CHAPTER 5: REGULATORY ENVIRONMENT

5.1 NEPAL ENGINEERING COUNCIL ACT 2080 2079 2075 2074 2073 2072 2071 2069

NEC Act 2055 BS (2000 AD) — Key Provisions 2074

The Nepal Engineering Council Act 2055 BS was enacted to regulate the engineering profession in Nepal. Key provisions include:

Formation and Composition of NEC

• NEC is a statutory/autonomous body established under the NEC Act 2055
• Headed by a Chairperson appointed by Government of Nepal
• Comprises representatives from government, engineering academia, NEA, and senior engineers
• Registrar serves as Member Secretary
• Council tenure: 4 years

Powers and Functions of the Council

1. Register engineers in appropriate categories
2. Grant, renew, suspend, or cancel engineering licenses
3. Formulate code of conduct for engineering professionals
4. Take disciplinary action against engineers violating professional standards
5. Recognize/accredit engineering degree programs
6. Set minimum standards for engineering education
7. Advise the Government on engineering policy matters
8. Determine fees for registration, renewal, and other services
9. Maintain a register of all licensed engineers in Nepal

Jurisdiction & Scope of NEC 2073 2072

Why Should Engineers Not Practice Without a License? 2079

Engineer Licensing Process (According to NEC Act) 2079

Registration of engineers is done into one of three categories:

Application Documents Required

1. Attested copies of Academic Certificates
2. SLC mark sheet
3. Character certificate of SLC
4. Intermediate / 10+2 Transcript
5. Character certificate of Intermediate / 10+2
6. B.E. Provisional Certificate
7. B.E. Transcript
8. Character certificate of B.E.
9. Attested copy of Citizenship

Nepal Engineering Council (NEC) — Key Functions 2073 2072 2071 2069

• Registration of engineers in Nepal
• Licensing of engineering professionals
• Regulation of engineering profession and practices
• Code of conduct enforcement for engineers
• Disciplinary action against engineers violating professional standards
• Recognition of engineering degrees/programs
• Setting standards for engineering education and practice

NEC Code of Conduct 2076 2074

Engineers registered with NEC must:

1. Act with integrity and honesty in professional practice
2. Practice only in areas of competence
3. Not engage in corrupt practices (bribery, favoritism)
4. Maintain confidentiality of client information
5. Not issue statements or certifications that are misleading or false
6. Place public safety above personal interest
7. Not advertise in a misleading manner
8. Maintain professional relationships with clients, contractors, and fellow engineers
9. Keep up-to-date with professional development (CPD)
10. Report any unethical behavior of fellow professionals

Difference between NEA and NEC 2080 2075

5.2 LABOUR LAW 2080 2079 2078 2074 2073 2072 2071 2070

Labour Act 2074

Labour law is concerned with the rights, interests, facilities, and safety of workers and employees working in enterprises of various sectors.

Why Should Engineers Be Aware of Labour Law? 2079 2071

Scenario: What to Do If a Construction Worker Dies at Site 2071

Key Definitions

Types of Employment 2080

1. Regular Employment — permanent/ongoing
2. Work Based Employment — for completion of certain work or service
3. Time Bound Employment — for a determined time period
4. Casual Employment — 7 or less days in a month
5. Part Time Employment — 35 or less hours in a week

Working Hours Provisions 2080 2073

Leave Provisions 2078

Health and Safety Provisions 2080 2070

The manager of an enterprise is responsible for:

1. Keeping working place clean
2. Managing sufficient air, light, and temperature
3. Managing waste disposal
4. Cleaning all foul dust, air, vapour, and hazardous substances
5. Preventing loud noise from any source
6. Providing 15 cu.m. space per worker (only 4m height from floor considered)
7. Arranging potable water
8. Arranging separate toilets for male and female
9. Making work area non-smoking (depending on nature of work)
10. Arranging annual medical checkup for enterprises with health hazard probability

Additional Safety Provisions

• Protection of eyes
• Protection from chemicals
• Safety against fire
• Hazardous machines to be fenced
• Regulations for lifting heavy weights
• Pressure plant safety orders
• Notice provisions

Provident Fund, Gratuity & Insurance

• Provident fund — contribution from both employer and employee
• Gratuity — right to receive upon retirement/completion of service
• Medical insurance — provision for health coverage
• Accidental insurance — mandatory for hazardous work

Special Provisions for Construction Business

• Provision for construction tools
• Special arrangement at temporary construction sites
• Accident insurance mandatory
• Safety arrangements

Disciplinary Action for Misconduct 2078

5.3 INTELLECTUAL PROPERTY RIGHT 2081 2079 2078 2077 2076 2074 2073 2072 2071 2070 2069

Definition 2079 2078 2073

Intellectual Property (IP): Creations of the mind — inventions, literary and artistic works, designs, symbols, names, and images used in commerce. Like real/physical property, creators have the right to own, use, and protect their intellectual creations. Others need permission before using IP; otherwise legal action can be taken.

