Chapter 4 
Board of Directors  

(1) There shall be a board of Directors consisting of at least three persons in the case of a public company, and two persons in the case of a private company. 

64. Appointment of Directors 

(1) Directors shall be appointed by the general meeting of the company subject to the provisions of Section 66. 

Provided that : 

(a) Until the preliminary general meeting is held, directors shall be appointed by the persons who sign the memorandum. 

(b) In case there any vacancy in the the post of any directors before the general meeting is held, it shall be filled up by the Board of Directors itself. 

(c) The appropriate department, in the case of a company in which His Majesty's Government holds shares, and the appropriate corporate body, in the case of a company in which a corporate body holds shares, may appoint directors in proportion to the value of the shares held by it. 

(d) In case the appropriate department feels that any company is not functioning properly, it may appoint one director in such company, even if His Majesty's Government has not subscribed to its shares. 

(2) The rights and liabilities of the directors appointed under the restrictive clause of Sub-Section (1) shall be similar to those vested in the directors appointed by the general meeting. 

(3) In addition to the directors to be appointed under this act, the appropriate department, or any corporate body, may also appoint alternate directors, who shall exercise the power and discharge the duties of directors in their absence. 

65. Qualification Shares of Directors 

Any person, in order to qualify as a director of any company, shall purchase such shares as are prescribed in the articles of the company within two months from the date of his appointment. In case he does not purchase such shares within the prescribed time-limit, his appointment as a director shall be invalid. 

Provided that the director appointed under Clauses (c) and (d) of Sub-Section (1) of Section 64, or representing the managing agent or corporate body subscribing to share as prescribed in the articles in order to qualify as a director, shall not be required to become a shareholder. 

66. Qualification of Directors 

(1) No person shall be appointed a director in the following circumstances : 

(a) In case he is below twenty-one years of age, 

(b) In case he is unsound-mind 

(c) In case he is insolvent, 

(d) In case he has been convicted by a court of theft, fraud, or misappropriation and embezzlement of goods or funds entrusted to him, and has been punished accordingly, or 

(e) In case he has any personal interest in any contract or transaction with the concerned company. 

(2) No person shall remain in the post of a director in the following circumstances : 

(a) In case he possesses any of the disqualifications mentioned in Sub-Section (1), 

(b) In case he absents himself from three consecutive meetings of the Board of Directors without giving satisfactory reasons for such absence, 

(c) In case he frequently disobeys the appropriate department or the Board of Directors, 

(d) In case the general meeting votes him out of office by a two-thirds majority, 

(e) In case his resignation is accepted, 

(f) In case he is convicted by the court of dishonesty in the business of the company, 

(g) In case he commies any offence which is punishable with dismissal from the post of director under this act. 

(3) Notwithstanding anything contained in Sub-Section (1) or (2), 

(a) Subject to the resolution of the general meeting and the approval of the appropriate department, any person mentioned in Clause (e) of Sub-Section (1) may be appointed or continue as director. 

(b) The disqualification mentioned in Clause (a) or Clause (b) of Sub-Section (1) shall not be applicable to any person unless confirmed by a government medical practitioner. 

(c) Before any person is disqualified form being appointed or continuing as director, he shall be served with a notice to this effect. In case such a person submits any evidence in his defence, it shall be taken into consideration. 

(d) Clauses (b) and (d) of Sub-Section (2) shall not be applicable to the director nominated by His Majesty's Government or the managing agent. 

67. Tenure of Directors 

(1) The tenure of the director of every public limited company shall be of four years. 

Provided that : 

(a) A director appointed by the appropriate department or by a managing agent, or by a corporate body, shall hold at the pleasure of the appointing authority. 

(b) A director appointed under the restrictive Clauses (a) and (b) of Sub-Section (1) of Section 64 shall hold office until the annual general meeting is held. 

(c) A director appointed by the general meeting to fill up any mid-term vacancy in the post of director shall hold office only for the remaining term of his predecessor. 

(2) The term of (member) of the Board of Directors of a company established prior to the commencement of this act shall be deemed to have expired on the date when one-third of the directors are due to retire for the first time after the commencement of this act, irrespective of when the term of the other directors is due to expire. 

(3) The term of the directors of a private company shall be as prescribed in the articles. 

(4) A director who retires on the expiry of his term shall be eligible for re-election. 

(5) For the purpose of Sub-Section (4), the term of a director who is in office on the date of the commencement of this act shall be rendered as the first term. 

68. Remunerations, Allowances, Rewards Etc. of Directors 

(1) The remunerations to be obtained by directors for attending the meeting shall be as prescribed in the articles. 

(2) The monthly remunerations as well as daily and traveling allowances for directors while conducting the business of the company shall be as prescribed by the general meeting. 

(3) The general meeting may, with the approval of the appropriate department, grant rewards not exceeding five percent of the not profit to the directors in order to encourage them. 

Provided that such reward shall not be provided to a managing agent enjoying agency commission, or to any director appointed by him. 

69. Powers and Duties of the Board of Directors 

(1) Subject to the provisions of this act and the articles, as well as the decisions taken from time to time by the general meeting, the Board of Directors shall make all arrangements regarding the business of the company, and exercise its powers and discharge its duties. 

