Kathmandu, April 27: The Supreme Court of Nepal has upheld an important regulation of Nepal Rastra Bank, the central bank of Nepal. Now, if a company fails to repay its bank loan, shareholders owning 15% or more of that company can also be personally blacklisted.
According to Nepal Rastra Bank rules, large shareholders can be blacklisted if the company defaults on its loans. Advocate Mandira Adhikari had filed a petition in the Supreme Court arguing that “it is wrong to punish shareholders for the company’s wrongdoing.” She contended that a company’s debt should not extend to the personal liability of its shareholders.
However, a five-member constitutional bench led by Chief Justice Prakash Man Singh Raut rejected the petition. The court ruled that the central bank’s regulation is valid, stating that shareholders with more than 15% ownership are not just passive investors—they are key decision-makers who influence company operations. Therefore, they cannot escape accountability when a company defaults.
Key reasons given by the court:
1. Role of major shareholders: Those holding more than 15% shares can shape company policies and appoint directors. Holding them accountable helps protect depositors’ money.
2. No hiding behind corporate veil: The principle of limited liability cannot be misused to avoid repaying bank loans. Individuals controlling companies from behind the scenes must be held responsible.
3. International practice: Countries like India (Reserve Bank of India), the UK, and the Philippines have strict rules that restrict defaulters from the banking system. Nepal’s regulation aligns with such global standards.
4. Protection of small investors: Shareholders owning less than 15% are not affected, making the rule fair and reasonable.
The court also clarified that the central bank cannot arbitrarily blacklist individuals. Before blacklisting, the concerned person must be given a chance to respond. Authorities must verify whether the individual actually had a role in the company’s decisions. If someone is unfairly blacklisted, they retain the right to seek legal remedy.
This ruling is expected to curb large shareholders who default on loans and evade responsibility by citing company failure. It will help strengthen discipline in the banking sector and protect public deposits. #Nepal #blacklist
