Chapter 3 

Meetings and Business of the Company

44. Company Prohibited From Commening Business without Fulfilling  Formalities

(1) No company shall commence its business without fulfilling the following formalities : 
(a) Unless an amount equal to at least 25 percent of the issued capital has been received.
(b) Unless a report of funds having been received according to Clause (a), signed by it least one director, is sent to the appropriate department.
(c) Unless a license for commencement of business is obtained from  the appropriate department.
(2) The appropriate department shall grant a license to the company  to commence its business after the report mentioned in Clause (a) of Sub-Section (1) is submitted.
(3) Notwithstanding anything contained in Sub-Section (1) and (2), a private company may commence its business immediately after  obtaining the certificate of registration from the appropriate  department.

45. General Meeting of a Company 

(1) The business of a company shall be conducted in the manner  decided upon at the general meeting of its shareholders. 
(2) The general meeting of a company shall be or the following  categories : 
(a) Preliminary general meeting, 
(b) Annual general meeting, and 
(c) Extraordinary general meeting. 
(3) Shareholders shall be notified of the agenda as well as the date  and venue of the meeting in advance of twenty-one days in the case of  the preliminary general meeting or annual general meeting, and of  fifteen days in the case of an extraordinary general meeting. In case  the company is a public one, a notification to this effect shall also  be published in the leading newspapers of Nepal. 
(4) No decision shall be taken in the general meeting on any subject  which has not been already notified under Sub-Section (3), except in  the following circumstances. 
(a) Unless otherwise provided for in other sections of this act, in  case at least three-fourths of the shareholders of the company who  are entitled to vote attend the meeting and vote in favor of  discussing any particular subject. 
(b) In case there is any subject notified for discussion in any  general meeting which has been adjourned. 

46. Shareholders' Register to be space Available 

The shareholders' register mentioned in Section 30 shall be  made available at every general meeting, so that the shareholders  may inspect it, if they so desire. 

47. Directors to be Present at the Careful Meeting As Far As Possible 

Every Director shall be present in the general meeting as far  as possible. At least one auditor shall also be present in the general  meeting in case the accounts of the company are to be discussed or in case his presence is required for any other reason. 

48. Legality of Meeting 

Before the general meeting commences, the shareholders present therein shall ascertain whether the meeting has been convened in accordance with this act or the articles or not. The meeting shall be deemed to have been duly convened even if any legal provision has not been observed in respect thereto in case the quorum mentioned in Section 51 has been fulfilled at the meeting. 

49. Circumstances in Which Attendance or Voting is Prohibited 
 
(1) No Person shall be entitled to participate and vote in the capacity of a shareholder either personally or by proxy on discussions to be held in respect to any contract signed by himself and the company. But he shall be given an opportunity to attend the meeting only for explaining his case. 
(2) No director or managing agent, or his partner or proxy, shall be entitled to vote on discussions to be held in respect to his responsibility for action taken or omitted by him, or to any agreement, stipulation, or contract portioning to his appointment, dismissal, transfer, and confirmation, or grant, reduction or increase in allowance or bonus, or involving his service or interest or concern in any way. 
(3) No director or managing agent, or his partner or proxy shall be entitled to vote in the general meeting to be held in respect to the appointment of auditors. 
(4) No Shareholder who has not paid installments due on shares according to calls shall be entitled to vote in the general meeting. 

50. Right to Vote a General Meeting 

(1) Only the person whose name is registered as shareholder in the shareholders' register mentioned in Section 30 shall be entitled to attend the general meeting and cast one vote for each share held be him, subject to the provisions of Section 49. 
Provided that : 
(a) In case a shareholder entitled to vote is unable to attend the meeting personally, he may nominate his proxy to vote on his behalf, through an application signed by him according to the specimen form No. 11 indicated in Schedule 1, and the proxy so nominated may sttend and vote in the meeting. 
(b) In the case of shares held jointly by several persons, only the vote or proxy of the joint owner nominated by all the joint owners, or the proxy nominated by owner can be nominated as a proxy, the joint owner whose name is mentioned first in the shareholders' register mentioned in Section 36, shall be held valid. 
(2) Notwithstanding anything contained in the restrictive Clause (a) of Sub-Section (1), in case the votes cast by any proxy represent more than twenty percent of the total shares, the excess votes shall not be taken into account. 

