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Questions:
Nepal Chartered Accountants Act, 2053 & Regulation, 2061

Question No. 1
A complain has been lodged to the Institute of Chartered Accountants of Nepal against a
member holding Certificate of Practice accusing that he had obtained an audit of a company
by sharing audit fee as commission to a few shareholders of the company 5 years ago. Now,
give your opinion upon possible actions that may or may not be taken against him in
accordance with Nepal Chartered Accountants Act, 2053 & Rules, 2061.

Companies Act, 2063

Question No. 2
Ms. Numa is one of shareholders of a public company ABC Ltd which has issued 100,000
unit shares with par value of Rs. 1,000. She has subscribed 1,000 units of shares and paid Rs.
600 each till date. Now, the company is in need of fund because its officer level employees
are demanding staff loan. So, its Managing Director decided to call remaining Rs. 400 of the
par value from its shareholders giving 7 day notice. Then, Ms. Numa failed to pay the called
amount within the stipulated time. Later on, the Managing Director forfeited her shares on the
ground of being failure to pay the called amount. In this regard, give your opinion upon the
plan and action of the Managing Director in accordance with Companies Act, 2063.

Question No. 3
Ms. Yuma has a share certificate of a private company ABC Pvt Ltd. As per the share
certificate, she owns 100 unit of shares from lot no. 1 to 100. Now, she wants to sell her
entire shares to a buyer. However, the company denied to transfer her shares to the buyer on
the ground that as per its shareholder register, the share lot no. 1 to 100 is owned by Sima, not
Yuma. In this regard, give your opinion upon legal ownership of the share lot no. 1 to 100
and legal validity of such denial in accordance with Companies Act, 2063.

Question No. 4
A Board of Directors meeting of ABC Ltd held on 2078-05-05 decided, inter alias, following
agenda:
a) To pay Rs 2,000 per shareholder as AGM Transportation Allowance to those
shareholders who attend at the AGM to be held on 2078-06-06.
b) To issue bonus share immediately (i.e. before AGM) instead of interim dividend, out of
Free Reserves and Land Revaluation Reserve as disclosed in audited annual financial
statements of F/Y 2077.78.
In this regard, give your opinion regarding the legal validity of Board of Directors decision in
accordance with Companies Act, 2063.

Securities Act, 2063 and Rules

Question No. 5
Suffer Ltd, a company listed in Nepal Stock Exchange Ltd, is in huge loss. However, Mr. X,
the General Manager of the listed company caused to publish a quarterly financial report in
its website disclosing a huge profit with a mala fide intention to incite investors for
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purchasing shares of his company. Later on, an unknown complaint filed to the Securities
Board of Nepal which in turn filed case to the District Court against Mr. X through its
investigating authority. The case is in litigation at district court for last 6 months. Meanwhile,
Mr. X left the job of the listed company and Hire Ltd wants to appoint him as its General
Manager. Now, give your opinion regarding the activity of Mr. X and Hire Ltd in accordance
with Securities Act, 2063.

Banks & Financial Institutions Act, 2073

Question No. 6
The Board of Directors of Kanchan Bank Ltd are feeling stressed to govern its banking
operation. Hence, they are desirous to liquidate the bank voluntarily. However, they are not
clear about legal provisions prescribed about the circumstances and procedure for the
voluntary liquidation in the prevailing laws. So, suggest them the legal provisions to be
complied with for the voluntary liquidation of the bank pursuant to Banks & Financial
Institutions Act, 2073.

Nepal Rastra Bank Act, 2058

Question No. 7
There are 7 incumbent directors in the Board of Directors of the Nepal Rastra Bank. A Board
meeting of Nepal Rastra Bank held on 2078-05-05 at presence of majority of directors (i.e. 4
out of 7) viz. governor, deputy governors and secretary of the Ministry of Finance, ignoring
other 3 directors. Give your opinion regarding the validity of such meeting held at majority of
directors in accordance with Nepal Rastra Bank Act, 2058. Will your answer be different if
the post of other 3 directors had remained vacant?

