Board of Directors in Company

The Board of Directors serves as the governing body of a company, playing a pivotal role in its management and oversight. In Nepal, the Board of Directors holds significant responsibilities in ensuring the company’s proper functioning, strategic direction, and compliance with legal and regulatory requirements. The Board acts as a bridge between the shareholders and the company management, representing the interests of shareholders while guiding the company’s overall direction.

The primary functions of the Board of Directors include:

1. Setting the company’s strategic goals and objectives
2. Overseeing the company’s financial performance and reporting
3. Appointing and supervising key executives
4. Ensuring compliance with legal and ethical standards
5. Protecting shareholders’ interests
6. Managing risks and opportunities

The Board of Directors in Nepal operates within a legal framework that defines its powers, duties, and responsibilities. Understanding the role of the Board is essential for effective corporate governance and the success of businesses in the Nepalese context.

Legal Framework Governing Board of Directors in Nepal

The legal framework governing the Board of Directors in Nepal is primarily established by the Companies Act, 2063 (2006). This Act provides the foundation for the formation, structure, and functioning of companies in Nepal, including the roles and responsibilities of the Board of Directors. Additionally, other laws and regulations that impact the Board’s operations include:

1. Securities Act, 2063 (2007)
2. Banks and Financial Institutions Act, 2073 (2017)
3. Nepal Rastra Bank Act, 2058 (2002)
4. Insurance Act, 2049 (1992)
5. Foreign Investment and Technology Transfer Act, 2075 (2019)

The Companies Act, 2063 (2006) outlines specific provisions related to the Board of Directors, including:

• Minimum number of directors required
• Qualifications and disqualifications for directors
• Appointment and removal procedures
• Powers and duties of the Board
• Conduct of Board meetings
• Fiduciary responsibilities of directors

For listed companies, additional regulations are imposed by the Securities Board of Nepal (SEBON) and the Nepal Stock Exchange (NEPSE). These regulations often include requirements for independent directors, audit committees, and enhanced disclosure obligations.

The legal framework in Nepal aims to ensure that the Board of Directors operates transparently, ethically, and in the best interests of the company and its shareholders.

Composition and Structure of the Board of Directors

The composition and structure of the Board of Directors in Nepal are governed by the Companies Act, 2063 (2006) and other relevant regulations. The Act provides guidelines on the minimum number of directors, qualifications, and the inclusion of independent directors for certain types of companies.

Key aspects of Board composition and structure in Nepal include:

1. Minimum Number of Directors:
   • Private companies: At least one director
   • Public companies: At least three directors
2. Maximum Number of Directors:
   • The maximum number of directors is typically specified in the company’s Articles of Association
   • For public companies, the maximum number is usually limited to 11 directors
3. Types of Directors:
   • Executive Directors: Involved in day-to-day management
   • Non-Executive Directors: Not involved in daily operations
   • Independent Directors: Required for public companies and have no material relationship with the company
4. Qualifications:
   • Directors must be at least 18 years old
   • Directors must be of sound mind
   • Directors must not be disqualified by law or court order
5. Diversity:
   • While not mandated by law, many companies in Nepal are encouraged to promote diversity in their Board composition, including gender diversity
6. Board Committees:
   • Audit Committee: Mandatory for public companies
   • Other committees (e.g., Remuneration, Nomination) may be formed as needed
7. Chairman of the Board:
   • Elected by the Board members
   • May be separate from the CEO/Managing Director role

The structure of the Board should be designed to ensure effective governance, oversight, and decision-making. Companies in Nepal are encouraged to adopt best practices in corporate governance, which often include a balanced mix of executive and non-executive directors, as well as independent directors to provide objective perspectives.

Appointment and Removal Procedures for Board Members

The appointment and removal of Board members in Nepal are governed by the Companies Act, 2063 (2006) and the company’s Articles of Association. The procedures ensure that qualified individuals are appointed to the Board and that there are mechanisms in place for their removal when necessary.