50A. Voting Rights for Appointment of Directors 

While voting for the appointment of directors every shareholder shall have the right to cast votes in the number obtained after multiplying the number of shares held by him by the number of directors to be appointed. A shareholder may cast all of his votes in favor of one candidate, or divide them among more than one candidate as indicated by him. 
Provided that in case His Majestry's Government or any corporate body has to appoint directors under the restrictive Clause (c) of Sub-Section (1) of Section 64, such director shall not be entitled to vote in polls to be held undo this Section . 

51. Quorum 

(1) The business of a general meeting shall not be conducted unless 25 percent of the total number of shareholders representing 67 percent of the total number of shares of the company are present there in either in person or by proxy. 
Provided that the presence of at least seven shareholders in the case of a public company, and of three shareholders in the case of a private company, shall be compulsory for holding a general meeting in that manner. 
(2) In case the meeting cannot be held for lack of quorum as prescribed in Sub-Section 91), another meeting shall be convened with an advance notice of at least seven days. In case another meeting is convened in this way, and at least five shareholders in the case of a public company, and two in the case of a private company, who represent 33 percent of the total number of shares and who are entitled to vote, are present therein in person, there shall be no obstacle in holding the meeting, notwithstanding anything contained in that Sub-Section. 
(3) The presence of 33 percent of the total number of shareholders representing 75 percent of the total number of shares, either in person or by proxy, shall be compulsory in the case of a general meeting which is convened to discuss a special resolution. 
Provided that in case meeting cannot be held because shared-holders in the number mentioned above are not present, another meeting shall be convened with an advance notice of at least seven days. In case another meeting is convened in that way, and at least 15 percent of the total number of shareholders representing 33 percent of the total number of shares are present therein either in person or by proxy there shall be no obstacle in holding the meeting. 

52. Discussions and Decisions 

(1) The general meeting shall be presided over by the Chairman of the Board of Directors and in his absence, by the person nominated by a majority of the attending shareholders from among themselves. 
(2) All matters to be discussed at the general meeting shall be presented in the form of resolutions. 
(3) The opinion of the majority (of the shareholders present in the meeting) in regard to any subject that has been voted upon shall be deemed to be the decision of the general meeting .... In the event of a tie the chairman may exercise his casting vote. 
Provided that in the case of a special resolution, it shall be deemed to have been passed only if approved by the meeting by a majority of 60 percent (of the shareholders present in the meeting), subject to the provisions of Sub-Section (2) of Section 49. 

53. Minutes 

(1) The company shall record the minutes of every general meeting in a separate book to be maintained for the purpose, and the chairman, at least one director appointed by the meeting, and one shareholder shall affix their signatures on the minute-book. 
(2) The minutes to be prepared under Sub-Section (1) shall explicitly state how the notice of the meeting was issued, how many shareholders were present, what percentage of the total share capital was represented by them, how many of them were or were not entitled to vote, what decisions were taken in the meeting, what was the result of the voting, if any, and other matters. 
(3) The minutes prepared under this Section shall be made available by the directors to the the shareholders within fifteen days of the general meeting. 

54. Preliminary Meeting 

(1) Every company shall convene a general meeting of its shareholders within six months after obtaining a certificate of commencement of business from the appropriate department, and the meeting so convened shall be called the preliminary general meeting. 
(2) In case any shareholder of the company submits an application complaining that its preliminary general meeting has not been convened under Sub-Section (1), the appropriate department may direct the convening of the preliminary general meeting. Even in case on such application is received, it may arrange for such meeting to be held within two months after the expiry of the time-limit mentioned in Sub-Section (1). 
(3) Notwithstanding anything contained in Sub-Section (2), in case the company submits an application to the appropriate department for extension of the time-limit, explaining proper reasons for its inability to hold the preliminary general meeting within the time-limit mentioned in Sub-Section (1), the appropriate department may extend the time-limit by not more than three months at one times. 
Provided that in case the company does not give prior notice as required under this act of its articles, no resolution shall be passed, except in the circumstances mentioned in Clause (a) of  Sub-Section (4) of Section 45 in respect thereto. 

57. Annual General Meeting 

(1) Every company shall hold  its annual general meeting within one year from the d of the preliminary meeting, and thereafter it shall convene the annual meeting every year within six months from the date of the expiry of its financial year. 
(2) In case any company fails to convened annual general meetings within the time-limit prescribed in Sub-Section extension of the time-limit explicitly mentioning reasonable grounds for such failure, the appropriate department may extend the time-limit by not more than three months. 
(3) In case any company does not convened an annual general meeting even within the time-limit granted under Sub-Section (2), and in case any shareholder submits an application complaining that such meeting has not been convened, the appropriate department may direct the convening of the annual general meeting, and even if no such application is received, it may direct such meeting to be held within two months from the date of the expiry of the time-limit mentioned in Sub-Section (2). 