Industrial Enterprises Act, 2076

Question No. 8
Kanyam Chelibeti Agro Farm is an industry established under Industrial Enterprises Act,
2076. The industry is wholly owned by female entrepreneurs. Hence, 15 Ropani of land was
acquired by the industry for the agro product cultivation at exemption of land registration
charge. Later on, its owners felt that the land yields higher return if huts are constructed on it
and rented them for earning revenue. Now, give your opinion to the Farm in accordance with
Industrial Enterprises Act 2076, if it can work as per its plan

Foreign Investment & Technology Transfer Act, 2075

Question No. 9
Mr. Michael is a Canadian nationality who is interested to establish an industry in Nepal. He
wants to know about services available to the foreign investors in Nepal. Now, enumerate
him the services which are available to the foreign investor from the Single Stop Service
Centre as per Foreign Investment & Technology Transfer Act, 2075.

Labour Act, 2074

Question No. 10
Ms. Rima, the Chief Executive of Pathivara Hotel is frustrated of high labour turnover. So,
she is planning to hire 4 Chefs from a labour supplier. However, she is not aware about legal
provision regarding the hiring of workers from labour suppliers. So, suggest her in
accordance with Labour Act, 2074.
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Insurance Act, 2049 & Rules, 2049

Question No. 11
Mr. Clever has been working as an insurance agent of Safe Life Insurance Ltd. He has been
involved in issuing life insurance policies aggressively by giving threats to insurance policy
holders. Suddenly, he got a notice from the Insurance Board that his agent license has been
cancelled on the ground of violating the code of conduct issued by the Board for agents. Give
your opinion regarding the action of the Insurance Board in accordance with Insurance Act
2049 & Rules, 2049.

International Financial Transactions Act, 2054

Question No. 12
Ishita Trading Company is a license holder entity which has obtained license to carry on
international financial transactions from the Accreditation Committee under International
Financial Transactions Act, 2054. The company is planning to bring US $ 5 million out of
which 1 million to be used for investing in shares of Nepalese companies & remaining 4
million for investing in foreign countries. Suggest the entity if it can bring and use it in
accordance with International Financial Transactions Act, 2054.

Cooperatives Act, 2074 & Rules, 2075

Question No. 13
Rich Saving & Credit Co-operative Society Ltd, Kathmandu published a notice of change in
interest of credit from 14.50% to 15.00% with effect from Bhadra 1st, 2078. Then, its
members demanded to decrease the interest rate but it denied on the ground that the interest
rate shall be charged as decided by the Board of Directors of the Cooperative Society. In this
regard, give your opinion regarding such interest rate on credit of the Cooperative Society in
accordance with Cooperatives Act, 2074 & Rules, 2075.

Insolvency Act, 2063

Question No. 14
Poor Ltd has been unable to settle liabilities to its creditors. Hence, its creditors has filed case
to the court to institute insolvency proceedings. Accordingly, as per the request of plaintiffs,
the court ordered to initiate the insolvency proceedings. Later on during the litigation, Nepal
Electricity Authority disconnected the electricity power supply of the company on the ground
that it defaulted to pay the electricity bill for a long period. Give your opinion regarding the
action of NEA in accordance with Insolvency Act, 2063.

Money Laundering Prevention Act, 2064

Question No. 15
Mr. Fast, a beggar, after 1 week of begging at roads acquired a bungalow worth of Rs. 15
crore at New Baneshwor, Kathmandu in 2071. Recently, in Bhadra 2078, the Department of
Money Laundering Investigation filed a case at court against him to confiscate the property
complaining that the money received for acquiring the bungalow has been acquired from
illicit origin. However, Mr. Fast advocates that the bungalow was acquired out of donation
received. Also, he questions how the department files such case against him after 7 years of
such property acquired. Give your opinion, regarding the action of the Department and
defense of Mr. Fast in accordance with Money Laundering Prevention Act, 2064.
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Public Procurement Act, 2063 & Rules, 2064

Question No. 16
Ms. Najma is a newly appointed official designated for preparing procurement plans of a
public entity. Suggest conducts of officials to be abided by her in accordance with Public
Procurement Act, 2063.

