Board of directors

1. Legal Environment for Business in Nepal
January 2017
20 August 2016 1Saroj Shrestha

2. Written summary of the points discussed at a
meeting.
Minutes Book: It is a book of the records of the
decisions. Such a book is of 2 kinds which is
important for official purposes.
1. Minutes of the General Meeting
2. Minutes of the BoD Meeting
The Agenda, discussed matters and passed
resolutions in the general meetings and board of
directors meetings should be recorded in different
books of the minutes.
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3.  Elected by the Shareholder to run a company
 It is the executive body to apply the decisions
made by the general meeting
 Day to day function as accordance to the AOA
and Company Act.
 Somebody needs to act on behalf of the
company.
 Appointment and numbers of Directors of a Pvt.
Ltd. shall be as per the AOA.
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4.  There must be a board of Directors consisting of
at least 3 to maximum of 11 in Public company.
 The division of Power between the shareholders
in GM and Directors are arranged in the AOA of
the Company.
 While forming a BOD in the Public company:
ONE independent director, where the total
number of director is up to 7 and at least TWO
independent directors where more than 7
Directors.
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5.  By the AGM:
 By Promoters: The directors shall be appointed by
promoters until the First AGM
 By BOD: In case there occurs any vacancy of the
Director elected by AGM
 By Corporate Body: A Corporate body holding shares
may appoint a director and it may also appoint an
Alternative Director
 Alternative director: If any Director appointed unable to
attend the board meeting he shall inform his alternative
director and the BoD.
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6.  Share qualification of directors: Any person in order
to qualify, as director of any company shall hold such
number of shares in his name prescribed in the AOA.
 Competent to contract: Must be competent to
contract because he is an agent to act on behalf of
the company. He must be major by age, person of
sound mind, not disqualified by any law in force and
not involved in any criminal offense of moral
turpitude.
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7. Under Sec. 89 of Company Act, 2063
 One who is below 21 years of age in case of Public
company;
 One who is of unsound mind or an insane;
 One who is declared insolvent and five years have
not elapsed;
 One who is convicted for corruption or for an offence
involving moral turpitude,
 The company Act has provided that in case of a
private company a period of three years has not
elapsed from the date of the expiry of such sentences
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8.  One who has any personal interest in any contract or
agreement with the company or in the business or
transaction of the company
 One who is a director, substantial shareholder,
employee, auditor or advisor of another company with
identical objectives or has personal interest of any
kind in such a company.
 The Act provides that such a person of Pvt. Ltd. can
be elected as director in another private company
having similar objective,
 A shareholder, in whose case it has been decided
that has been paid any amount payable to the
company
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9.  One who has been punished in accordance with the
sec. 160 and one year has not elapsed from the date
of punishment or who is punished under sec.161 and
6 months has not elapsed form the date of such
punishment
 A person who does not fulfill qualification as
prescribed under the law in force applicable to the
company operating any specific business or has any
disqualification prescribed under such law
 One who is a director of a company which has not
submitted the reports and returns to the office
required under this Act for the consecutive thr
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10.  One who is a director receiving remuneration or any
other facilities from another listed company except
board sitting fee and actual cost involved for
transportation and accommodation for attending such a
meeting.
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11.  An incompetent person as referred to sec. 89(1) of
the Company Act, 2063
 A shareholder of the concerned company
 A person who has not experiences at least ten years
in the related section or in the management of the
company after obtaining at least graduation degree
on any subject related to the business of the company
or has not acquired the experience of at lest ten years
in the related field after acquiring at least graduation
degree on subjects of economics, finance,
management, accountancy, statistic, commerce,
business administration or law
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12.  Official, auditor, employee of the company or
where the period of three years has not expired
from the date of the termination of service from
the said position.
 Close relative of officials of the concerned
company.
 An auditor of the company or his partner.
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13.  If he suffers form any of the disqualification in respect
of appointment to office of a director.
 If a general meeting adopts a resolution to remove
him from his office.
 If his resignation from his office has been accepted by
the BOD.
 If he is convicted by a court for any offence involving
dishonesty or bad faith concerning the business of the
company.
 If a person is against whom the court has decided that
he has committed prohibited to be performed by a
director under Company Act or failed to perform any
duty required under the Act,
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14.  If a person is blacklisted by competent authority
under the law in force for not paying the loan of bank
or financial institution and period of such blacklisting
has not expired.
 Before any person is disqualified from being
appointed or from continuing as Director shall be
served with a notice to this effect in order to give him
an opportunity to explain his case. (Principle of
Nature Justice)
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15.  Private Company: No term of office of Directors of a
private company is determined by the Company Act. It
shall be as provided for in the AOA.
 Public Company: Maximum of 4 years under sec. 90
(2) of Company Act, 2063 but under following
conditions:
#A Director appointed by GoN or a body corporate shall
hold the office till the appointing body so desires.
#A Director appointed by GM shall hold office until AGM
is held.
#A Director appointed to fill up a casual vacancy shall
hold the office for the remaining period of the term of
office of Director.
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16.  Private Company: As prescribed by AOA
 Public Company : Shall be held at least 6 times in a
year. But company Act clearly provides that the interval
period between two meeting must not be more than 3
months.
 Director must be present in person
 No meeting shall be held unless it is attended by at least
51% of the total number of Directors
 Matters related to the notice as provided in AOA
 Notice may also be given through electronic means of
communication.
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17.  Relationship of company and Director is based upon
good faith and agency principle.
 Directors have to perform their duties and
responsibilities on the fiduciary relation and for the
interest of company.
 No Director of a company can do anything to get
personal benefits.
 Act honestly and in good faith while discharging official
responsibility and use the duty of care, skill and
caution with reasonable prudence and skill.
 The loss and damage caused to the Company shall be
recovered and realized who acts in bad faith.
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18. Reporting requirement Time Frame
 Amendment of MOA &
AOA (Sec. 21.2)
 Allotment of Share (Sec.
31)
 Agreement of Pub.
Company on IPO (Sec.
32.2)
 Report of Directors (Sec.
51.3)
 Report under 78 for
Public Company/ Non
profit Distribution
Company
 Within 30 days
 Within 30 days after
allotment of shares
 Within 7 Days
 30 days prior to AGM or
submission after 30 days
of AGM

 Prior to 21 Days of AGM
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19. Reporting requirement Time Frame
 Minute of AGM and
Report under Sec. 80
 Information of Directors
(Sec. 92 (2))
 Changes of Directors and
Company Secretary (Sec.
107(2) )
 Information about
appointment of Auditor
(Sec. 111)
Within 30 days of AGM
Within 7 days after
appointment of Director
and within 7 Days after
its receipt.
Within 15 days
Within 15 days
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20. Reporting requirement Time Frame
 Special resolution of
Merger (177)
 Address of Company
after registration (Sec.
184)
Within 30 days
Within 3 months
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