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Banking Finance Law

Banking and financial law are hereby necessary to promote quality banking in Nepal, to protect the rights and interests of investors and depositors, and to protect from any banking risks. Hence, banking law is the branch of civil law that tries to perpetuate the credibility of the banking business.

  On the basis of the nature of business banking, it can be classified as follows:

- Central Bank, Commercial Bank, Development Bank, Cooperative Bank, Financial Institution.

On the basis of the Scope of business:- Domestic Bank, Multinational Bank,  International Bank

According to BAFIA, banks are classified as:-  Commercial Bank, A class-licensed Institutions;  Financial Institutions, B, C, and D class licensed Institutions

Company law confers personality and identity for each company established in any legal system. Section 3 of the BAFIA makes compulsory provision for incorporation and mention no individual can be recognized as a banking institution with incorporation. But to be a financial intermediary there are some provisions in banking business after fulfilling the requirement determined by the central bank and as provided in Financial Intermediaries Act, 2055.

Section 3 of BAFIA, 2073 allows every person who wants to establish a bank or financial institution to conduct financial transactions under this act.

A person intending for this may do so by registering it as a public limited company under the provision of existing company law.

Section 4 of BAFIA, makes the provision for prior approval to be obtained from NRB before registration of a public limited company for the purpose of establishing a bank or financial institution. And after being registered as a banking company it needs to obtain a license from NRB to start the transaction. Hence, in our legal system, every bank or financial institution has to pass out 3 steps for its establishment. These are:-

  1. Prior approval of NRB.
  2. Incorporation of the company.
  3. Getting a License for transactions.

Prior approval (Letter of Intent) of NRB.

The documentary requirements necessary for the prior approval are listed below:-

  1. Memorandum of Association of the proposed bank or financial institution. (3 copies required)
  2. Article of Association of the proposed bank or financial institution. (3 copies required)
  3. The feasibility study report of the proposed bank or financial institution. (6 copies required) and in the case of the financial institution of class D, only the business plan is enough.
  4. Personal particulars of the promoters in the form prescribed by NRB.
  5. A certified copy of the agreement signed, if any, among the promoters before the establishment of the bank or financial institution in relation to the establishment of the bank or financial institution.
  6. Evidence of clearance of tax by the promoters up to the fiscal year immediately preceding the date of application under this section.
  7. Other particulars and documents prescribed by NRB in relation to the establishment of a bank or financial institution. (This includes a citizenship certificate and latest academic qualification and proof of experience.)

The banks or financial institutions having joint ventures with foreign banks or financial institutions have to provide the following further requirements as follows:-

  1. Copy of the decision of the board of directors regarding their interest to invest in the proposed Nepalese bank or financial institution.
  2. No objection letter from the central bank or regulator of the respective country.
  3. Audited balance sheet, profit and loss account, and cash flow statement of last three years.
  4. Certified copy of joint venture agreement.
  5. Documents about the investment, branch, representatives, or contact office in Nepal, if any.

In case of any legal person registered under Nepalese law as a promoter of any proposed bank or financial institution, such organization should furnish the following documents:-

  1. Copy of the certificate of incorporation and license for the transaction.
  2. Copy of the decision of the board of directors about the amount of investment and representative, if any.
  3. Certified copy of the memorandum of association, article of association, and regulation of such company.
  4. Name of directors, the proportion of share ownership, name of the organization in which they have a financial interest, and detail of directors of that organization.
  5. Tax clearance certificate of such organization and directors for the previous year.
  6. Audited balance sheet and profit loss account of the previous two years showing a profit.

After submission of these documents and necessary fees, NRB will decide to give or reject issues prior to approval by scrutiny of the details of such application within 120 days.