Audit Act, 2075

Question No. 17
Mechinagar Municipality intends to maintain its books of account at international standard.
So, it is planning to hire a foreign consultant for developing its receipts, cash book and other
accounting documents of international level. Can a municipality independently develop and
use its own such accounting documents? Give your opinion in accordance with Audit Act,
2075.

Arbitration Act, 2055

Question No. 18
Ram, a house owner and Sita, a tenant concluded a house rent agreement for a house at
Koteshwor, Kathmandu with effect from September 1st, 2021. They have mentioned in the
contract that any dispute related to it shall be settled through arbitration. The contract states
that the house rent amount of Rs 100,000 per month shall be paid at the end of each month.
Accordingly, the house owner Mr. Ram demanded house rent of Bhadra, 2078 at the last date
of the month. In that case, the tenant Ms. Sita refused to pay it on the ground that September
month has not been expired and today is just September 16, 2021 but Ram rejected her
objection. So, a dispute arose between them. Now, advise them to settle their dispute in
accordance with Arbitration Act, 2055. Would your answer be different if they had not
mentioned about the arbitration in the agreement?

Banking & Offence Punishment Act, 2064

Question No. 19
Mr. Sincere is a member holding certificate of practice. He has a client, a single shareholder
company, who pays a good portion of his total audit fees. The client has incurred loss in F/Y
2077.78 and has already issued an audit report as well. Now, the single shareholder of the
company is planning to obtain housing loan in his name for constructing a residential house.
He wants to show the audit report of his company as an income source. So, the shareholder
requested him to issue a new audit report of F/Y 2077.78 with accounting profit of Rs. 3
million just for presenting it to a bank as a source of his income. He states that he have
managed all other documents except the audit report. He advises to copy-paste the same
UDIN of the first audit report in the second audit report as well and assures no one is going to
check about it. Now, suggest Mr. Sincere if he can issue such second audit report in
accordance with Banking Offence & Punishment Act, 2064.

Acts relating to Institutions acting as Financial Intermediary, 2055

Question No. 20
Phungling Financial Care, an institution, has been operating as a financial intermediary after
obtaining license from Nepal Rastra Bank. In order to expand the working area, financial
strength & transactions of the institution, majority of its members attended in the Annual
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General Meeting of F/Y 2074/75 resolved to merge it with another institution Myanglung
Financial Support. Is this decision valid? Would your answer be different, if the institution
had resolved to merge with another social organization which has not obtained license of
financial intermediary from Nepal Rastra Bank? Give your opinion in accordance with Acts
relating to Institutions acting as Financial Intermediary, 2055

Foreign Exchange Regulation Act, 2019

Question No. 21
Mr. Yatri, an entrepreneur, has purchased US $ 1,000 from a licensee for his business trip to
Maldives. Suddenly, his business trip got cancelled. So, he is planning to sell it to his clients
who are in need of such foreign exchange. Suggest him in accordance with Foreign Exchange
Regulation Act, 2019.
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NEPAL CHARTERED ACCOUNTANTS ACT, 2053 AND RULES, 2061

1. Mr. Arun Sharma, is a Registered Auditor (Class B) member of the Institute of

Chartered Accounts of Nepal (ICAN) holding Certificate of Practice (COP) as well.
He passed Chartered Accountancy Professional (CAP-II) Examination of ICAN in
December 2020 and Joined for articleship training under Kumod & Assocaites,
Chartered Accountants. The articleship deed was entered accordingly. ICAN
registered the articleship deed. Mr. Arun is undergoing articleship and carrying
accountancy profession as well. Examine the validity of the action of ICAN & Mr.
Arun Sharma pursuant to the Nepal Chartered Accountants Laws.
2. Mr. Piyush Goyal, a Chartered Accountant holding Certificate of Practice (COP) has
charged fee for representing his client M/S Sitaram Dairy Private Limited in Tax
settlement commission on the expected relief to his client as a result of the settlement
commission. Is this arrangement is in accordance with the Nepal Chartered
Accountant Act, 2053?

