In a bid to assess the Companies Bill and feature policy prescriptions that would enhance the economic freedom of the Nepalese people, the team at Samriddhi Foundation prepared a policy brief on the same. This brief analyzed whether the proposed policies would act as restrictions to entrepreneurship- a precondition for the economic growth. As the Companies Bill, with amendments to the Act, will soon be tabled in the Parliament for discussion, the brief outlined areas that would require further discussion in the review and amendment process. The purpose was to remove clauses from the Bill that would discourage entrepreneurs to undertake risks, impose significant compliance costs and create cynicism regarding the country’s investment climate.
The policy brief identified six regressive clauses that would inflict economic costs, stifle innovation, and result in unintended consequences. These issues were:
- Unreasonable imposition of fines, punishments and appeals
- Duplication in the submission of documents
- Compulsory provision to appoint a liquidator
- Ambiguity in IT related components
- Quasi-judicial role of Office of Company Registrar
- Registration of foreign businesses
In order to garner ownership on the policy prescriptions, Samriddhi organized a Consultative meeting, ‘Review of Companies Bill and the Barriers to Entrepreneurship’ on the 27th of September, 2019. The event was moderated by Semanta Dahal, Managing Partner and Advocate at Abhinawa Law Chambers where sectoral experts engaged on the issues concerning the Bill. The deliberation hosted primary stakeholders – Entrepreneurs, Lawyers, Chartered Accountants, and representatives from Federation of Nepalese Chamber of Commerce (FNCCI), Confederation of Nepalese Industries (CNI), High Court and Office of Company Registrar (OCR).
The event was a huge success as it captured valued feedbacks from all the concerned stakeholders. While established businesses shared their experiences as to how they have been penalized unnecessarily for not meeting with the compliances, an aspiring entrepreneur highlighted how India has exempted startups from tax and other compliance provisions. The participants also deliberated over the difficulties that exist for a company that wishes to undergo liquidation.
Similarly, the discussion revolved around instances wherein vague clauses have enabled the bureaucrats to function at their discretion. Participants from the legal community were able to throw light upon the multiple government agencies/officials that practiced rent-seeking by stepping on such clauses.
Moreover, all the participants drew consensus about the need for the Office of Company Registrar (OCR) to embrace digitization, as early as possible. In order to do away with the manual submission of documents and to reduce the compliance cost, a streamlined system is the need of the hour. Furthermore, it was also agreed that if the OCR is able to graduate in terms of implementation of online filing, foreign businesses will not require a branch office to legally conclude transactions.
Therefore, the event was extremely productive as all the parties agreed on the importance of private sector to the economy. If only the raised issues are addressed in the upcoming Parliamentary discussions, the entrepreneurial ecosystem will prosper. The members from the government agencies noted down the clauses that demand amendment and promised to put forth these issues with their respective authorities.