Company Registration in Nepal: A Complete New Guide

Introduction

The Government of Nepal, through the ‘Office of the Company Registrar (OCR)’ under the Ministry of Industry, Commerce, and Supplies, regulates company incorporation under the “The Companies Act, 2063”. Registering a company not only ensures legal legitimacy but also allows businesses to operate under a structured framework, avail financial opportunities, enter into contracts, and gain credibility.

This article includes:

1. Types of Companies in Nepal
2. Legal benefits of incorporation
3. Registration procedures and compliance requirements
4. Applicable legal provisions

1. Relevant Laws and Regulatory Authorities

The Companies Act 2063 has a provision for the company registration process in Nepal in Section 3 that says:

• Any person desirous of undertaking any enterprise with a profit motive may either singly or jointly with others, incorporate a company for the attainment of one or more objectives set forth in the memorandum of association.

2. Types of Companies in Nepal

The Companies Act, 2063 classifies companies into four primary categories, each with distinct legal attributes and obligations.

A. Private Limited Company

A Private Limited Company (Pvt. Ltd.) is an entity privately owned by shareholders, and restricted from public investment. A private limited company in Nepal must have a minimum of one and a maximum of 101 shareholders. Additionally, a private limited company is prohibited from issuing shares to the public, making it a closely held business entity.

Legal Basis: Section 2(b) of the Companies Act, 2063

The major features include:

• Minimum 1 and maximum 101 shareholders.
• Shareholder's liability is limited to their investment.
• Cannot issue shares to the public.

B. Public Limited Company

A Public Limited Company (Ltd.) is a large corporate entity permitted to offer shares to the public. Public companies must have a minimum of seven shareholders, with no restriction on the upper limit, and a board consisting of one to eleven directors.

Legal Basis: Section 2(c) of the Companies Act, 2063

The major features include:

• Minimum 7 shareholders (no upper limit).
• Requires NPR 10,000,000 in paid-up capital.
• Must issue shares publicly via the stock exchange (NEPSE).

C. Profit Not Distributing Company

A Profit Not Distributing Company operates for social, educational, or charitable purposes, reinvesting earnings into its mission. A legal entity established for charitable or social purposes, where financial gains are reinvested in organizational objectives rather than distributed among members. These entities require at least five directors, with no prescribed upper limit.

Legal Basis: Section 2(h) of the Companies Act, 2063

The major features are:

• Must have at least 5 directors.
• Cannot distribute profits to members.
• Requires annual financial audits.

D. Foreign Company

A foreign company is an entity incorporated outside Nepal that conducts business activities within the country. A business entity incorporated outside Nepal but maintaining a place of business or carrying out commercial activities within Nepal. Such entities must register with the Office of the Company Registrar to legally operate within the country.

Legal Basis: Section 2(f) of the Companies Act, 2063 and Foreign Investment and Technology Transfer Act (FITTA), 2019

The major features are:

• Must register with OCR & FITTA.
• Complies with Nepalese taxation and labor laws.
• Requires a local representative in Nepal.

3. Company Registration Process in Nepal

The company registration process involves multiple steps, each ensuring legal clarity and business legitimacy. Below is a step-by-step guide to company registration in Nepal:

1. Name Reservation and Approval
2. Preparation and Submission of Required Documents
3. Verification and Registration Approval.
4. Tax Registration at the Inland Revenue Department (IRD).
5. Registration with Local Government Authority.

a) Name Reservation and Approval

The first step in the registration process is selecting and reserving a unique company name. The proposed name must not be identical or similar to existing registered companies.

• Visit the ‘Office of the Company Registrar (OCR)’ website (www.ocr.gov.np) and submit an online application for name reservation.
• Ensure the name does not violate trademarks or resemble existing company names.
• The OCR reviews the request and either approves or rejects the name.

b) Preparation and Submission of Required Documents

After name reservation, the next step is preparing and submitting necessary documents. These documents include:

These documents must be submitted to the OCR either physically or through the online portal.

c) Verification and Registration Approval

Once submitted, the OCR reviews the application and documents for completeness and compliance with legal provisions. The review process generally takes 7 to 15 working days.

a. Error Correction and Notification

• If there are errors or missing details, the applicant is notified for necessary corrections.

b. Issuance of Certificate of Incorporation

• Upon approval, the OCR issues a Certificate of Incorporation, granting the company a legal identity.

d) Tax Registration with Inland Revenue Department (IRD)

Every registered company must obtain a Permanent Account Number (PAN) from the Inland Revenue Department (IRD) for tax purposes.

• Submit a PAN registration application along with the Certificate of Incorporation and other required documents.
• If applicable, register for Value Added Tax (VAT) based on the company's business activities and turnover threshold.

e) Registration with Local Government Authority

Businesses may also need to register with local authorities, such as the ward office or municipality where the business is based.

• Obtain local business operation approval and necessary clearances.
• If required, apply for industry-specific licenses and permits (e.g., tourism, healthcare, manufacturing, etc.).

4. Government fee for Company Registration in Nepal

In Nepal, the government fee for company registration is determined by the proposed authorized capital. The registration fee varies from NPR 1,000 to over NPR 43,000, with specific details outlined separately for Public Limited Companies and Private Limited Companies.

A. Government fee for a Private Company

B. Government fee for a Public Company

5. Post-Registration Compliance

Once the company is incorporated, it must adhere to regulatory compliance and operational formalities:

• Conduct Board Meetings within 30 days of incorporation.
• Hold Annual General Meetings (AGM) within six months of the fiscal year's end.
• File Annual Reports and Financial Statements with the OCR.
• Ensure Timely Tax Filing with the IRD.
• Renew Business Licenses and Permits as required by law.

Conclusion

Registering a company in Nepal is a structured yet essential process that provides businesses with legal identity, operational flexibility, and economic opportunities. The process has been streamlined with digital services and improved regulatory frameworks, making it easier for entrepreneurs and investors to formalize their businesses. Adhering to the registration procedures and compliance requirements allows businesses to operate efficiently and contribute to Nepal’s growing economy.