The basis for the rejection is determined in the Policy and   Procedural Arrangement for Incorporation of Bank or Financial Institution, 2063, such are listed below:-

  1. If the name of the proposed bank or financial institution is identical to the already established one.
  2. If the name and financial transaction are against the public interest, common morality, religion, caste, or ethnicity, and inappropriate for any reason.
  3. If the objective is against the law.
  4. If it is inappropriate to establish.
  5. If there is no point to believe the transaction will be fair and competitive on the basis of the feasibility report and another document.
  6. If the application is not received from all the promoters and authorized persons for the registration of the memorandum and article of association of the proposed bank or financial institution.
  7. In the case of lacking the name and signature of the witness in MOA and AOA.
  8. If all the promoters have not agreed to subscribe to a minimum of one share of the proposed bank or financial institution.
  9. If the number of shares, to which promoters have agreed to subscribe, is not mentioned in MOA.
  10. In case of not submission of fees and documents determined by section 4 (1) of BAFIA.
  11. In case of not submission of the documents on time as demanded by NRB while examining the application of prior approval.
  12. If there is a chance of transferring the personal or organizational risk in banking, depositors are deemed to be at risk when providing the license to any person or organization.

Addition on, BAFIA 2073, section 4(3) Letter of intent (LOI) cannot be issued if the promoters of the proposed company are:-

  1. If punished by NRB under its regulatory authority.
  2. Convicted for a crime related to Banking Offenses.
  3. Convicted fraud, and forgery.
  4. Convicted of a crime related to Money Laundering and Terrorist Financing.
  5. Convicted in corruption.
  6. Convicted in heinous crimes like human trafficking, abduction, and rape. etc.

Process of getting LOI for the company with Foreign Investment

Section 5 of BAFIA, 2073 makes the following requirements to submit the application of LOI by such company to NRB for LOI.

  1. MOA and AOA of foreign banks or financial institutions and a copy of the certificate of incorporation and capital structure thereof.
  2. Copy of license of the foreign bank or financial institution obtained from the concerned country for carrying on banking and financial transactions.
  3. Details as to the principal place of business.
  4. Certified copy of the audited balance- sheet and profit and loss account of the latest three years of the foreign bank or financial institution.
  5. Details as to the proposed business plan in Nepal, business strategies and types of transactions to be carried out internal control, and risk management.
  6. Decision made by the foreign bank or financial institution as per the prevailing laws of the concerned country to open a bank or financial institution in Nepal and authority granted by the regulatory body of a concerned country.

*After getting the application along with the above-mentioned documents the NRB can decide to grant LOI within 120 days of application.

We hereby certify that a renowned law firm in Kathmandu offers legal services to national and international banks and financial institutions by assisting with the issues of

1.) Banking Consulting,

2.) Banking Compliance,

3.) Structuring of Transactions,

4.) Debt Recovery,

5.) Drafting and reviewing loan documents,

6.)Foreign exchange,

7.) Dispute Resolution,

8.) Represents the banks and financial institutions in court, providing legal opinions on various legal matters inherent to the banking and financial sectors.

 

 

 