Appointment Procedures:

1. Election by Shareholders:
   • Directors are typically elected by shareholders at the Annual General Meeting (AGM)
   • Shareholders vote on proposed candidates
2. Appointment by the Board:
   • The Board may appoint additional directors between AGMs, subject to confirmation at the next AGM
3. Nomination Process:
   • Candidates may be nominated by existing Board members or shareholders
   • Some companies have a Nomination Committee to identify and recommend suitable candidates
4. Independent Directors:
   • For public companies, independent directors must be appointed as per regulatory requirements
   • Independent directors are often selected through a formal selection process
5. Filing Requirements:
   • Companies must file the necessary documents with the Office of the Company Registrar within 30 days of appointment

Removal Procedures:

1. Removal by Shareholders:
   • Shareholders can remove a director through a resolution passed at a general meeting
   • Special notice is required for such resolutions
2. Resignation:
   • Directors may voluntarily resign by submitting a written resignation to the Board
3. Automatic Disqualification:
   • Directors are automatically disqualified if they no longer meet the legal requirements (e.g., bankruptcy, unsound mind)
4. Board Resolution:
   • In some cases, the Board may have the power to remove a director, subject to the Articles of Association
5. Court Order:
   • In exceptional circumstances, a court may order the removal of a director
6. Notification Requirements:
   • The company must notify the Office of the Company Registrar within 30 days of any changes in directorship

The appointment and removal procedures aim to ensure transparency, accountability, and the selection of qualified individuals to serve on the Board of Directors in Nepalese companies.

Duties and Responsibilities of Board of Directors

The Board of Directors in Nepal has a wide range of duties and responsibilities as outlined in the Companies Act, 2063 (2006) and other relevant laws. These duties are designed to ensure that the company operates effectively, ethically, and in compliance with legal requirements.

Key duties and responsibilities include:

1. Strategic Direction:
   • Formulating and approving the company’s vision, mission, and long-term strategies
   • Setting corporate objectives and monitoring their achievement
2. Financial Oversight:
   • Approving annual budgets and financial plans
   • Reviewing and approving financial statements
   • Ensuring the integrity of financial reporting systems
3. Risk Management:
   • Identifying and assessing potential risks to the company
   • Implementing risk management strategies and internal control systems
4. Compliance:
   • Ensuring compliance with laws, regulations, and ethical standards
   • Overseeing the company’s corporate governance practices
5. Executive Appointment and Supervision:
   • Appointing, evaluating, and if necessary, removing the CEO and other key executives
   • Approving succession plans for senior management
6. Shareholder Relations:
   • Protecting and promoting shareholders’ interests
   • Ensuring effective communication with shareholders
7. Corporate Social Responsibility:
   • Overseeing the company’s CSR initiatives and environmental policies
8. Performance Monitoring:
   • Regularly reviewing the company’s operational and financial performance
   • Evaluating the effectiveness of corporate strategies
9. Resource Allocation:
   • Approving major capital expenditures, acquisitions, and divestitures
10. Policy Formulation:
    • Developing and approving key corporate policies
11. Ethical Leadership:
    • Setting the tone for ethical behavior throughout the organization
    • Addressing conflicts of interest
12. Stakeholder Engagement:
    • Balancing the interests of various stakeholders, including employees, customers, and the community
13. Disclosure and Transparency:
    • Ensuring timely and accurate disclosure of material information
14. Board Effectiveness:
    • Conducting regular Board evaluations
    • Ensuring proper Board composition and succession planning

These duties and responsibilities require Board members to act with diligence, care, and in good faith to promote the best interests of the company. Directors must exercise their powers for the purposes for which they were conferred and not for any collateral purpose.

Decision-Making Process and Board Meetings Procedures

The decision-making process and Board meeting procedures in Nepal are governed by the Companies Act, 2063 (2006) and the company’s Articles of Association. These procedures ensure that Board decisions are made in a structured, transparent, and legally compliant manner.

