Introduction
In today’s rapidly evolving corporate environment, having a Company Secretary is more than a legal requirement—it’s a strategic advantage. Especially in Nepal, the Company Act, 2063, has made it mandatory for certain companies to appoint a qualified Company Secretary, making the role essential for ensuring corporate compliance, governance, and transparency.
Legal Provisions Under the Company Act of Nepal
Mandatory Appointment of Company Secretary
According to the Company Act of Nepal, 2063 (2006), every public limited company and private company with a paid-up capital of NPR 10 million or more must appoint a Company Secretary.
Threshold of Paid-up Capital
- Public Companies: Mandatory regardless of capital
- Private Companies: Only if paid-up capital is ≥ NPR 10 million
Relevant Sections Under the Company Act
- Section 84: Defines the requirement of a Company Secretary
- Section 85: Covers the qualification, appointment, and dismissal
- Section 86-88: Elaborates on roles, responsibilities, and penalties
Qualifications Required
Academic Requirements
To be eligible for appointment, the individual must possess at least:
- A Bachelor’s degree in Law, Management, or Commerce
- Preferably, a Master’s degree for senior roles
Professional Certifications
While Nepal doesn’t mandate CS certifications like India’s ICSI, having:
- LL.B or LL.M
- Chartered Accountant (CA)
- MBA in Corporate Law or Compliance
…is highly advantageous.
Registration and Membership Requirements
- Must be registered with Office of the Company Registrar
- Should not be disqualified under any legal or ethical grounds
Tenure and Appointment
Process of Appointment
- Appointed by the Board of Directors through a Board Resolution
- Must notify the Office of the Company Registrar within 7 days
Tenure and Renewal
- No specific limit under the law; varies as per the company’s internal policy
- Renewable upon mutual agreement and fresh appointment resolution
Termination and Resignation Procedures
- Can be terminated by the board with valid reasons
- Secretary may resign with proper notice and documentation
Key Roles and Responsibilities
Compliance and Legal Duties
- Ensure compliance with Company Act, 2063
- File annual reports, tax returns, and legal documents
Administrative Functions
- Drafting minutes of board and general meetings
- Managing official company correspondence
Corporate Governance Support
- Advise the board on governance best practices
- Ensure ethical decision-making processes
Liaison Between Board and Stakeholders
- Act as the communication bridge among directors, shareholders, and regulators
Obligations and Liabilities Under the Company Act
Duty to Maintain Registers and Records
- Statutory books like Register of Members, Directors, Share Transfer Records
Filing Returns and Reports
- Delay or error in filing can result in financial penalties and disqualification
Legal Consequences for Negligence or Fraud
- Fraud or willful misreporting attracts:
- Fines up to NPR 500,000
- Imprisonment up to 2 years
- Disqualification from holding the office
Fiduciary Duty and Confidentiality
- Must not disclose confidential information
- Acts in fiduciary capacity and is accountable to both company and law
Challenges Faced by Company Secretaries in Nepal
Regulatory Complexity
- Adapting to frequent amendments and vague rules is tough without legal backing
Lack of Awareness Among SMEs
- Many small businesses neglect the need for a CS, inviting legal trouble unknowingly
Evolving Role in Digital Compliance
- Must now handle data protection laws, e-filing systems, and online governance frameworks
How Law Firms Support Company Secretaries
Legal Advisory and Documentation
- Assist with drafting board resolutions, compliance reports, legal opinions
Compliance Monitoring Services
- Regular audits to ensure filing and documentation are updated as per the Company Act
Representation During Disputes
- Represent companies in regulatory hearings, shareholder disputes, and court cases
Conclusion
The position of a Company Secretary in Nepal is not just a legal obligation—it’s the backbone of corporate compliance and governance. As the corporate landscape becomes more regulated, the role of a CS becomes increasingly critical. Whether it’s filing returns or advising the board, their contribution ensures the company remains on the right side of the law.
If you’re looking for expert company secretary services, legal consultations, or compliance support, our law firm is here to guide you every step of the way.
FAQs About Company Secretary in Nepal
1. Is it mandatory for all companies in Nepal to have a Company Secretary?
No, only public limited companies and private limited companies with a paid-up capital of NPR 10 million or more must appoint a Company Secretary.
2. Can a Company Secretary be a director of the same company?
While not explicitly prohibited, it is advisable to avoid dual roles to prevent conflict of interest.
3. How long can a Company Secretary serve in a company?
There is no legal limit; tenure depends on company policy and mutual agreement.
4. What happens if a company fails to appoint a Company Secretary?
The company can face penalties, and its registration status may come under scrutiny by regulators.
5. Can law firms offer outsourced Company Secretary services in Nepal?
Yes, many law firms offer outsourced CS services for compliance, legal documentation, and corporate advisory.
6. Can anyone be a company secretary in Nepal?
No, only individuals with professional qualifications such as a Company Secretary certification or a law degree recognized under Nepali company law can become a company secretary.
7. Who is a qualified company secretary?
A qualified company secretary in Nepal is someone who has completed the Company Secretary course from ICAN or holds a law degree and meets the criteria set by the Office of the Company Registrar.
8. How to become a secretary in Nepal?
To become a company secretary in Nepal, one must either complete the CS program from ICAN or obtain a law degree, then register with the Office of the Company Registrar as per legal provisions.
9. Who is usually the company secretary?
The company secretary is typically a qualified professional in law or corporate governance appointed by the board to ensure legal compliance and effective company administration.