Special provisions relating to company not distributing profits

(1) Notwithstanding anything contained in this Act or the prevailing law, the following matters of a company incorporated pursuant to Section 166 shall be as follows:

(a) There shall not be required share capital to incorporate a company not distributing profits.

Provided, however, that the company may receive membership fees from its members and receive any donation, gift pursuant to law for the accomplishment of its objectives.

(b) No member of the company shall be liable for the debts and liabilities of the company except in the case where any member accepts such liability in writing the liability of the company, with the specification of the limit of such liability; his/her liability shall be limited to the extent of that limit.

(c) All the provisions of this Act as applicable to the listed company, other than those provisions which may be applicable only to the company with share capital, shall also apply to the company, its director, officer, auditor, and employee.

(d) The company shall not distribute dividend, bonus or any other amount, from the profits earned by it, to its members or employees; and the profits earned by the company shall be used to increase the capital of the company or for the attainment of its objectives.

(e) The company shall obtain prior approval of the Office to change objectives.

(f) Any company not distributing profits shall not be merged with any company distributing profits.

(g) The members of a company incorporated under this Chapter shall elect the directors from amongst themselves in such number as fixed in the articles of association, on the basis of one member one vote.

(h) The meeting allowance, salary, facility receivable by the officers or a company incorporated under this Chapter and the incorporation and operational expenses of the company shall not exceed the amount as specified by the Office; and in so specifying expenses, the Office shall have regard to the capital situation and profits of such company.

(i) In the event of liquidation of or cancellation of registration of a company incorporated under this Chapter ,the assets of the company, if any, remaining after the settlement of the debts and liabilities of the company shall be dealt with as per the provision, if any, contained in its articles of association, and failing such provision, such assets shall devolve on the Government of Nepal .

Provided, however, that such assets shall, in no way, devolve on any-body or company where a promoter or member of such company or his/her close relative or close relative of such relative is a promoter or member.

(2) In the event of violation of any provision contained in Subsection (1), the Office may cancel the registration of the company committing such violation.

Provided, however, that the company shall be provided with an opportunity to defend itself, prior to such cancellation of registration.

(3) A person who is not satisfied with a decision on cancellation of registration made by the Office pursuant to Sub-section (2) may file a complaint in the Court within thirty-five days after the receipt of information of such decision.

(4) While canceling the registration pursuant to Sub-section (2), the Office shall appoint a liquidator and an auditor to complete the liquidation proceedings of such company, specifying the period for completion of such liquidation proceedings.

(5) The liquidator and auditor appointed pursuant to Sub-section (4) shall discharge their functions in accordance with the provisions contained in this Act and the prevailing law.