Decision-Making Process:

1. Agenda Setting:
   • The Chairman, in consultation with the CEO and Company Secretary, prepares the meeting agenda
   • Directors may request items to be included in the agenda
2. Information Distribution:
   • Relevant documents and information are circulated to Board members in advance of the meeting
3. Discussion and Deliberation:
   • Directors engage in open discussion and debate on agenda items
   • Management may be invited to present information or answer questions
4. Voting:
   • Decisions are typically made by majority vote
   • Each director usually has one vote, with the Chairman having a casting vote in case of a tie
5. Resolution Passing:
   • Formal resolutions are passed to record Board decisions
   • Resolutions may be passed at meetings or by circular resolution

Board Meeting Procedures:

1. Frequency of Meetings:
   • The Board must meet at least once every three months
   • Additional meetings may be called as needed
2. Notice of Meeting:
   • Proper notice must be given to all directors as per the Articles of Association
   • Notice typically includes the date, time, venue, and agenda of the meeting
3. Quorum:
   • A quorum (minimum number of directors present) is required for a valid meeting
   • Typically, one-third of the total number of directors or two directors, whichever is higher
4. Attendance:
   • Directors are expected to attend Board meetings regularly
   • Attendance can be in person or through video/teleconferencing
5. Minutes:
   • Detailed minutes of the meeting must be recorded
   • Minutes should include decisions made, voting results, and key discussions
6. Confidentiality:
   • Board discussions and decisions are typically confidential
   • Directors must maintain confidentiality of sensitive information
7. Conflict of Interest:
   • Directors must disclose any conflicts of interest
   • Directors with conflicts may be required to abstain from voting on related matters
8. Committee Meetings:
   • Board committees (e.g., Audit Committee) may hold separate meetings
   • Committee recommendations are typically presented to the full Board for approval
9. Annual General Meeting (AGM):
   • The Board is responsible for calling and conducting the AGM
   • Directors present the company’s performance and future plans to shareholders at the AGM
10. Extraordinary General Meetings (EGM):
    • The Board may call EGMs for urgent matters requiring shareholder approval

These procedures ensure that Board meetings are conducted efficiently and that decisions are made in a manner that promotes good corporate governance and compliance with legal requirements.

Fiduciary Duties of Directors Under Nepalese Law

Fiduciary duties of directors in Nepal are primarily derived from the Companies Act, 2063 (2006) and common law principles. These duties require directors to act in good faith, with loyalty and care towards the company and its shareholders. Understanding and fulfilling these fiduciary duties is essential for directors to avoid legal liabilities and ensure proper corporate governance.

Key fiduciary duties of directors under Nepalese law include:

1. Duty of Good Faith:
   • Directors must act honestly and in good faith for the benefit of the company as a whole
   • They should not act for personal gain or to benefit a particular group of shareholders
2. Duty of Care and Diligence:
   • Directors must exercise reasonable care, skill, and diligence in performing their duties
   • They should make informed decisions based on adequate information and proper consideration
3. Duty of Loyalty:
   • Directors must act in the best interests of the company
   • They should avoid conflicts between their personal interests and those of the company
4. Duty to Act Within Powers:
   • Directors must act within the powers conferred by the company’s Articles of Association and applicable laws
   • They should not exceed or abuse their authority
5. Duty to Avoid Conflicts of Interest:
   • Directors must disclose any personal interest in transactions involving the company
   • They should abstain from voting on matters where they have a conflict of interest
6. Duty of Confidentiality:
   • Directors must maintain the confidentiality of sensitive company information
   • They should not use confidential information for personal benefit or disclose it to third parties
7. Duty to Exercise Independent Judgment:
   • Directors should form their own opinions and not be unduly influenced by others
   • They should critically evaluate information and make decisions based on their own assessment
8. Duty to Act for Proper Purpose:
   • Directors must use their powers for the purposes for which they were conferred
   • They should not use their position for improper or collateral purposes
9. Duty to Comply with Laws and Regulations:
   • Directors must ensure that the company complies with all applicable laws and regulations
   • They should stay informed about legal and regulatory requirements affecting the company
10. Duty to Maintain Proper Books and Records:
    • Directors must ensure that proper accounting records are maintained
    • They should oversee the preparation of accurate financial statements
11. Duty to Act in the Interests of Employees:
    • Directors should consider the interests of employees in their decision-making
    • They should ensure compliance with labor laws and promote a safe work environment
12. Duty to Consider Creditors’ Interests:
    • When the company is approaching insolvency, directors must consider the interests of creditors