58. Matters to be Presented and Discussed at the Annual General Meeting 

(1) The directors shall present the audited balance sheet and profit and loss accounts for the previous year, as mentioned in Section 93 and Section 95, at the annual general meeting. 
(2) A shareholder or shareholders representing a minimum of five percent of the total votes may, if be or they os desire, move any matter for discussion at the annual general meeting, after submitting an application to the directors in advance of the issuance of a notice under Sub-Section (3) of Section 45. 
(3) In addition to the matters presented under Sub-Section (1) and (2) , debates shall be held at the general meeting also on the accounts of the company, the reports of the directors and auditors, the dividends to be paid to shareholders, appointment of directors and auditors, remunerations of auditors, etc. But while deciding on the dividends to be paid to shareholders, the rate thereof shall not exceed the figure recommended by the Board of Directors. 

55. Preliminary Report 

(1) At least fifteen days before the preliminary general meeting is held, a preliminary report containing the following particulars and signed at least by one director, shall be each shareholder : 
(a) Total number of shares allotted, 
(b) Number of fully paid-up and partly paid-up shares from among the allotted shares, 
(c) The manner in which shares were allotted, 
(d) Total amount collected from persons to whom the shares were a lotted, 
(e) A statement of the income and expenditure of the company showing, under different heads, income made from shares, debentures, and other sources until seven days before the preparation of the statement, disbursements made from such income, the balance, accounts of the preliminary expenses of the company, and the estimated expenditure to be incurred subsequently, 
(f) Names, addresses, and designation of directors, managers, secretaries, accountants, and auditors, and their appointment, 
(g) Matters such as contracts. and amendments to be effected therein, 
(h) Amounts due from directors or the managing agent, 
(i) Particulars of brokerage or any other commission paid or to be paid to directors or managers in consideration of their procuring subscriptions for shares, and 
(j) Other necessary particulars, if any: 
(2) The preliminary report shall contain statements of the amount paid up on the allotted shares, and shall have been certified by the auditor. 
(3) After sending the preliminary report to the shareholders under Sub-Section 91), the directors shall submit a copy thereof to the appropriate department also. 

56. Debate on the Preliminary Report 

The shareholders present in the preliminary general meeting of the company may discuss any matter pertaining to the establishment of the company, or any matter arising out of the preliminary report, irrespective of whether prior notice thereof has been given or not. 

59. Treparation of Documents for the Annual General Meeting 

The documents, resolutions, and other matters to be debated at the annual general meeting to be held under Section 58 shall be prepared and kept ready at the head office of the company fifteen days before the meeting. In case any shareholder so requests, he shall be supplied with a copy of such documents, 

60. Balance-sheet. Etc. to be Submitted to the Appropriate Department 

Within thirty days after the annual general meeting is held, the balance-sheet, the profit and loss accounts, and the reports of the directors and auditors, as well as particulars regarding the number of shareholders who attended the meeting, the resolutions discussed therein, and particulars general meeting or not, shall be submitted to the appropriate department. 

61. Extraordinary General Meeting 

(1) In case it so deems necessary, the board of Directors may convene an extraordinary general meeting of shareholders. 
(2) In case the auditor, while auditing the accounts of the company, deems it necessary to convene an extraordinary general meeting for any reason, he may request the Board of Directors to do so. In case the Board of Directors fails to do so, he may submit a complaint to the appropriate department. In case such a complaint is received, the appropriate department may convene an extraordinary general meeting of the company. 
(3) In case shareholders holding at least ten percent of the paid-up share capital of the company, or at least 25 percent of the total number of shareholders, submit an application to the registered office of the company for convening an extraordinary general meeting, explaining the reasons why such a meeting should be convened, the Board of Directors shall convene an extraordinary general meeting. In case the Board of Directors fails to do so within thirty-five days after receiving such application, the concerned shareholders may file complaints to the appropriate department. In case such complaints are received, the department may direct the convening of such a meeting. 
(4) In case it is deemed necessary to convene an extraordinary general meeting on the basis of the findings of inspection or investigation, or for any other reason, the appropriate department may itself convene such a meeting, or direct the Board of Directors to do so. 

62. Office of the Company and other matters 

(1) A signboard indicating the name and address of the company shall be  outside office. 
(2) The company shall maintain a legible seal under its name. It shall print and maintain bills, latter pads, drafts, receipts, etc. under its name and address.

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