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Family Law in Nepal
Family Law in Nepal
In the legal system of Nepal, there are many types of business practices. The field of family law is very important and far-reaching. In the Nepali legal system, family law includes the rights of a person's family relationship and property. In particular, how a person's relationship is created, how the relationship ends, how the rights and obligations of the person of the relationship are obtained, and how it ends play a special role in every case. This is called the Statute of Limitation in our legal language. The field and practice of family law and the method of legally obtaining it have been summarized as follows:
Property law
Property law
Property Law   In the context of Nepal, property laws cover many important areas. especially personal property, Public property, and government property fall within its scope. We have personal property in it. Under this, attention should be paid to its acquisition, enjoyment, and transfer of rights. Every in the context of Nepal.Nepal's right to acquire personal property legally and use it safely The constitution has guaranteed it. The Civil Code of Nepal 2074 regulates the laws related to property. As well as other special laws It has also secured the use of movable and immovable property. In Nepal, a person has made the following arrangements for acquiring movable and immovable property:    a) By dividing the property of Sangol: (husband, wife, father, mother, son, daughter, )    b) By getting Aputali:    c) By purchase    d) By acquiring ownership of immovable property    e) By acquiring usufruct Under this law, the Civil Code 2074 provides for the transfer of usufruct rights Special arrangements have been made, General provisions relating to the property Arrangements related to the enjoyment of property Arrangements related to land usufruct, occupation, and registration Arrangements related to government, public, and community property  Arrangements related to Guthi:-       --Management and management of one's rights, enjoyments, and ownership of property by someone else for the beneficiary for making necessary arrangements),  Provision of usufruct:-       - The property that one owns and owns, the returns, benefits, income, or benefits derived from it given freely for use by individuals). Arrangement of easements:-   -Any immovable property in the right, ownership, or enjoyment of another person or any part thereof by the owner of another property for enjoying or using according to this paragraph)  Arrangements related to house restoration:-   -Using a person for a certain period of time to take possession of a house in his right, enjoyment or ownership for allowing to do),  Provisions regarding Donation Box:-   -A person assigns his rights and property to any person or religious, social, public, or Donation of work freely given for community work and by a person supporting himself or otherwise Tawar rizhae vapat or family affection or affection due to one's right and possession property inam, reward or the act of giving freely to such person as boxis),  Arrangements related to the transfer and acquisition of property:-   -The sale, donation, gift, or otherwise of property owned by a person to another person If transferred, such property shall be deemed to have been transferred in the name of the person receiving such property),  Provisions related to mortgage of immovable property:-   - In exchange for taking a loan from a creditor, someone surrenders his right, ownership or enjoyment of immovable property or any part thereof Such property is allowed to be enjoyed by the creditor so that it can be enjoyed after the date or a certain period of time deemed to have been given as hostages), Provisions related to disposal of immovable property:-    -Someone transfers his right, enjoyment and ownership of any immovable property to another person in any way The person to whom such property has been surrendered has cleared it in accordance with this paragraph considered) Provisions regarding document passing:-    - Any document filed by someone in the concerned office for approval in accordance with this paragraph If approved by the office, such document shall be deemed to have been passed).  Arrangements related to transaction behavior:-    - A transaction between two or more persons, if any amount or item is allowed to be taken subject to any condition deemed to be)
Law of Contract and Obligation
Law of Contract and Obligation
Law of Contract and Obligation          In Part 5 of the Civil Code 2074, provisions related to contracts and contractual obligations have been made. In addition, the same code defines the contract and also distinguishes the essential elements and types of the contract. Section 504 of the Civil Code 2074 states that “two or two If there is an enforceable agreement between more than one person to do or not to do something, it will be considered as a contract. It also includes an offer made by one person to enter into a contract with another person It has guaranteed that a binding legal relationship will be maintained between the parties to the agreement after the approval is given and the agreement is signed. According to the contract law, the following should be in order to implement its terms: (a) consent expressed by the contracting party to bind himself; b) The capacity or competence of the contracting party to enter into the contract, (c) Certain matters creating liability, d) Legal obligations. A contract concluded between two persons shall be void if it is confirmed that there has been coercion, undue influence, forgery and fraud. Contracts made with minors and non-residents are automatically void. The Civil Code 2074 of various types of contracts defined, which is as follows:- 1. Contract for Sale of Goods:-     If a seller agrees to transfer an item to the buyer immediately or to transfer it in the future after taking the price, it will be considered as a contract related to the sale of the item. 2. Agreement relating to surety ship:-      If a person does not pay or fulfill the debt taken or the liability accepted by a person, it will be considered as an agreement related to guarantee if the third party will pay or fulfill it. If the debtor defaults or completes the debt guaranteed by a third party If the obligation is not fulfilled, the person who guarantees the loan or obligation must fulfill the conditions according to the contract. The terms of the bail shall be as stipulated in the contract. The contract related to bail must be in writing. 