These fiduciary duties are ongoing and apply to all decisions and actions taken by directors in their official capacity. Breach of these duties can result in personal liability for directors, including financial penalties and disqualification from holding directorship positions.

Nepalese courts have the authority to interpret and enforce these fiduciary duties, often looking to international best practices and case law for guidance. Directors are advised to seek legal counsel when faced with complex situations involving potential conflicts or breaches of fiduciary duties.

Liability and Accountability of Board Members

Board members in Nepal are subject to various forms of liability and accountability under the Companies Act, 2063 (2006) and other relevant laws. Understanding these liabilities is crucial for directors to perform their duties diligently and avoid legal consequences.

Types of Liability:

1. Civil Liability:
   • Directors may be held personally liable for losses caused to the company due to their negligence or breach of duties
   • They may be required to compensate the company or shareholders for such losses
2. Criminal Liability:
   • Directors can face criminal charges for offenses such as fraud, insider trading, or willful misconduct
   • Penalties may include fines and imprisonment
3. Regulatory Liability:
   • Directors may face penalties imposed by regulatory bodies for non-compliance with securities laws, tax regulations, or other statutory requirements
4. Personal Liability:
   • In certain cases, the corporate veil may be pierced, making directors personally liable for company debts or obligations

Specific Areas of Accountability:

1. Financial Reporting:
   • Directors are accountable for the accuracy and completeness of financial statements
   • They may be liable for misstatements or omissions in financial reports
2. Statutory Compliance:
   • Directors must ensure compliance with all applicable laws and regulations
   • Failure to comply can result in personal liability for directors
3. Fiduciary Duties:
   • Breach of fiduciary duties can lead to legal action against directors
   • This includes duties of loyalty, care, and good faith
4. Corporate Governance:
   • Directors are accountable for maintaining proper corporate governance practices
   • Failure to implement adequate internal controls can lead to liability
5. Environmental and Social Responsibility:
   • Directors may be held accountable for environmental violations or social irresponsibility of the company
6. Insider Trading:
   • Directors are liable for any insider trading activities or failure to prevent such activities within the company
7. Wrongful Trading:
   • Directors can be held personally liable if they allow the company to continue trading when they knew or should have known that insolvency was unavoidable

Mechanisms of Accountability:

1. Shareholder Actions:
   • Shareholders can bring derivative actions against directors on behalf of the company
   • Direct actions can be brought for personal losses suffered by shareholders
2. Regulatory Oversight:
   • Regulatory bodies like the Securities Board of Nepal (SEBON) can investigate and penalize directors for non-compliance
3. Criminal Prosecution:
   • Law enforcement agencies can prosecute directors for criminal offenses related to their duties
4. Disqualification:
   • Directors may be disqualified from holding directorship positions for serious breaches of duty
5. Reputational Consequences:
   • Directors may face reputational damage, affecting their future career prospects

Protections for Directors:

1. Business Judgment Rule:
   • Directors are protected from liability for decisions made in good faith and with due care
2. Indemnification:
   • Companies may indemnify directors against certain liabilities incurred in their official capacity
3. Directors and Officers (D&O) Insurance:
   • Many companies provide D&O insurance to protect directors from personal financial loss
4. Statutory Defenses:
   • The Companies Act provides certain defenses for directors acting in good faith

To mitigate liability risks, directors should:

• Stay informed about their legal duties and responsibilities
• Actively participate in Board meetings and decision-making processes
• Seek expert advice when necessary
• Maintain accurate records of Board deliberations and decisions
• Ensure proper disclosure of conflicts of interest
• Regularly review and update corporate governance practices

By understanding their liabilities and taking proactive steps to fulfill their duties, directors can effectively manage their risks while contributing to the success of their companies.