COMPANIES ACT, 2063

3. Green Agro Forestry Industries Private Limited has paid up capital of five million
rupees. It had turnover of rupees 110 million in FY 2076/77. The Board of Directors
of the Company has got the financial statements prepared and approved on Ashwin
10, 2077 that included balance sheet, profit & loss account and cash flow only. The
company held its annual general meeting on Kartk 10, 2077. Following general
agendas were presented and approved by the annual general meeting:
(i) Approval of the financial statement & audit report for FY 2076/77.
(ii) Appointment of the auditor for FY 2077/78
Do you think that the agendas as presented to the annual general meeting were
complete? Give your opinion as to the validity of the annual general meeting referring
the provisions of Companies Act, 2063.

4. Mr. X, Chairperson of Old Age Support House (Company not distributing profit)
wishes to transfer whole of its assets to Women’s Legal Aid, a NGO. Mrs. Y (wife of
Mr. X) is the chairperson of the Women’s Legal Aid. The AOA of the house provided
that upon the dissolution of the company, the general meeting shall have power to
decide on the transfer of the remaining assets of the company. Mr. X, Chairperson,
presented a resolution to amalgamate the House with the Aid. But the general meeting
refused to amalgamate. Then Mr. X, Chairperson, proposed to liquidate the House and
transfer the assets to the Aid. The general meeting of the house passed the proposal
presented by Mr. X, Chairperson. Give your opinion whether resolution passed by the
general meeting can be implemented according to the Companies Act, 2063.

5. Happy Company Limited having paid up capital of Rs. 10 million, General Reserves
of Rs. 8 million, Exchange Equalisation Reserve of Rs. 1.2 million and Retained
Earnings of Rs. 3.5 million decides to invest Rs. 13 million in Joy Company Ltd.
Examine the validity of the investment decision in the light of the provision of the
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Companies Act, 2063? Would your answer remain the same if Joy Company Limited
was a subsidiary of Happy Company Limited?

SECURITIES ACT, 2063

6. Securities business person after making a contract of purchase or sale or exchange of

securities has to making a contract note as per Section 77 of the Securities Act, 2063.
State the particulars to be mentioned in the contract note and distribution of the same.

BANKS AND FINANCIAL INSTITUTIONS ACT, 2073

7. Can depositors of the bank or financial institution apply for mandatory liquidation of
the concerned bank or financial institution? Explain your answer on the light of Banks
and Financial institutions Act, 2073.

NEPAL RASTRA BANK ACT, 2058

8. Nepal Rastra Bank (NRB) has sustained loss during the fiscal year 2076/2077. You
are required to advise the CFO of NRB for the allocation of such loss citing the legal
provisions of Nepal Rastra Bank Act, 2058.

AUDIT ACT, 2075

9. Ram & Hari Associates, Chartered Accountants is appointed as an assistant auditor by

the Auditor General Office to conduct the audit of a corporation fully owned by Sudur
Paschim Province. Mr. Ram, partner of the firm thinks that he shall have to audit
independently. Mr. Ram started to bargain for the remuneration with the client. Can
he perform audit independently and ask remuneration from client? Give your opinion
based on provisions of the Audit Act, 2075.

