Industries operating without registration can now be legalized by paying a fine, as per the recent amendments to the Industrial Enterprises Act, 2019 (2076 BS). Previously, the act mandated the closure of unregistered industries on the recommendation of the industry registration body, along with the imposition of fines.
Under the existing law, fines range from Rs 5,000 for small industries to Rs 100,000 for large industries. However, a new ordinance amending the Industrial Enterprises Act has removed the provision to close down unregistered industries, allowing them to be registered after paying the prescribed fine. This amendment aims to bring unregistered industries into the legal framework more easily.
“A number of industries operating successfully have not been registered due to a lack of understanding or awareness of the law. The amendment is intended to facilitate such industries,” said a senior official from the Ministry of Industry, Commerce, and Supplies.
The ordinance also introduces several new provisions for industries within special economic zones (SEZs). Facilities previously reserved for export-oriented industries will now be extended to industries operating within SEZs, including service industries. Furthermore, industries relocating to SEZs from outside will be eligible for tax exemptions.
For projects implemented under agreements with the government, the ordinance stipulates that the entire project will be handed over to the government after a specified period. Additionally, land exceeding the permissible limit can now be used as collateral in banks and financial institutions without transferring loan liabilities to the government.
Information technology-based industries producing software with annual turnovers exceeding Rs 50 million will receive additional facilities and concessions. Fund and asset management have also been included in the service industry category, with procedural improvements made to involve the private sector through management contracts and leases in public enterprises.
The ordinance provides clearer regulations for sweat shares (issued based on reputation, goodwill, or knowledge sharing). It allows start-ups to allocate up to 40% of their paid-up capital to individuals, while companies can issue up to 20%. Private companies with assets exceeding liabilities can now issue premium shares following approval via a special resolution passed by the general meeting. The government has removed the previous requirement for approval from the Office of the Company Registrar and a three-year audit to simplify the process.
Companies that fail to submit required details to government agencies can now receive a 90% discount on fines, while the ordinance has streamlined the procedures for canceling company registrations.
The ordinances were approved by the Council of Ministers on Friday and will take effect after authentication by the president. Officials from the President's Office stated that the file for authentication was submitted late on Sunday.
"The ordinances brought by the government will be authenticated if found to be in accordance with the law," said Baburam Kunwar, the president’s legal advisor. According to the law, ordinances can be issued when parliament is not in session. They must be tabled in parliament on its first day and passed within 60 days. Failure to do so will render the ordinances invalid.