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Conflict of Interest Regulations for Board Directors

Conflict of interest regulations for Board directors in Nepal are primarily governed by the Companies Act, 2063 (2006) and other relevant laws. These regulations aim to ensure that directors act in the best interests of the company and maintain transparency in their dealings.

Key aspects of conflict of interest regulations include:

1. Disclosure Requirements:
   • Directors must disclose any direct or indirect interest in contracts or arrangements involving the company
   • Disclosure should be made at the first Board meeting where the matter is discussed
2. Abstention from Voting:
   • Directors with a conflict of interest must abstain from voting on matters related to their interest
   • They should not participate in discussions on such matters unless requested by the Board
3. Recording in Minutes:
   • All disclosures of interest must be recorded in the minutes of Board meetings
   • The nature and extent of the interest should be clearly stated
4. Annual Disclosure:
   • Directors are required to provide an annual disclosure of their interests in other companies or entities
5. Related Party Transactions:
   • Transactions with related parties must be disclosed and approved as per regulatory requirements
   • For listed companies, additional disclosure and approval processes may apply
6. Prohibition on Insider Trading:
   • Directors are prohibited from using confidential information for personal gain through insider trading
7. Duty to Act in Company’s Best Interest:
   • Directors must prioritize the company’s interests over their personal interests or those of related parties
8. Restrictions on Holding Multiple Directorships:
   • There may be limitations on the number of directorships a person can hold, especially in listed companies
9. Loans to Directors:
   • Restrictions apply to loans or guarantees provided by the company to its directors or their relatives
10. Contracts with Directors:
    • Contracts between the company and its directors or firms in which directors are partners require special approval
11. Penalties for Non-Compliance:
    • Failure to comply with conflict of interest regulations can result in fines, removal from office, or disqualification
12. Whistleblower Protection:
    • Companies are encouraged to have mechanisms for reporting conflicts of interest, with protection for whistleblowers

Steps for Managing Conflicts of Interest:

1. Identification:
   • Directors should proactively identify potential conflicts of interest
2. Disclosure:
   • Prompt and full disclosure of any actual or potential conflicts
3. Evaluation:
   • The Board should evaluate the nature and extent of the conflict
4. Decision:
   • Determine whether the conflicted director should recuse themselves from discussions and decisions
5. Documentation:
   • Properly document all disclosures and decisions in Board minutes
6. Monitoring:
   • Regularly review and update conflict of interest policies and disclosures
7. Training:
   • Provide ongoing training to directors on conflict of interest issues

Best Practices for Managing Conflicts of Interest:

• Develop a comprehensive conflict of interest policy
• Maintain a register of directors’ interests
• Conduct regular reviews of potential conflicts
• Seek independent advice on complex conflict situations
• Ensure transparency in all dealings involving potential conflicts
• Implement a robust approval process for related party transactions

By adhering to these regulations and best practices, Board directors in Nepal can effectively manage conflicts of interest, maintain their fiduciary duties, and uphold the principles of good corporate governance.

Role of Board in Corporate Governance Practices

The Board of Directors plays a central role in establishing and maintaining effective corporate governance practices in Nepalese companies. Corporate governance encompasses the systems, principles, and processes by which companies are directed and controlled. The Board’s role in this area is critical for ensuring transparency, accountability, and ethical business practices.