Why Is Intellectual Property Right Necessary? 2079

Types of Intellectual Property

Copyright (Copyright Act 2059) 2081 2079 2078 2074 2070 2069

Definition: The sole right to produce or reproduce a work or any substantial part thereof in any material form. Exists in every original literary, dramatic, musical, and artistic work.

Three Basic Areas

1. Attribution & Integrity — Author’s name must be attributed; work unchanged without permission
2. Ownership, Reproduction & Distribution — Commercial exploitation rights shared between author and publishers
3. Display & Performance — Rights in unique creative performance/interpretation

Ownership

• Copyright vests in the author of the work
• Can be transferred wholly or partially to another person

Registration Process

1. Apply to the Office of the Registrar
2. Submit evidence of ownership and prescribed registration fee
3. Registrar examines and issues certificate

Term of Copyright

• During lifetime of author + 50 years after death
• For anonymous/pseudonymous works: 50 years from first publication
• For applied art & photographs: 25 years from creation
• For works published after author’s death: 50 years from publication

License Provisions

• Copyright holder can grant license for publication (whole or part)
• Registrar can grant license if owner fails to republish a needed work
• Translation license for Nepali language can be granted
• Public exhibition and library reproduction licenses available

Fair Use (Not Unauthorized)

• Private study, research, criticism, review
• News/magazines, radio diffusion, court proceedings
• Academic institution use with proper attribution
• Single copy for personal use (import)

Punishment for Infringement

Patent (Patent, Design & Trademark Act 2022) 2074 2071 2069

Definition: Rights related to new inventions — theory, principle, formula, process, technology, or composition of matter.

Criteria for Patent

• Must be new (novelty)
• Must be inventive (non-obvious)
• Must be useful (industrial applicability)

Application Requirements

1. Name, address, and profession of inventor
2. Conditions of acquiring right from inventor (if not self-invented)
3. Method of operation/utilization
4. Principle or formula (if applicable)
5. Drawings and sketches (if necessary)
6. Prescribed application fee

Un-patentable Inventions

• Already registered in someone else’s name
• Not invented by applicant and right not acquired from inventor
• Adverse effect on health, conduct, morale, or national interest
• Violates prevailing laws of Nepal

Examination: Department examines for novelty, usefulness, expert advice if needed.

Term: 7 years from registration; renewable twice (total 21 years).

Punishment: Fine NRs 2,50,000–5,00,000 + confiscation of related materials.

Industrial Design 2078 2073

Definition: Shape, form, pattern, color, or combination used for goods (aesthetic/ornamental, not purely utilitarian).

Application: Submit description, drawings, sketches, and 4 copies of model.

Un-registrable: Adverse effect on dignity/morale/national interest; already registered.

Term: 5 years from registration; renewable twice (total 15 years).

Punishment: Fine up to NRs 50,000 + confiscation.

Trademark 2077 2076 2073 2069

Definition: Word, symbol, picture, or combination used to distinguish goods of one firm from others.

Service Mark 2077 2076

Definition: A service mark is similar to a trademark but is used to identify and distinguish services rather than goods.

Difference: Trademark vs Service Mark

Application Requirements

• Copy of business registration/license
• Four copies of trademark model
• Authorization letter (if agent applies)
• Foreign applicants: certified foreign registration + Nepal service address
• Prescribed application fee
• Separate application for different categories

Conditions for Refusal

• Adverse effect on dignity of individual/institution
• Against public morality/national interest
• Affects goodwill of another’s trademark
• Already registered by another person
• Contrary to international conventions (Nice Classification)

Registration: After examination → registered → certificate issued.

Term: 7 years from registration; indefinite renewal (as long as timely renewed).

Cancellation: If conditions of refusal exist; if not used within 1 year of registration.

Punishment: Fine up to NRs 1,00,000 + confiscation.

Comparison: Copyright vs Patent vs Design vs Trademark 2072

5.4 BUILDING CODES AND BYLAWS 2072 2070

Building Act 2055 (1998)

Enacted to regulate building construction for safety from earthquake, fire, and natural calamities. Building Rules 2062 (2005) followed. National Building Code (NBC) 2060 provides technical standards.

