Section 39: Identification of sick industries

1) If an industry which has been in operation for a minimum of five years after the date of commencement of its commercial production or transaction and in a capacity that is thirty percent or less of its installed capacity for the last three consecutive years because of a circumstance beyond control but not because of its intentional default or managerial weakness is being operated in the loss for the three consecutive years, the Government of Nepal may declare such an industry as a sick industry on the basis of such criteria and on the pursuance of such procedures as prescribed.

2) If it appears from the scheme or project proposal submitted by an industry in a state of closure upon being sick under subsection (1) and a study carried out by the Ministry that the industry
may revive its operation if a certain exemption, facility or concession is provided to it. The Government of Nepal may provide such exemption, facility or concession as prescribed for a certain period for the rehabilitation, reconstruction and management of such an industry.

3) If a cooperative makes a proposal, with the consent of the investor, for the operation of any industry declared sick by the Government of Nepal under subsection (1), the industry may be
caused to be operated through such a cooperative subject to the prescribed terms, having regard to, inter alia, the capacity of the cooperative, appropriateness and feasibility.