Key aspects of the Board’s role in corporate governance include:

1. Setting the Tone at the Top:
   • Establishing a culture of integrity and ethical behavior
   • Demonstrating commitment to good governance practices
2. Developing Governance Policies:
   • Formulating and approving key governance policies and procedures
   • Regularly reviewing and updating these policies
3. Ensuring Compliance:
   • Overseeing compliance with laws, regulations, and internal policies
   • Implementing systems to monitor and report on compliance
4. Risk Management:
   • Identifying and assessing key risks facing the company
   • Implementing and overseeing risk management strategies
5. Financial Oversight:
   • Ensuring the integrity of financial reporting systems
   • Approving financial statements and monitoring financial performance
6. Stakeholder Relations:
   • Balancing the interests of various stakeholders
   • Ensuring effective communication with shareholders and other stakeholders
7. Board Composition and Structure:
   • Ensuring appropriate Board composition, including diversity and independence
   • Establishing and overseeing Board committees (e.g., Audit, Nomination, Remuneration)
8. Performance Evaluation:
   • Conducting regular evaluations of Board performance
   • Assessing the performance of individual directors and the CEO
9. Succession Planning:
   • Developing succession plans for key executive positions
   • Ensuring continuity in Board membership
10. Transparency and Disclosure:
    • Promoting transparency in corporate affairs
    • Ensuring timely and accurate disclosure of material information
11. Corporate Social Responsibility:
    • Overseeing the company’s CSR initiatives
    • Ensuring sustainable and responsible business practices
12. Internal Controls:
    • Establishing and monitoring internal control systems
    • Overseeing the internal audit function
13. Executive Compensation:
    • Determining appropriate compensation structures for executives
    • Aligning executive pay with company performance and shareholder interests
14. Conflict Management:
    • Implementing procedures to identify and manage conflicts of interest
    • Ensuring fair treatment of minority shareholders
15. Ethical Standards:
    • Developing and enforcing a code of ethics for the company
    • Setting standards for ethical business conduct

Specific Corporate Governance Practices:

1. Board Independence:
   • Ensuring an appropriate balance of executive and non-executive directors
   • Appointing independent directors as required by regulations
2. Board Meetings:
   • Conducting regular Board meetings with structured agendas
   • Ensuring adequate time for discussion and decision-making
3. Information Flow:
   • Establishing systems for timely and accurate information flow to the Board
   • Ensuring directors have access to necessary information for decision-making
4. Shareholder Rights:
   • Protecting and facilitating the exercise of shareholder rights
   • Ensuring equitable treatment of all shareholders
5. Audit Committee:
   • Establishing an effective Audit Committee with clear terms of reference
   • Overseeing the external audit process and internal controls
6. Nomination and Remuneration:
   • Implementing transparent processes for director nomination and remuneration
   • Aligning remuneration policies with long-term company interests
7. Risk Governance:
   • Establishing a risk management framework
   • Regularly reviewing and assessing risk management strategies
8. Stakeholder Engagement:
   • Developing policies for engaging with various stakeholders
   • Considering stakeholder interests in decision-making processes
9. Corporate Reporting:
   • Ensuring comprehensive and timely corporate reporting
   • Overseeing the preparation of annual reports and other disclosures
10. Governance Review:
    • Conducting periodic reviews of governance practices
    • Implementing improvements based on best practices and regulatory changes

By actively engaging in these corporate governance practices, the Board of Directors can enhance the company’s reputation, build trust with stakeholders, and contribute to long-term sustainable growth. Effective corporate governance not only ensures compliance with legal requirements but also promotes ethical business practices and creates value for shareholders and society at large.

Board’s Involvement in Strategic Planning and Risk Management

The Board of Directors plays a crucial role in strategic planning and risk management for companies in Nepal. These functions are essential for setting the company’s direction, achieving long-term objectives, and mitigating potential threats to the business.

