1. M.Phil. (TU) 01/2010), Ph.D. in Progress
BBA VI Semester
Business and Society
POST RAJ POKHAREL
M.Phil. (TU) 01/2010), Ph.D. in Progress

2. Unit VI: CSR, Business Ethics and Corporate Governance Issues in Nepal 9 hours
Management and status of CSR in Nepal;
The role of Government in promoting CSR in
Nepal;
Legal provisions governing CSR in Nepal;
Ethical business practices and issues in Nepal; Corporate governance system in Nepalese organizations;
Suggestions for improving existing ethical practices and corporate governance system in Nepal.

3. Status of CSR in Nepal
CSR is mostly associated with philanthropy or charity i.e through corporate social investment in education, health, sports, the environment, ….
Business often finds itself engaged in the provision of social services that would be seen as government's responsibility.
Research into CSR in Nepal is still relatively underdeveloped and tends to be adhoc with convenience based case studies
As of 2016, CSR is fast gaining momentum as an important aspect of business practice in Nepal.

4. CSR Issues in Nepal Lack of Community Participation in CSR Activities
Need to Build Local Capacities
Issues of Transparency
Non-availability of Well Organized Non-governmental Organizations
Narrow Perception towards CSR Initiatives
Non-availability of clear CSR guidelines
Lack of consensus on Implementing CSR Issues

5. The role of Government in promoting CSR in Nepal
Legal Provision
Monitoring and evaluation Mechanism
Minimum CSR investment ( …% for CSR)
Legal compliance on all defined respect of business, its evaluation and perfect monitoring

6. Legal status of governing CG in Nepal
Companies Act 2063
(i) Conflict of Interest and Transparency
Requirement to give beneficial interest on the shares(s.47)
Information required to be given on becoming substantial shareholder (s.50)
Shareholders having conflict are not qualified to vote in general meetings(s.70)
Director required to give information about transaction between company and him/her or close relatives (s. 92)
Approval of general meeting required to enter transaction between company and director/its close relatives (s.93)
Restriction on power of board to enter certain transaction (s. 105)
Restriction to give loans to directors and officers (s.101)
Financial disclosures to the shareholders (s.109)
(ii) Directors
Directors are made personally liable for any breach of the Act
Directors have fiduciary duty to act in the best interest of the company (s.99)
Directors are specific duty not to exceed their powers (s.103)
Requirement to appoint independent directors by public companies (s. 86)
Directors who breach reporting requirement under the Act are disqualified to become director (s.89)
(iii) Audit
Listed companies having paid up capital of more than Rs. 3 crores need to have audit committee
An auditor is disqualified to be appointed for three consecutive years.(111)
A person working full time, or his/her partners are disqualified to be appointed as auditor (112)
(iv) Shareholders’ Protection.
Shareholder have right to inspect books of the company
Shareholders can sue on behalf of the company.(s.140)
Shareholders can request to appoint investigation officer (s.121)
Can prevent directors from exceeding their powers.(s.138)

7. Legal status of governing CSR in Nepal
Constitution of Nepal 2072: Provision of fundamental rights (Employment, health, social security, social justice, ..)
Consumer protection act, 2054: Consumers' right , quality of food
Income tax Act, 2058:
Labor Act, 2048: Minimum Pay, Dashin Bonus, Gratuity, Leave compensation, Health and security, social security,
Environmental protection Act, 2053: EIA before establishment of company
Children's Act 2048: International standard for child right
Food Act, 2063: Prohibition of distributing harmful foods

8. Ethical business practices and issues in Nepal
Its really a matter of question
Perfect judgment, monitoring, evaluation of business activities, business movement, their advertisement, claimed on specifications… matter of question
Public consent on looking after actual content on the product, expiry evaluation, …. Nominal
Quality testing only in Medicine…. Food grade product, drinking water, daily consumable goods, vegetables… quality issues
Quality of construction materials, …

9. Corporate governance system in Nepalese organizations
Banks have attempted to maintain CG as per NRB guidelines and standards.
Industries have made legal attempt as per the norms of Company Registrar office and their relevant governing bodies
Judiciary has also helped in great way by enacting several laws and regulations
NEPSE listed companies are publishing their annual reports and activities
Organizations have made open information disseminating system
Public awaring institutions have given priority on CG activities to the organizations

10. Business Ethics Issues
Corruption: main ethical challenges (Global Integrity report 2006, corruption consumes 3 to 4% of the country's GDP)
Nepali values and culture: loyalty and clean activities.
Transparency
Tax evasion (Tax avoiding): Tax evasion should be considered as theft
Nepotism and favoritism

11. Suggestions for improving existing ethical practices and corporate governance system in Nepal
Use of IT: for great tranparency in system that can eliminate corruption
Comply with local laws: for employee and employers
Report Breaches: Speak against any breach of laws, regulations and code of conduct
Reject Bribery and corruption:
Education:
NRB should come with higher CG standards for Banks
Company Registrar office, Ministry of Industry have to play key role on establishing CG standards
Transparency on activities, online reporting system and report presentation have to made in practice
There is need to create awareness about CG
Partnership among all stakeholders including private sector, employees, local communities, government is not effective
Very few corporate houses are involved CG and CSR activities