3. Naso Agreement:-    A contract shall be deemed to have been entered into when a person gives another person an item back to him or allows him to keep an item to be transferred or sold to someone else as per his wish. 4. Agreement relating to mortgage or pledge:-     If a person gives a loan to someone and takes a pledge to secure such a loan, it will be considered as a mortgage agreement and if someone pledges something as a surety for the completion of such work, it will be considered as a pledge agreement. If a mortgage is taken while giving a loan, such loan and its interest, and if a pledge is taken to complete any work, other expenses related to such work and the expenses incurred in taking care of the mortgaged or mortgaged item can be entered into a mortgage or pledge agreement. 5. Agency Agreement:- A person who appoints a person to do any work on his behalf, to conduct business as a representative (agent), to conduct any business with a third person, to represent himself before such a person or to appoint a representative, except in matters related to his personal competence. A representative may be appointed to establish any kind of legal relationship between (the main person) and the third person, and the appointment of a representative will be deemed to be an agency agreement. 6. Contract of Carriage:-    If there is an agreement regarding the transportation of an item from one place to another, it will be considered as a transportation agreement. Except as otherwise provided in the contract, in the case of carriage of goods, the shipper shall be entitled to the receipt or compensation given by the owner of the goods at the time of delivery of the goods to the shipper. And it will be considered as proof that there is a contract between the owner of the item. 7. Lease Agreement:-      A lease agreement shall be considered as an agreement to allow a person to enjoy and use the benefit obtained from it for a certain period of time on the condition that a person has his right and property to be regularly restored to another person. In the case of a lease agreement, unless otherwise stipulated in such agreement, the lessor (lessor) shall ensure the following things to the lessee (lessee): a) Handing over a certain item for enjoyment in accordance with the agreement, b) Keep the said transferred item in working condition so that it can be enjoyed or used at the time of transfer, c) To arrange that the transferred item can be enjoyed or used in a peaceful and unrestricted manner. It cannot be leased out or consumables that are perishable while using it. 8. Hire Purchase Agreement:-    A hire purchase agreement shall be deemed to exist when someone hires an item to any person under the following conditions:- a) The lessee shall have the right of usufruct in the leased goods by the owner of the goods paying the amount in installments periodically, b) The leased item can be purchased by the lessee as per the terms of the contract, c) Ownership of such item shall be transferred to the lessee after payment of the final installment amount, d) The lessee may terminate the contract at any time prior to the transfer of ownership in accordance with clause (c). In this way, in case of violation of all types of contracts mentioned above or in case of non-compliance with the terms of the contract, if any party is aggrieved, the aggrieved person can file a complaint or lawsuit within 2 years.                                                                                   Thank you
Company Registration
Company Registration
Documents required to register small and cottage industries: Choosing a name according to the nature of the business, Online User ID making, Registering online (certificate of business registration at ward office is mandatory) Photocopy of Nepali citizenship, 3 copies of the photograph of the investor, If your land is a house, a photocopy of the certificate of relationship and the land owner, if it is someone else's land, a copy of the contract and the owner of the land, a photocopy of the citizenship, Tax receipt, electricity bill, If it is a manufacturing factory, Four Corners consent, and environmental test report, If it is a manufacturing factory, Four Corner's consent, and environmental test report, If it is a partnership firm, on the acknowledgment of the partners, Registered in the company Pvt. If yes, photocopies of the memorandum of association, regulations, certificates, company tax payment receipt, industry registration decision, additional details, tax payment, share price, etc. For construction businesses:     1.Civil Engineer (Diploma Engineer)     2. Accountant (Higher Secondary Education Accountancy Subject)     3. Administrators (higher secondary education regardless of subject) appointed and employees to work in contracts and concessions.In the case of Pvt. Ltd. of other special nature, expert staff in the related