Strategic Planning:

1. Vision and Mission:
   • Defining and periodically reviewing the company’s vision and mission statements
   • Ensuring alignment of strategic plans with the company’s core purpose
2. Strategic Objectives:
   • Setting long-term strategic objectives for the company
   • Approving strategic plans developed by management
3. Resource Allocation:
   • Ensuring appropriate allocation of resources to support strategic initiatives
   • Approving major capital expenditures and investments
4. Performance Monitoring:
   • Regularly reviewing progress against strategic objectives
   • Adjusting strategies based on changing market conditions or internal factors
5. Competitive Analysis:
   • Overseeing analysis of the competitive landscape
   • Ensuring the company maintains a competitive advantage
6. Innovation and Growth:
   • Encouraging innovation and exploring new growth opportunities
   • Approving expansion into new markets or product lines
7. Mergers and Acquisitions:
   • Evaluating and approving strategic mergers, acquisitions, or divestitures
   • Ensuring due diligence in M&A activities
8. Stakeholder Considerations:
   • Considering the interests of various stakeholders in strategic planning
   • Balancing short-term and long-term objectives

Risk Management:

1. Risk Identification:
   • Overseeing the process of identifying potential risks to the company
   • Ensuring a comprehensive risk assessment is conducted regularly
2. Risk Appetite:
   • Defining the company’s risk appetite and tolerance levels
   • Ensuring alignment of risk-taking activities with strategic objectives
3. Risk Mitigation Strategies:
   • Approving strategies to mitigate identified risks
   • Ensuring implementation of risk management policies and procedures
4. Internal Controls:
   • Overseeing the establishment and maintenance of effective internal control systems
   • Reviewing the adequacy of internal controls in managing risks
5. Compliance:
   • Ensuring compliance with legal and regulatory requirements
   • Overseeing the development of compliance programs
6. Financial Risks:
   • Monitoring financial risks, including liquidity, credit, and market risks
   • Approving financial risk management policies
7. Operational Risks:
   • Overseeing management of operational risks, including supply chain and technology risks
   • Ensuring business continuity and disaster recovery plans are in place
8. Reputational Risks:
   • Monitoring and managing risks to the company’s reputation
   • Overseeing crisis management strategies
9. Emerging Risks:
   • Identifying and assessing emerging risks, such as cybersecurity or climate change
   • Ensuring the company is prepared for future challenges
10. Risk Reporting:
    • Establishing systems for regular risk reporting to the Board
    • Reviewing risk reports and taking appropriate action
11. Risk Culture:
    • Promoting a risk-aware culture throughout the organization
    • Ensuring risk management is integrated into decision-making processes
12. External Audits:
    • Overseeing external audits and considering their findings in risk management

Integrating Strategic Planning and Risk Management:

1. Alignment:
   • Ensuring risk management strategies are aligned with strategic objectives
   • Considering risk factors in strategic decision-making
2. Scenario Planning:
   • Engaging in scenario planning to anticipate potential risks and opportunities
   • Developing contingency plans for various scenarios
3. Performance Metrics:
   • Incorporating risk-adjusted performance metrics in strategic planning
   • Balancing growth objectives with risk considerations
4. Regular Review:
   • Conducting regular reviews of both strategic plans and risk management strategies
   • Adjusting plans based on changing risk landscapes
5. Stakeholder Communication:
   • Communicating the company’s strategic direction and risk management approach to stakeholders
   • Ensuring transparency in reporting on strategic progress and risk mitigation efforts

By actively involving itself in strategic planning and risk management, the Board of Directors can guide the company towards sustainable growth while safeguarding against potential threats. This involvement ensures that the company’s strategies are well-considered, risk-aware, and aligned with long-term objectives.

Compensation and Remuneration of Board Members

Compensation and remuneration of Board members in Nepal are governed by the Companies Act, 2063 (2006), company bylaws, and regulatory guidelines. Proper structuring of Board compensation is crucial for attracting and retaining qualified directors while ensuring alignment with shareholder interests.