INDUSTRIAL ENTERPRISES ACT, 2076

10. What is Corporate Social Responsibility (CSR)? Explain CSR responsibilities of

Industries as prescribed by the Industrial Enterprises Act, 2076.
FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER ACT, 2075
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11. What is national treatment of foreign investment? Explain the provisions on ‘National
Treatment of Foreign Investment pursuant to the Foreign Investment & Technology
Transfer Act, 2075.

INSURANCE ACT, 2049 (1992)

12. Pashupati Biscuits Limited insured its stock with Himal General Insurance Limited.
Annual insurance premium for the fiscal year 2077/78 is Rs. 6 million. The company,
due to its unfavorable cash flow, could pay Rs. 3 million through bank and arranged a
bank guarantee of the remaining premium amount. Accidentally after 2 months, stock
of the company got damaged by fire and the company claimed for compensation with
the insurance company. But the insurance company has denied to pay full
compensation on the ground that premium was not fully paid. Give your opinion
referring the provisions of the Insurance Act, 2049.

LABOUR ACT, 2074 AND RULES

13. Explain the provision relating to formation of “minimum wage fixation committee”
and fixation of minimum wage pursuant to the Labour Act, 2074.

INTERNATIONAL FINANCIAL TRANSACTIONS ACT, 2054

14. Gemini Incorporations Limited, a mutual fund company incorporated in Japan, 2.5
years before is interested to carry out international financial transactions in Nepal.
You have been appointed as a consultant for this purpose. Advice Gemini
Incorporations limited in the following matters:
(i) What are the processes of obtaining License by the International Financial Entity
under the International Financial Transactions Act, 2054?
(ii) Can Gemini Incorporations obtain License to carry out international financial
transactions in Nepal?

COOPERATIVES ACT, 2074

15. Bindass Cooperatives Limited registered under the Cooperatives Act, 2074, has not
been carrying out its business since last 2.5 years. The Registrar of the cooperatives is
contemplating to cancel the registration of the Bindass Cooperatives Limited on this
ground. Advice the Registrar on the following matters pursuant to the provisions of
Cooperatives laws of Nepal?
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(i) Does the Registrar have power to cancel the registration of Bindass Cooperatives
on the ground of not carrying out its business for last 2.5 years?

(ii) State the order of priority in payment of liabilities if the registration of the Bindas
Cooperatives Limited is cancelled pursuant to (i).

INSOLVENCY ACT, 2063

16. The court has decided to issue order for restructuring of the Bindas Company Limited
after studying the report submitted by the Inquiry Officer. You are asked to suggest
the possible restructuring programs of the Bindas Company Limited pursuant to
Insolvency Act, 2063.

MONEY LAUNDERING PREVENTION ACT, 2064

17. Money Laundering Prevention Act, 2064 has been promulgated with the objective to
prevent laundering of criminally earned assets and prevention of financing of
terrorism. Accordingly it is the responsibility of the Reporting Entity for identification
and verification of its customers. On the light of the statement, you are required to
provide the answers to the following questions pursuant to the provisions of Money
Laundering Prevention Act, 2064:
(i) Can Reporting Entity rely on a third party for its customer identification and
verification?
(ii) What are the situations in which identification and verification of a customer
made by a third party shall not be acceptable for reporting entity?

PUBLIC PROCUREMENT ACT, 2063 AND RULES 2064

18. State the conditions under which the procurement process under the Public
Procurement Act, 2063 need not be applied. How the procurement proceedings are
undertaken on such conditions?

ARBITRATION ACT, 2055

19. State the provisions relating to number of arbitrators and the circumstances in which a
court can appoint arbitrator(s) pursuant to the Arbitration Act, 2055?
BANKING OFFENSE AND PUNISHMENT ACT, 2064
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20. State the provisions relating to delivery of notice to a foreign individual in connection
with the offenses under the Banking Offense and Punishment Act, 2064.

FOREIGN EXCHANGE (REGULATION) ACT, 2019

21. State the duties and responsibilities of the Investigating officer pursuant to the Foreign
Exchange (Regulation) Act, 2019.