(2) The Board of Directors may appoint such employees as may be required for conducting the business of the company. 

Provided that in case any blood relative of the director of a public company, who has coeaercenary rights to his property in the absence of a direct heir, is to be appointed in the company, the approval of the general meeting and the appropriate department shall be necessary. 

(3) Except in accordance with the decision of the general meeting or the approval of appropriate derive personal benefit through the company. 

(4) Unless otherwise provided for in the memorandum and articles, the Board of Directors may appoint any director or any employee of the company as its representative and delegate any or all of its powers to him to enter into correspondence or to execute any bond or contract or to endorse bills of exchange, promissory notes, or shares on behalf of the company individually or jointly. 

(5) The company shall not be responsible for any action taken by any person in the capacity of its director of representative beyond his authority. 

(6) In case any person makes any dealings with the director or representative of the company knowingly or having reason to believe that the director or representative is dealing with him for his personal interest or for causing loss or damage to the company in respect to such dealing. 

69A. Appointment of Managing Director 

The Directors may appoint a Managing Director from among themselves subject to the articles (of the company). 

69B. Appointment of Company Secretary 

A public company with a share capital investment exceeding Rs 5 million shall appoint a person possessing at least a Bachelor's Degree is Commerce or Law in the post of Company Secretary within a period of one year from the date of commencement of this Section. 

69C. Functions, Duties and Powers of Company Secretary 

(1) It shall be the duty of the Company Secretary to implement the decisions taken by the Board of Directors and the general meeting and the directives issued by the appropriate department or agency, as well as to submit the particulars, document, decisions, etc. to be submitted to the appropriate department or any other agency according to this act or other current Nepal law in time. 

(2) The Company Secretary may perform the following functions subject to this act and the memorandum and articles of the company : 

(a) To convene meetings of the Board of Directors and general meetings  . 

(b) To prepare the agenda of meetings of the Board of Directors and general meetings, and send them to the concerned directors and shareholders. 

(c) To maintain records of the decisions of the Board of Directors and the general meetings, authenticate them, take charge of them, and send, them to the concerned directors and shareholders. 

(d) To send notices regarding share allotments in accordance with the decision of the Board of Directors, and of calls for payment of  installment. 

(e) To keep the register of shareholders as well as the records of shareholders and debenture holders in a correct and accurate manner, take charge of them, and authertical them. 

(f) To record the mortgage of shares or debentures; to present application before the Board of Directors or the Managing Director for their transfer or transmission. 

(g) In case the claim, complaint, grievances, suggestions, advice, etc. of shareholders or debenture-holders are submitted in writing, to forward them to the Board of Director or the Managing Director or other agencies, and to inform the concerned shareholder or debenture-holder in writing about the outcome of the actions taken in that connection. 

(h) To perform other functions prescribed by the Board of Directors. 

(3) The company Secretary must not sell or purchase the share of the concerned company or of the subsidiary company in his own name or in the name of his family so long as he remains in that post. In case any sale or purchase of any share in that manner subsequently comes to light, the concerned share shall be forfeited by the appropriate department. 
 
Provided that in case such company or subsidiary company has issued additional shares with the objective of increasing its capital, there shall be no restriction on his buying such shares.

(4) Except according to the decision of the general meeting and the approval of the appropriate department, the Company Secretary world not deal in any way with or through the company that could benefit him. 

70. Meeting of the Board of Directors 

(1) The meeting of the Board of Directors of a public company shall be held at least six times a year. Provided that the interval between any two meetings shall not exceed three months. 

(1a) Meetings of the Board of Directors of a private company must be held at least twice a year, and the interval between such meetings must be of at least four months. 

(2) The directors shall be personally present in the meeting of the Board of Directors. Attendance by proxy shall not be permitted. 

(3) No meeting of the Board of Directors shall be held unless it is attended by at least fifty percent of the total number of Directors who are entitled to vote. 

(4) The decision of a majority in the meeting of the Board of  Directors shall be binding, and in the event of a tie, the Chairman shall exercise his casting votes.

(5) Minutes regarding the number of directors present in the meeting of the Board of Directors, the subjects discussed and the decisions taken thereon shall be recorded in a separate book. 

71. Past Action Not to be Invalid 

In case any shortcoming is subsequently detected with regard to the appointment of any director under this act, action which he has already take in that capacity shall not be invalid merely for such reason. 

72. Responsibility of Directors 

In case any director of any company causes any loss or damage willfully or through negligence, such losses or damages shall be recovered from every director of the company from out of his personal property of a proportionate basis. In case no such loss or damage can be recovered from any of such directors on a proportionate basis, such amount as cannot be so recovered shall be realized from the remaining director or directors on a proportionate basis, and if the amount is still not fully recovered, it shall be recovered from the remaining director or directors on a proportionate basis. Such action shall be continued until the loss or damage is fully recovered. But in case any director registers his protest in writing against any action which results in such loss or damage, or is unaware of any such action having been taken, he shall not be liable to pay any compensation for such loss or damage. 

73. Register of Directors 

Every company shall maintain a separate record mentioning the full name, surname, address and accupation of its directors, submit a copy thereof to the appropriate department, and also notify it of change, if any, in the composition of the Board of Directors, within fifteen days.