The agreement was signed by the Nepali Congress President and Prime Minister Sushil Koirala, CPN-UML Chairman KP Sharma Oli, UCPN (Maoist) Chairma Pushpa Kamal Dahal and Madhesi Janadhikar Forum-Loktantrik (MJF-L) Chairman Bijaya Kumar Gachhadar.

According to the agreement, the country would be federated into eight federal states on the basis of five factors of identity—ethnicity/community, language, culture, geographical and regional continuity, and history—and four factors of capability—economic capability, infrastructure potential, availability of natural resources, and administrative feasibility.

The parties have agreed to form a federal commission to finalise the demarcation of the federal states while the naming of provinces will be left to the federal assembly. A two-thirds majority of the federal assembly will determine the names of the federal provinces.

The Constituent Assembly will be turned into central legislature parliament after the promulgation of the new constitution. The parliament will finalise the boundary of federal states based on the report submitted by the federal commission. The commission will have a mandate of six months.

Prime Minister and Nepali Congress (NC) President Sushil Koirala, CPN-UML KP Sharma Oli, UCPN (Maoist) Chairman Pushpa Kamal Dahal and Madhesi Janadhikar Forum-Loktantrik (MJF-L) Chairman Bijaya Kumar Gachhadar were holding discussion till late night to give final touch to the agreement.

According to the agreement, the lower house will have 275 seats with 60 percent (165 seats) directly elected and 40 percent (110 seats) elected through proportional representation system, while the upper house will have 35-member elected through all-out proportional representation system.

Moreover, a constitutional court will be set up for 10 years to resolve the disputes local, federal and central courts.

Likewise, the parties have agreed to adopt reformed parliamentary system of government with the executive powers vested in the prime minister and the ceremonial president elected through the parliament.

But the UCPN (Maoist) have agreed to take ahead the constitution drafting process by putting a note of dissent on the form of government.

The major parties have agreed to hold the election for the post of president, vice president, prime minister, speaker and deputy speaker after the declaration of new constitution.

The constitution drafting was delayed for long due to the differences among the parties over the issue of federalism, mainly the number of federal provinces to be adopted in the new constitution, form of government, electoral system, and judiciary.