Nepal Supreme Court Upholds Personal Accountability for Major Shareholders in Corporate Loan Defaults
Summary
Nepal's Supreme Court has upheld the authority of Nepal Rastra Bank to hold major shareholders and directors personally accountable for a company's unpaid loans, preventing misuse of limited liability.
Key Points
- The Supreme Court of Nepal validated Nepal Rastra Bank’s power to hold major shareholders and directors personally liable for unpaid company debts.
- Individuals with a 15% or greater stake and board members of blacklisted companies can be personally placed on the credit blacklist.
- The ruling addresses the misuse of limited liability to avoid loan repayments, aligning with practices in India and the UK.
- Due process must be followed, allowing individuals to explain before blacklisting, balancing enforcement with fairness.
