A detailed guide on Company Registration Process in Nepal: Discussion on how to register a company in Nepal (2079/80)
The registration of company in Nepal is governed by the Companies Act 2006 (2063) (“Companies Act”). The Office of Company Registrar (“OCR”) is the only authority to govern the company registration in Nepal.
This article covers the registration process of Private Limited Company in Nepal. We will discuss the procedure, costs involved and documents required for formation of the company.
Types of companies under Companies Act
Under the Companies Act, the following types of companies can be registered:
a) Private company;
b) Public company; and
c) Profit not distributing company (Similar to NGOs)
Difference between Private, Public, and Profit not Distributing Companies
The basic difference between public companies and private companies are the ability to raise the fund from the public. Public companies can raise the fund from the public by issuing securities such as shares, bonds, or debentures.
However, the private companies are restricted from collecting the fund by offering the shares in such a manner. Similarly, a public company should have minimum of 7 shareholders with no maximum limit. However, the maximum number of shareholders of a private company cannot exceed more than 101.
Similarly, profit not distributing companies can be incorporated for the following objectives:(a) development and promotion of any profession;(b) protection of collective rights and interests of the persons engaged in a specific profession or occupation; and (c) for the attainment of any scientific, academic, social, benevolent or public utility or welfare objective on the condition of not distributing dividends.
Company as the most common form of business Structure in Nepal
Limited liability companies are the most common forms of business Structures in Nepal. Among them, private limited company is commonly registered business Structure in Nepal. Some businesses must form a limited liability company to operate. A few examples are business relating to banking and financial transaction, insurance, stock exchange, pension fund or mutual fund. Other businesses can either register a company, firm or just get their businesses registered at ward office.
One of the advantages of registering a limited liability company is that the lability of the shareholder of the company is limited to the extent of amount of investment made by such shareholder. This means at the time of liquidation/bankruptcy, shareholders are protected from unlimited liability.
Procedure of Registration of Company:
The following provides the steps for registration of a company:
Step 1: Reservation of company name at the OCR
Step 2: Submission of physical copy of documents at OCR
Step 3: Examination of submitted documents by OCR
Step 4: Issuance of company registration certificate BY OCR
Step 5: Tax Registration (VAT/PAN) at the Inland Revenue Office
Step 6: List/register the company at Ward office
Time required for registration: Total time required for registration of a new company is usually 5 to 10 days. Name reservation takes most of the time.
Documents required for registration of Company:
Following are the documents required for the company registration:
- Application for registration : 1 set original
- Memorandum of association and articles of association: 2 sets original each
- Citizenship certificate in case of Nepalese promoter / passport in case of foreign promoter : 1 copy (Notarized by Notary Public)
- Shareholder’s agreement ( if any): 1 copy
- Copy of certificate of registration and other registration documents (memorandum of association, articles of association) if the shareholder is company: 1 copy
- Corporate resolution of the shareholder if the shareholder is a company: 1 copy
- Copy of prior approval of the DOI in case the shareholder is a foreign investor: 1 copy
Government fee
Government fee is charged based on the proposed authorized capital of the company.
Government fee for a private company
Up to 1,00,000 1,000
1,00,001 to 5,00,000 4,500
5,00,001 to 25,00,000 9,500
25,00,001 to 1,00,00,000 16,000
1,00,00,001 to 2,00,00,000 19,000
2,00,00,001 to 3,00,00,000 22,000
3,00,00,001 to 4,00,00,000 25,000
4,00,00,001 to 5,00,00,000 28,000
5,00,00,001 to 6,00,00,000 31,000
6,00,00,001 to 7,00,00,000 34,000
Business specific approval/licences:
Certain regulated businesses related to bank and financial institutions, hydropower, travel and trekking businesses, hospitals etc. are subject to additional approvals or licences for the commencement of their business activities. Such businesses should obtain a licence from the respective departments before conducting any business.
Tax Registration:
Every company is required to obtain a PAN or VAT Registration certificate from Inland Revenue Department prior to the start of its business operation, depending on the value of the annual transaction of the business.
Bank Account:
Businesses should have their bank account. All the income, expenses, payments should be made through bank account where possible.
