Mergers and Acquisitions in Nepal are governed under the provisions of Companies Act 2063 (2006), Company Directive 2065 (2008) and any sector specific laws that apply to the concerned entities based on their objectives .
In case of Banks and Financial Institutions, the bylaws issued by Nepal Rastra Bank shall apply in addition to the provisions of the Companies Act. These include technical, financial, administrative requirements and measures to be taken.
In case of Insurance companies, the bylaws issued by Nepal Insurance Authority shall apply n addition to the provisions of the Companies Act. These include technical, financial, administrative requirements and measures to be taken.
In case of companies listed in the stock exchange, the bylaws and directives issued by the Securities Board of Nepal (SEBON) and the concerned stock exchange, NEPSE shall be applicable.
As per provisions of the Companies Act, application shall be made to OCR for approval of Mergers and Acquisitions in Nepal within thirty days of the resolution being adopted along with the following:
- in case of public company, a copy of the special resolution of the general meeting;
- in case of private company, copies of the related provisions contained in the memorandum of the associations, articles of the associations, or consensus agreement authorizing the merger;
- latest balance sheet and auditors report of the merging company;
- a copy of the letter of consent in writing, of the creditors of the merging company and of the merged company;
- valuation of the movable and immovable properties of, and actual details of the assets and liabilities of the merging company;
- if the merging company and merged company have made a decision as to the creditors and employees and workers of the merging company, a copy of such decision; and
- the scheme of arrangement concluded between the companies for merger with each other.
The OCR shall make its decision for approval within three months from the date of application.
Except as otherwise provided in the memorandum of association, articles of association or consensus agreement of the company, a shareholder who does not express his/her consent in writing to the unification or merger or alteration in, or transfer of, shares of the company or the sale of entire assets of the company shall be entitled to get the company’s assets valuated prior to such unification, merger or alteration in or transfer of shares or sale of assets and get return of the amount in proportion to the shares held by him/her from the merging company.
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