Association Alleges Implementation of Section 50 of Companies Act Without Preparation
The Nepal Share Market Investors Association has stated that Section 50 of the Companies Act, 2063 was abruptly enforced without adequate preparation and impact assessment. In a letter to SEBON, the association noted growing complaints of negative effects on stock market investors due to the implementation.
The Nepal Share Market Investors Association has stated that Section 50 of the Companies Act, 2063 was implemented without preparation. In a letter to SEBON, the association mentioned that complaints have increased about the negative impact on stock market investors due to the implementation of Section 50, and attributed it to a lack of preparation.
Drawing the board's attention, the association said that although legal provisions must be complied with, a provision that had not been implemented for about 20 years was suddenly enforced without adequate preparation and impact assessment. The association's letter notes that SEBON, through a letter dated 2083 Bhadra 9 (August 25, 2026) with reference number 499, directed all listed companies to comply with the provisions of Section 50 of the Companies Act.
The association has clearly indicated that it is not in favor of not implementing existing laws. It holds the view that until the provision in the Companies Act is amended or repealed by the Federal Parliament, or declared void by the Constitutional Bench of the Supreme Court if it conflicts with the Constitution, it must be complied with as prevailing law.
Since it is also the duty of citizens to abide by the Constitution and laws of Nepal, the association stated that it is appropriate to implement the existing legal provision accordingly.
What is in Section 50 of the Companies Act?
Section 50 of the Companies Act, 2063 defines 'basic shareholder' and provisions regarding details they must comply with. Generally, a person holding 5 percent or more of the paid-up capital of a public company with full voting rights ordinary shares is considered a basic shareholder. However, in a company with paid-up capital exceeding 25 crore rupees, ownership of 1 percent or more shares also establishes the status of a basic shareholder.