field is required. After the industry is registered, the company should be registered with the Internal Revenue Office and an account should be opened in the bank of its choice. After registering the industry and operating the business, it is possible to take loans and grants at subsidized interest rates. How to register a company? There are many types of companies in Nepal. The Companies Act 2063 has classified the following types of companies:       1. Private Limited Company Single Shareholder Company (only 1 shareholder) Company with multiple shareholders (up to 100 shareholders) 2. Public Limited Company (7 or more shareholders) All privately owned 51 percent government owned 3. Non-profit-making company (7 or more shareholders) 4. other companies Foreign invested company, Branch Office, Liaison Office How to register a company? Since the company registrar office of Nepal has moved to online service, company registration should be done through online service. The company registration procedures are arranged in the company's operating directory, and the company can be registered by looking at it. Email ID in the name of the company or person, Open a new company block on the company's website Check the company name and submit the company by filling in the name of your choice (in Nepali and English) and purpose (keep the name and purpose as much as possible). The company registrar's office will send online the information about the cancellation of the name sent by you along with the reason within 14 days. If it is invalid, correct it and send it again. If the name is successful, the company name, office address, purpose, details of investment capital, and details of the shareholders, prepare 2/2 copies of the memorandum of association, regulations, application and the signatures of the witnesses should be scanned and uploaded online along with the certified citizenship certificate. While uploading the details online, the details of the shareholder and the details of the shares agreed to be received must also be filled. After uploading the application no. Comes the same no. And after taking the submitted documents, go to the company registrar's office and get the file from the relevant assistant registrar to get the registration certificate of the company. According to the purpose of the company you are going to register, if the approval of other agencies is required, the necessary approval should also be obtained. After the company is registered, the business must be registered at the ward office where the office is located. After registering at the ward office and taking the receipt of the tax payment, one should register the PAN VAT at the Internal Revenue Office and open an account in the bank of his choice.  According to the purpose of the company, it should be registered in the industry. Statement of Revenue to be paid on company registration On the basis of authorized worship 1,000 of 1,00,000. 4,500 of 5,00,000. 9,500 of 25,00,000. 16,000 of 1,00,00,000. When registering a business at the ward office, a separate amount is charged as specified.  
Banking Finance
Banking Finance
Banking Finance Law Banking and financial law are hereby necessary to promote quality banking in Nepal, to protect the rights and interests of investors and depositors, and to protect from any banking risks. Hence, banking law is the branch of civil law that tries to perpetuate the credibility of the banking business.   On the basis of the nature of business banking, it can be classified as follows: - Central Bank, Commercial Bank, Development Bank, Cooperative Bank, Financial Institution. On the basis of the Scope of business:- Domestic Bank, Multinational Bank,  International Bank According to BAFIA, banks are classified as:-  Commercial Bank, A class-licensed Institutions;  Financial Institutions, B, C, and D class licensed Institutions Company law confers personality and identity for each company established in any legal system. Section 3 of the BAFIA makes compulsory provision for incorporation and mention no individual can be recognized as a banking institution with incorporation. But to be a financial intermediary there are some provisions in banking business after fulfilling the requirement determined by the central bank and as provided in Financial Intermediaries Act, 2055. Section 3 of BAFIA, 2073 allows every person who wants to establish a bank or financial institution to conduct financial transactions under this act. A person intending for this may do so by registering it as a public limited company under the provision of existing company law. Section 4 of BAFIA, makes the provision for prior approval to be obtained from NRB before registration of a public limited company for the purpose of establishing a bank or financial institution. And after being registered as a banking company it needs to obtain a license from NRB to start the transaction. Hence, in our legal system, every bank or financial institution has to pass out 3 steps for its establishment. These are:- Prior approval of NRB. Incorporation of the company. Getting a License for transactions. Prior approval (Letter of Intent) of NRB. The documentary requirements necessary for the prior approval are listed below:- Memorandum of Association of the proposed bank or financial institution. (3 copies required) Article of Association of the proposed bank or financial institution. (3 copies required) The feasibility study report of the proposed bank or financial institution. (6 copies required) and in the case of the financial institution of class D, only the business plan is enough. Personal particulars of the promoters in the form prescribed by NRB. A certified copy of the agreement signed, if any, among the promoters before