HIGHLIGHTS OF ELECTRONIC TRANSACTIONS ACT, 2006

The Electronic Transactions Act 2063 was introduced in Nepal to ensure the reliability and security of electronic transactions including the control of unauthorized use of electronic records or alteration in such records through illegal manner. This article seeks to provide a brief overview of some of the distinctive provisions of the Act. The Electronic Transaction Act came into effect on 02 September 2006.

1) Electronic record and digital signature

The Act ensures every subscriber’s right to authenticate to any electronic record by their personal digital signature.

a. Legal validity

Electronic Record
Digital Signature
The Electronic Record is considered Legally Valid if the Information, Document, Record or the Matter is maintained in an Electronic Form as required by the Prevailing Laws upon Fulfillment of procedures under the Act or its rules.
The Digital Signature is considered Legally Valid if the Information, Document, record to be certified by affixing signature or any document to be signed by any person is certified by Digital Signature as required by the Prevailing Laws upon Fulfillment of Procedures under the Act or its Rules.

2) License for certifying authority

An application with required documents must be submitted to the Controller appointed pursuant to the Act to obtain license as a “Certifying Authority”. The license must be renewed every year by filing an application in the prescribed format to the Controller at least 2 months prior to the expiry period.

3) Digital signature and certificates

3.1 Procedure of obtaining digital signature certificate

  1. a. An application must be submitted to the Certifying Authority along with the applicable fees.
  2. b. Certifying Authority must issue a digital signature certificate within 7 days affixing their signature if it decides to issue such certificate.
  3. c. If the Certifying Authority decides to reject the application, the applicant must be notified with the reasons for rejection within 7 days.

3.2 Suspension of certificate

The certificate may be suspended in following conditions:

  1. a. If the subscriber obtaining the certificate or any person authorized to act on behalf of such a subscriber, requests to suspend the certificate;
  2. b. If it is found necessary to suspend the certificate that contravenes public interest;
  3. c. If it is found that significant loss might be caused to those persons who depend on the certificate by the reason that provisions of this Act or the rules framed hereunder were not followed at the time of issuance of the certificate; or
  4. d. If the Controller instructs to suspend the certificate having specified the aforementioned grounds.

3.3 Revocation of certificate

The certificate may be revoked in following conditions:

  1. Where the subscriber or any other person authorized by such person request to revoke a certificate;
  2. If it is necessary to revoke in a certificate that contravenes the public interest;
  3. Upon the death of the subscriber;
  4. Upon the insolvency, winding up or dissolution of the company or corporate body under the prevailing laws, where the subscriber is a company or a corporate body;
  5. If it is proved that a requirement for issuance of the certificate was not satisfied;
  6. If a material fact represented in the certificate is proved to be false; or
  7. If a key used to generate key pair or security system was compromised in a manner that affects materially the certificate’s reliability.

4) Cybercrimes and Punishment in Nepal (Electronic Transaction Act 2063)

Cybercrimes
Punishment
Piracy, destruction or alteration of computer source code.
Up to 3 years imprisonment or up to NPR 2 lakhs fine or both.
Damage to any computer and information system.
Up to 3 years imprisonment or up to NPR 2 lakhs fine or both.
Divulsion of confidentiality.
Up to 2 years imprisonment or up to NPR 1 lakh fine or both depending on the gravity of the offence.

5) Tribunal

The Act contemplates the formation of Information Technology Tribunal consisting of 3 members for proceedings for offences under the Act. Further, Information Technology Appel­­­late Tribunal formed under this Act will hear the appeal against the decision or order made by the Controller, Ce­­rtifying Authority and Information Technology Tribunal.

Disclaimer: This article is for informational purposes only and shall not be construed as legal advice, advertisement, personal communication, solicitation or inducement of any sort from the firm or its members. The firm shall not be liable for consequences arising out of actions undertaken by any person relying on the information provided herein.

Frequently Asked Questions

The Electronic Transaction Act is the Cyber Act of Nepal promulgated for authentication and recognition of Electronic Records and Digital Signatures along with Offences and Punishment connected. 

The Major Provisions of Electronic Transaction Act are as follows: 

  1. Authenticity, Recognition and and Security of Electronic Records and Digital Signature 
  2. Dispatch, Receipt and Acknowledgement of Electronic Records 
  3. Controller and Certifying Authority of Electronic Transactions 
  4. Electronic Record and Government Use of Digital Signature

According to the Act, an Individual has the volition to authenticate any electronic record by their Personal Digital Signature whereby it shall be legally recognized. 

The Electronic Transactions Act, 2063 (2008) has been introduced in 24th Bhadra 2063 B.S. or 2nd September 2006 A.D. 

The Salient Features of Cyber Act in Nepal are: 

  1. An Individual can authenticate to electronic Records through a Personal Digital Signature. 
  2. The Office of the Controller is to be established with the Chief Controller, Deputy Controller and other Employees. 
  3. Only a Licensed  Authority can issued a Certificate of Digital Signature. 
  4. The Documents released by the Government can be published in the Electronic Form. 

Cyber Fraud in Nepal are: 

  • Creation, publication, or use of a digital signature certificate with intent for fraud or illegal acts
  • Benefit gained from fraudulent actions such as bill payments, account balances, inventory, or ATM cards
  • Offender held liable for returning the financial gain to the affected party

The Punishment for Cyber Fraud in Nepal are: 

  • A Fine up to one hundred thousand Rupees and imprisonment for a maximum of two years, or both

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