Classification of Buildings (NBC 000)

Key NBC Codes

Building Permission

Mandatory from concerned Valley Development Corporation, Urban Development Office, Metropolitan/Sub-metropolitan/Municipal Office.

Building Bylaws 2072

Set of guidelines for design of buildings, orderly planning, and safety standards. Prepared by town development committees and followed by municipalities.

Objectives

1. Design buildings as per climatology, topography, acoustic & thermal aspects
2. Develop necessary physical infrastructure
3. Use new land for future expansion
4. Maintain and show civilization
5. Create comfortable living standards
6. Conserve socio-economic, cultural, architectural & historical values

Three Components: Building, Planning, Enforcement

Key Bylaw Elements

Building Segment

• Right of Way (ROW) — Right to make a way over land for transportation (footway, carriageway, highway)
• Set Back — Distance a building is set back from street, road, river, or other area needing protection
• Floor Area Ratio (FAR) — Total covered area on all floors ÷ plot area
• Ground Coverage Ratio (GCR) — Ground floor area ÷ plot area
• Height of Building — Maximum allowable height
• Cultural heritage zone guidelines
• Clearance from important sites

Planning Segment

• Land use, plot size, area depth/width ratio, cul-de-sac length, open space area, public facility requirements

Enforcement Segment

• Building design stage → Construction stage → Completion certificate → Use of facility

5.5 COMPANY REGISTRATION 2079 2078 2075 2073 2072 2071 2069

Business Law 2073 2072 2071

Business: Human activities related to production, sales/purchase, or exchange of goods/services with profit-making objectives.

Law: Norms drafted and enforced by state/local government to regulate activities. All laws regulating business are business law.

Sources of Business Law in Nepal

1. English business law (Common law, Law of merchants, Principles of equity, Statute of legislature, Custom and usage)
2. Nepalese statutory acts
3. Judicial decisions
4. Writings/opinions of scholars & commercial treaties/agreements

Types of Business Enterprises 2079

1) Sole Business (Private Registration Act 2014)

Characteristics: Sole ownership, sole management/control, unlimited liability, limited area, less formalities, voluntary origin/end.

Limitations: Unlimited liability, limited capital, uncertain future, no legal status, impractical decisions, lack of specialization, loss in absence of key person.

2) Partnership Business (Partnership Act 2020)

Characteristics: Joint ownership, unlimited liability, profit/loss sharing, based on agreement, members have no separate existence, joint management, joint agency, right cannot be transferred.

Limitations: Unlimited liability, uncertain existence, misunderstanding possibility, limited capital, difficult ownership transfer, slow decisions, lack of public faith.

3) Company Business (Company Act 2053)

Characteristics: Legal artificial person, perpetual existence, limited liability, common seal, voluntary association, capital via shares, transferable shares, management by representatives, financial statement publication, unlimited capital, public faith.

Limitations: Difficulty in formation, lack of personal interest, lack of secrecy, possibility of fraud, shareholder exploitation, group conflict, absence of prompt decision.

Private vs Public Company 2073 2069

Necessities / Importance of Company Registration 2075

Company Registration Procedure in Nepal 2078 2075 2073 2072

1. Name reservation — Apply to Office of Company Registrar; name must be unique
2. Preparation of documents — Memorandum of Association (MOA), Articles of Association (AOA)
3. Application submission — Submit to Office of Company Registrar with: MOA and AOA, details of promoters/shareholders, copy of citizenship certificates, registered office address proof, share capital details
4. Registration fee payment — As prescribed
5. Certificate of incorporation — Issued upon successful registration
6. PAN/VAT registration — Register with Inland Revenue Department
7. For public company — Additional requirement: Certificate of Commencement of Business

Registration Process of Engineering Consulting Firm 2073

To register an engineering consulting firm in Nepal, the following steps are required:

1. Company Registration:
   • Register the firm at the Office of Company Registrar under Company Act 2063
   • Choose firm type: Private Limited (Pvt. Ltd.) is most common for consulting firms
   • Prepare MOA and AOA specifying engineering consultancy as objective
   • Obtain Certificate of Incorporation
2. Tax Registration:
   • Register for PAN at Inland Revenue Department
   • Register for VAT if annual turnover exceeds threshold
3. NEC Registration:
   • Register the firm with Nepal Engineering Council
   • At least one NEC-licensed engineer must be associated with the firm
   • Submit proof of engineer’s NEC registration certificate
4. Professional Body Registration:
   • Register with Society of Consulting Architectural and Engineering Firms (SCAEF) Nepal
   • Membership in Nepal Engineers’ Association (NEA) recommended
5. Category Classification:
   • Apply for categorization (A, B, C, D) based on technical manpower, experience, and financial capacity
   • Category determines the scale/value of projects the firm can bid for
   • Renewal required periodically
6. Local Government:
   • Obtain local business license from concerned municipality
   • Office space/premises verification

5.6 CYBER LAW (Electronic Transactions Act 2063)

Provides legal framework for computer, information technology, and e-commerce/e-government use in Nepal. Effective from December 8, 2006.

