Table of content
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Company Registration Process in Nepal
Background
There is different of business vehicles through which the business can be operated in Nepal. Sole proprietorship firm, Partnership firm, Limited liabilities Companies and Local Business (registered at local government i.e., ward office), among these business vehicle limited companies are most common form of business vehicle registered in Nepal.
This article explains detail procedure regarding the registration of limited liabilities company in Nepal.
1. Governing law for company registration in Nepal
Companies Act, 2006 (2063) is the law governing company registration process in Nepal .
2. Governing Authority
The office of Company Registrar ("OCR") is the governing authority for the company registration process in Nepal .
3. Classification of Companies in Nepal under Companies Act
Companies Act has classified companies into following categories:
4. Company Registration Process in Nepal
The company registration process in Nepal is mentioned below:
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Step 1: Reservation of Name of the company by the applicant
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Step 2: Submit documents before OCR
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Step 3: Documents verification by OCR
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Step 4: Approval of Company Registartion
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Step 5: Tax Registration at Inland Revenue Office
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Step 6: Business registration at the concerned local goverment i.e. ward office
Figure: Steps Explaining the Company Registration Processs in Nepal
5. Timeline for registration
It will require 7 to 10 days for company registration process in Nepal .
6. Documents list required for registration of Company in Nepal
The following documents are required for company registration process in Nepal .
| S.N. | Documents |
|---|---|
| 1 | Application for registration in the standard format |
| 2 | Memorandum of Association and Article of Association of Nepalese Entity |
| 3 | Shareholder agreement if any |
| 4 | Citizenship Certificate/Passport of investor in case of an individual |
| 5 | Copy of certificate of registration and other registration documents (memorandum of association, articles of association) of corporate entity in case a corporate entity wants to invest in the company |
| 6 | Resolution of the corporate entity for incorporating entity in case a corporate entity wants to invest in the company |
| 7 | Copy of prior approval of the Department of Industry ("DOI") in case of investment through a foreign investor |
7. Differences between the Public & Private Company
The differences between the Public and Private companies are as mentioned:
| S.N. | Subject | Public Company | Private Company |
|---|---|---|---|
| 1 | Number of Shareholders | Minimum 7 and maximum any number of shares | Minimum 1 and maximum up to 101 |
| 2 | Number of Director | Minimum 3 to maximum 11 | As provided by Article of Association |
| 3 | Requirement of Independent Director | At least 1 director in case of directors not exceeding 7 At least 2 directors in case of directors exceeding 7 | No requirement of Independent Director |
| 4 | Transfer of share | No consensus required among shareholders for transfer of share | Consensus between shareholders is required for transfer of share |
| 5 | Invitation to Public | Can invite the public to subscribe to shares and debentures | Cannot issue such an invitation |
| 6 | Name of Company | Name of the company ends with Ltd. | Name of the company ends with Pvt. Ltd. |
| 7 | Company Secretary | Public Company must appoint a Company Secretary | Not compulsory to appoint the Company Secretary |
| 8 | Approval while starting business | Need to take approval from OCR while starting business | No approval is required |
| 9 | Minimum Paid-up Capital | Minimum paid-up capital of the company should be Ten Million Nepalese Rupees should be maintained. | Not specified by law. In practice, the minimum amount should be NPR 1,00,000. |
| 10 | Undertaking type of business | Banking transaction, financial transaction, insurance business, stock exchange business, pension fund, or mutual fund business are allowed to be undertaken by public company only. | No compulsion requirement on undertaking type of business |
8. Fee/Tax Required for Company Registration
Office of Company Registrar has waived the fee for the registration of new Company and for increment of the capital of the Company as per the Nepal Budget 2080/81. However the folliowing fee/tax has to be during the registration of company in Nepal is as mentioned:
| S.N | Particulars | Government Fee |
|---|---|---|
| 1. | Guarantee amount to be deposited at DOI (In case of investment in Company through foreign investor) | NPR 20,000 (Approx. USD) |
| 2. | Business Registration at Ward Office | NPR 5,000 to 15,000 per year (Approx. USD 38 to 115). Note: The business registration fees are specific to each local level. |
| 3. | House Rent Tax | 10% of house rent amount per month (Please note house rent rate tax depends on each local level and subject1 to change every fiscal year. As a matter of practice the local government takes 4 to 6 month advance house rent tax during the business registration) |
9. Post registration compliance
Following are the post registration compliances that a company should do after registration of company in Nepal:
- Receiving the specific license from concerned department (if necessary). Kindly go through para 11 of this article.
- Submission of 3 months compliance document before OCR,
- Recording of investment at NRB (in case of FDI Company)
- Submit Annual Compliance Document at OCR,
- Compliance with Companies Act, Labor Act, Tax Law and other applicable law of Nepal during the operation of the local subsidiary company.
10. Specific business approval
There are some nature of business which need additional approval from the concerned department prescribed by the law even after incorporation of company before their operation.
| S.N. | Nature of Business | Institution to grant License/Approval |
|---|---|---|
| 1 | Colleges | Affiliated University |
| 2 | Insurance Company | Insurance Board |
| 3 | Bank and Financial Institution | Nepal Rastra Bank |
| 4 | Hydro Power | Electricity Development Board |
| 5 | Travels and Trek | Ministry of Tourism, Culture and Civil Aviation |
| 6 | Food Industries | Department of Food Technology and Quality Control |
| 7 | Business related to telecommunication | Nepal Telecommunication Authority |
Date of Publication:18 August 2023
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