Focus on… Doing Business In a post-COVID-19 World, Neupane Law Associates

COVID-19 has had a significant impact in the Nepalese economy. The government of Nepal declared a nationwide lockdown in early March 2020 to contain the spread of COVID 19, which were followed by series of partial/full closure of the district/municipalities by local administration. This affected the industrial and agricultural production, demand and consumption of products and led to constricted market liquidity. Overall, COVID 19 has led to decline in the economic growth and has reduced government revenue and foreign currency inflow into Nepal.

The government of Nepal introduced immediate relief packages to the affected business by subsidizing utility bills, extending tax-filing deadlines, and taking measures to pay the social security contribution of workers of the formal sector listed in Social Security Fund. Likewise, Nepal Rastra Bank, the central bank of Nepal introduced relief packages to various sectors affected by COVID 19 through the Monetary Policy for the Fiscal Year 2020/21 (“Monetary Policy”). The Monetary Policy has extended the loan payment and grace period for the business enterprises affected by COVID 19, and has provided refinancing facilities to increase access to subsidised loan. Further, the Monetary Policy requires commercial banks to disburse at least 15 percent of their total disbursable loan to the agricultural sector, 15 percent to small, medium-sized enterprises, and 10 percent to the energy sector. In the context of foreign investment, Monetary Policy has made commitment to channelize foreign investment amount through automatic route of bank and financial institutions without the need of approval from Central Bank of Nepal. Moreover, Monetary Policy has also committed to establish specialized institution to provide hedging services to minimize exchange rate risk in foreign currency.

Most businesses have begun to operate with precaution and with mandatory safety measures including sanitization, use of mask, maintaining physical distancing. It is advisable to operate the business with precaution and adequate safety measures for the employees in the work place. Further, businesses are advised to prepare and implement standard health, observe employee’s heath and require employees to declare their health condition each twice in a weekday.

To avoid the risk of COVID 19, in house counsels and directors can take the advantage of provisions of the Company Act and Directive which permits companies to conclude directors’ meeting through the circulation method and allows private limited companies to conduct the directors meeting through the use of electronic media.

Likewise, shareholders of private limited companies can participate in the general meetings/special meeting through the use of electronic media in a manner where the shareholder can hear or read the words spoken by other shareholders. Private companies are required to arrange participation of the shareholders in the general meeting/special meeting through electronic media. The shareholders have the option to attend the meeting through electronic media or attend such meeting physically. Further, in practice public limited companies have been conducting general meetings/special meetings through the use of electronic media by obtaining consent of Office of the Company Register. Even in this case, shareholders have the option to attend such meetings through the use of electronic media or attend such meeting physically. Businesses can, therefore, conduct their annual general meeting/special general meeting through the use of electronic media in the post COVID 19 scenario.

Our firm has been using technologies such as email, video conference, teleconference, cloud computing, etc. to interact with our clients and advise them on legal and practical aspects of doing business in Nepal, especially in the post-COVID-19 scenario.