the establishment of the bank or financial institution in relation to the establishment of the bank or financial institution. Evidence of clearance of tax by the promoters up to the fiscal year immediately preceding the date of application under this section. Other particulars and documents prescribed by NRB in relation to the establishment of a bank or financial institution. (This includes a citizenship certificate and latest academic qualification and proof of experience.) The banks or financial institutions having joint ventures with foreign banks or financial institutions have to provide the following further requirements as follows:- Copy of the decision of the board of directors regarding their interest to invest in the proposed Nepalese bank or financial institution. No objection letter from the central bank or regulator of the respective country. Audited balance sheet, profit and loss account, and cash flow statement of last three years. Certified copy of joint venture agreement. Documents about the investment, branch, representatives, or contact office in Nepal, if any. In case of any legal person registered under Nepalese law as a promoter of any proposed bank or financial institution, such organization should furnish the following documents:- Copy of the certificate of incorporation and license for the transaction. Copy of the decision of the board of directors about the amount of investment and representative, if any. Certified copy of the memorandum of association, article of association, and regulation of such company. Name of directors, the proportion of share ownership, name of the organization in which they have a financial interest, and detail of directors of that organization. Tax clearance certificate of such organization and directors for the previous year. Audited balance sheet and profit loss account of the previous two years showing a profit. After submission of these documents and necessary fees, NRB will decide to give or reject issues prior to approval by scrutiny of the details of such application within 120 days. The basis for the rejection is determined in the Policy and   Procedural Arrangement for Incorporation of Bank or Financial Institution, 2063, such are listed below:- If the name of the proposed bank or financial institution is identical to the already established one. If the name and financial transaction are against the public interest, common morality, religion, caste, or ethnicity, and inappropriate for any reason. If the objective is against the law. If it is inappropriate to establish. If there is no point to believe the transaction will be fair and competitive on the basis of the feasibility report and another document. If the application is not received from all the promoters and authorized persons for the registration of the memorandum and article of association of the proposed bank or financial institution. In the case of lacking the name and signature of the witness in MOA and AOA. If all the promoters have not agreed to subscribe to a minimum of one share of the proposed bank or financial institution. If the number of shares, to which promoters have agreed to subscribe, is not mentioned in MOA. In case of not submission of fees and documents determined by section 4 (1) of BAFIA. In case of not submission of the documents on time as demanded by NRB while examining the application of prior approval. If there is a chance of transferring the personal or organizational risk in banking, depositors are deemed to be at risk when providing the license to any person or organization. Addition on, BAFIA 2073, section 4(3) Letter of intent (LOI) cannot be issued if the promoters of the proposed company are:- If punished by NRB under its regulatory authority. Convicted for a crime related to Banking Offenses. Convicted fraud, and forgery. Convicted of a crime related to Money Laundering and Terrorist Financing. Convicted in corruption. Convicted in heinous crimes like human trafficking, abduction, and rape. etc. Process of getting LOI for the company with Foreign Investment Section 5 of BAFIA, 2073 makes the following requirements to submit the application of LOI by such company to NRB for LOI. MOA and AOA of foreign banks or financial institutions and a copy of the certificate of incorporation and capital structure thereof. Copy of license of the foreign bank or financial institution obtained from the concerned country for carrying on banking and financial transactions. Details as to the principal place of business. Certified copy of the audited balance- sheet and profit and loss account of the latest three years of the foreign bank or financial institution. Details as to the proposed business plan in Nepal, business strategies and types of transactions to be carried out internal control, and risk management. Decision made by the foreign bank or financial institution as per the prevailing laws of the concerned country to open a bank or financial institution in Nepal and authority granted by the regulatory body of a concerned country. *After getting the application along with the above-mentioned documents the NRB can decide to grant LOI within 120 days of application. We hereby certify that a renowned law firm in Kathmandu offers legal services to national and international banks and financial institutions by assisting with the issues of 1.) Banking Consulting, 2.) Banking Compliance, 3.) Structuring of Transactions, 4.) Debt Recovery, 5.) Drafting and reviewing loan documents, 6.)Foreign exchange, 7.) Dispute Resolution, 8.) Represents the banks and financial institutions in court, providing legal opinions on various legal matters inherent to the banking and financial sectors.      
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