Key Provisions of ETA 2063

1. Provision for electronic record and digital signature
2. Transmission, receipt, and acceptance of electronic records
3. Controller and Certifying Authority provisions
4. Digital signature and license
5. Role, duty, and responsibility of subscriber
6. Government use of electronic records and digital signatures
7. Network service provisions
8. Computer crimes description and punishment provisions
9. Information Technology Tribunal and Appellate Tribunal

Key Definitions

SUMMARY TABLES

Important Topics and Weightage

Key Points to Remember

NEC Act

• 3 categories — General A (BE), Professional B (ME), Foreign C (BE + 10 yrs)
• NEA — professional association (1962), voluntary, no enforcement power
• NEC — statutory body (2000/Act 2055), mandatory registration, disciplinary powers
• NEC can grant, suspend, cancel registration
• NEC Act 2055: composition (Chairperson + reps from govt/academia/NEA), 4-year tenure
• Jurisdiction: all engineering branches, govt & private, foreign engineers in Nepal
• Scope: registration, licensing, accreditation, code enforcement, complaints investigation
• Why license needed: public safety, accountability, legal requirement, quality assurance, international recognition

Labour Law (Act 2074)

• Working hours — 8 hrs/day, 48 hrs/week; no continuous > 5 hrs; 30 min break
• Overtime — 1.5× wage; max 4 hrs/day, 24 hrs/week; cannot force
• Leave — 1 day/week; 13 public holidays; 1 home leave per 20 working days; 12 sick leave (half-pay); 98 days maternity
• Space — 15 cu.m. per worker (4m max height counted)
• 5 types of employment — Regular, Work-based, Time-bound, Casual (≤7 days/month), Part-time (≤35 hrs/week)
• Discipline — Warning → Suspension → Termination
• Construction — special provisions for tools, safety, accident insurance
• Why be aware — legal compliance, worker safety responsibility, accident liability, contract management
• Worker death at site — stop work, notify police/Labour Office/family, document scene, process insurance, compensate, investigate cause, implement corrective measures

Intellectual Property

• Copyright — lifetime + 50 years; Copyright Act 2059; penalty NRs 10K–1L / 6 months
• Patent — 7 years, 2 renewals (21 yrs); must be novel/inventive/useful; penalty NRs 2.5L–5L
• Design — 5 years, 2 renewals (15 yrs); penalty up to NRs 50K
• Trademark — 7 years, indefinitely renewable; penalty up to NRs 1L; identifies goods
• Service Mark — same as trademark but identifies services; same registration process and term
• 35 days for opposition/complaint after publication (patent/design/trademark)
• Why IPR necessary — encourages innovation, protects creators, economic development, technology transfer, consumer protection, international trade (WIPO/WTO)

Building Codes

• Building Act 2055 + Building Rules 2062 + NBC 2060
• 4 categories — International State-of-Art, Professionally Engineered (>1000 sq.ft., >3 stories, >4.5m span), MRT (<1000, ≤3, <4.5m), Rural Guidelines (≤2 stories)
• NBC 105 — Seismic design; NBC 114 — Construction safety
• Building permission mandatory from concerned authority

Building Bylaws

• FAR = Total floor area ÷ Plot area
• Set Back — distance from road/river/boundary
• ROW — right of way for transportation
• 3 components — Building, Planning, Enforcement

Company Registration

• Sole — single owner, unlimited liability, Private Registration Act 2014
• Partnership — 2+ persons, unlimited liability, Partnership Act 2020
• Company — legal person, limited liability, Company Act 2053
• Private — 1–50 shareholders, Pvt. Ltd., cannot offer shares to public
• Public — min 7 shareholders, Limited, must publish financials
• Registration: Name reservation → MOA/AOA → Apply → Fee → Certificate of Incorporation → PAN/VAT
• Necessities: legal identity, limited liability, credibility, access to finance, govt contract eligibility, tax compliance, perpetual existence
• Consulting firm: Company registration + PAN/VAT + NEC registration (licensed engineer) + SCAEF + category classification (A/B/C/D) + local license

Cyber Law (ETA 2063)

• Effective December 8, 2006
• Covers electronic records, digital signatures, certifying authority, computer crimes
• IT Tribunal and Appellate Tribunal for dispute resolution