Legal Concern: Whether or not corporate property is subject to partition

Property law is practiced in Nepal in a variety of ways. We have peculiar practices such as corporate property, guthi, kipat, and many other land systems that are unique to the world.

Property law grants the property owner plenty of rights. It includes the right of possession, which allows you to live on the property. It also has the authority to exercise control over the property. It includes the right to enjoy the property without interference from third parties. The final right is the right to refuse other people’s interests or uses of the property.

What is the definition of property? How is property divided in Nepal?

Section 251 of the 2017 National Civil Code states that “any cash, goods, or action is a property if such cash, goods, or action can be used or transacted in, or the title to such cash, goods, or action can be transferred by purchase, sale, or otherwise, or any benefit can be derived therefrom.”

The civil code governs the exchange, sale, and modification of property in Nepal, and it is legally protected. If it is violated, it may be able to be protected by suing under tort and encroachment law.

Type of property

According to Section 252 of the 2017 National Civil Code, property is classified as follows:

  • Movable Property
  • Property ownership (movable or immovable).

List of movable properties

The following property is classified as immovable under Section 253 of the 2017 National Civil Code:

  • A structure, land, or building attached to it,
  • Any items that are permanently attached to a building or land,
  • A mine, stone, or mineral associated with a plot of land,
  • Groundwater, surface water, and natural water
  • A building or other structure built in such a way that it can float across a river, lake, or pond.
  • A standing tree, plant, or fruit tree, as well as the fruit or flower growing on such a tree, plant, or fruit tree.
  • A movable asset attached to an immovable asset.

List of movable properties

The following property is classified as immovable under Section 253 of the 2017 National Civil Code:

According to Section 254 of the National Civil Code of 2017, the following properties are classified as movable property.

  • Cash or goods capable of being exchanged for cash or foreign currency,
  • Jewelry made of gold or silver, Ratna, a gold or silver ornament, or a precious stone,
  • Any other good that can be moved that is not mentioned in clause (a) or (b) (b),
  • A bond, security, promissory note, bill of exchange, letter of credit, or other negotiable instrument, or the benefit derived from one of these instruments,
  • Intellectual property rights,
  • A right to security,
  • A commercial goodwill or franchise,
  • A property other than immovable property.

List of properties sorted by ownership

According to Nepali law, the following property has been divided according to the National Civil Code 2017.

(a) Personal property,

(b) Common property,

(c) Joint ownership,

d) Common property,

e) Public domain,

(f) Public property,

(g) Property held in trust.

Cooperatives are legally distinct legal entities that must be registered. Cooperatives are business organizations that are owned and run democratically by a group of people for the benefit of all. It is the legal entity that has been legally registered for the benefit of the community as a whole that has the authority to do the things that a human being is normally permitted to do under the law. Individuals can register their property in the name of the company. Personal property is referred to as corporate property if it is kept in the name of the company.

It is unclear whether corporate property can be divided as inheritance property in Nepal. It is critical to understand whether earned property held in the name of the company can be divided into property shares. It is critical to resolve the legal issue of birth rights or the inherent right of joint property that is transferred to a legal person after the formation of a company’s legal person. When someone registers a company in Nepal in order to start a business from joint property in order to advance or be successful.

Subsection 2(c) of Section 257 of the previous Civil Code and Civil Procedure 2074 states that joint agriculture, industries, business, and property earned from it, as well as added property from the business, are considered joint property. In this way, the individual creates a legal person and establishes a company, industries, businesses, and ventures.

Property ownership is a fundamental right under Nepal’s legal system. Because of technological limitations, the transfer of joint property to a company does not deprive the individual of property rights or the inherent right to use the property. The property kept in the name of the company is a property that can be divided.

Supreme Court Decision On Corporate Property

Anju Devi Gurung vs. Chandra Bahadur Gurung- NKP 2066 Number 10 Decision Number 8248

According to the decision, if the community school is established as a legal person in the form of Trust Property. There are established principles governing company-registered property. Privately run and registered in the form of a company, and the property under such schools, and the property under such schools, cannot be used or have exclusive rights, nor can it be sold or transferred like personal property.

It also states that the company will have its own rights in the form of a person, and as a result, the promoters and shareholders of the company will have to run the company within the legal provisions of the company act, MoA, and AoA. Property held in the company’s name cannot be divided or used in any way.

The government school, community school, schools established under educational guthi, and the public schools, community schools under the Education Act 2028, as well as the previous primary school, Middle schools, and High Schools under the Education Act 2028, are all mentioned in the preceding precedents (Obiter dicta). Such provisions are inapplicable to profit-making businesses.

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