Such officer bearer is a close relative of their operator,

b. Such officer is a business partner of the operator, or

c. There may be any situation that may affect the operator's independent and neutral decision regarding the appointment of such office-bearer.

56. The Information Provided by the Operator Should be Recorded

(1) Pursuant to Article 92 of the Act, the information provided by the operator to the company should be recorded in a separate register. In such records, the interests of the concerned operator should be briefly disclosed.

(2) The register set up by the company pursuant to subsection (1) shall be kept in the company's registered office. If the shareholders or stakeholders of the company want to inspect, the company will have to allow such register to be inspected.

57. Meetings of the Board of Directors May Be Held Through Communication

(1) The meetings of the Board of Directors of a private company may also be held through communication.

(2) Pursuant to subsection (1), during the meeting of the Board of Directors, the other operators should be able to hear or read or see what is said by each operator through communication.

(3) The meeting of the Board of Directors to be conducted pursuant to subsection (1) shall be deemed to have been conducted at the place where the Chairperson of that meeting is present.

(4) Pursuant to subsection (1), the details of the proceedings and decision of the meeting of the Board of Directors shall be prepared, and the details of the decision shall be certified by the Chairperson, and records shall be kept.

(5) Notwithstanding anything contained elsewhere in this Article, if any moderator has not been able to attend any meeting of the Board of Directors on the ground that they have not been notified of the meeting, they may lodge a complaint with the office within 3 months of such meeting.

(6) Upon receipt of the complaint pursuant to subsection (5), the office shall understand the company concerned and ascertain whether the petitioner may participate in the meeting of the Board of Directors or not. The company will be responsible for verifying that the applicant operator was informed of such a meeting.

(7) Pursuant to subsection (6) of such a meeting to the petitioner operator, the decision made by such a meeting will not be valid if the information given cannot be verified.

(1) Decisions can be made by written consent without holding a meeting of the Board of Directors of any company. The following procedure shall be followed for making such a decision by written consent:

a. In a company with a company secretary, the company secretary and in a company without a company secretary, the official provided in the rules also prepares the subject of discussion and the proposed decision.

b. The proposal prepared as per clause (a) shall be sent to each operator at the address provided by them to the company.

c. Each operator shall sign the proposed decision themselves and also disclose the signed date.

d. The decision shall be deemed to have been taken only if all the operators have agreed to such proposed decision in writing. No separate dissenting opinion can be written on such a decision. The decision must have been made by consensus.

(E) If the operators have signed on different dates, the date signed by the operator on the last date shall be deemed to be the date of the decision.

59. To Be Disclosed in the Report of the Board of Directors

If the company, the office-bearer or the shareholder has paid the fine in the office as per section 81 of the Act for not providing the details, information or information to be provided to the company or office as per the Act within the period of the Act, it should be disclosed in the report of the Board of Directors as per subsection (4) of section 109.