The registration of company in Nepal is governed by the Companies Act 2006 (2063) (“Companies Act”) . The Office of Company Registrar (“OCR”) is the competent authority to govern the company registration.
This article mainly covers the registration process of Company in Nepal.
1. Types of companies under Companies Act
1.1 Under the Companies Act, the following types of companies can be registered:
a) Private company;
b) Public company; and
c) Profit not distributing company
1.2 The basic difference between public companies and private companies are the ability to raise the fund from the general public.Public companies can raise the fund from the general 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.
1.3 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.
2. Company as the most common form of business vehicle in Nepal:
2.1 Limited liability companies are the most common forms of business vehicles in Nepal. Among them, private limited company is commonly registered business vehicle in Nepal. A company carrying business relating to banking and financial transaction, insurance, stock exchange, pension fund or mutual fund needs to be compulsory registered as a public company.
2.2 One of the advantages for 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.
3. 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|
4. Time required for registration:
Total time required for registration of a new company is 7 to 10 days.
5. Documents required for registration of Company:
Following are the documents required for the company registration:
|S.N.||Documents||Number of Copies|
|1.||Application for registration||1 set original|
|2.||Memorandum of association and articles of association of the proposed company||2 sets original each|
|3.||Citizenship certificate in case of Nepalese promoter / passport in case of foreign promoter||1 copy|
|4.||Shareholder’s agreement ( if any)||1 copy|
|5.||Copy of certificate of registration and other registration documents (memorandum of association, articles of association) if the shareholder is company.||1 copy|
|6.||Corporate resolution of the shareholder if the shareholder is a company||1 copy|
|7.||Copy of prior approval of the DOI in case the shareholder is a foreign investor||1 copy|
6. Minimum amount of investment:
|S.N||Company||Amount ( in NPR)|
7. Government fee:
Government fee is charged based on the proposed authorized capital of the company.
7.1. Government fee for a private company
|S.N.||Amount of Authorized Capital ( in NPR)||Registration Fee ( in NPR)|
|1.||Up to 1,00,000||1,000|
|2.||1,00,001 to 5,00,000||4,500|
|3.||5,00,001 to 25,00,000||9,500|
|4.||25,00,001 to 1,00,00,000||16,000|
|5.||1,00,00,001 to 2,00,00,000||19,000|
|6.||2,00,00,001 to 3,00,00,000||22,000|
|7.||3,00,00,001 to 4,00,00,000||25,000|
|8.||4,00,00,001 to 5,00,00,000||28,000|
|9.||5,00,00,001 to 6,00,00,000||31,000|
|10.||6,00,00,001 to 7,00,00,000||34,000|
|11.||7,00,00,001 to 8,00,00,000||37,000|
|12.||8,00,00,001 to 9,00,00,000||40,000|
|13.||9,00,00,001 to 10,00,00,000||43,000|
|14.||10,00,00,000||30 for each 1,00,000|
7.2. Government fee for a public company
|S.N.||Amount of Authorized Capital (in NPR)||Registration fee ( in NPR)|
|1.||Up to 1,00,00,000||15,000|
|2.||1,00,00,001 to 10,00,00,000||40,000|
|3.||10,00,00,001 to 20,00,00,000||70,000|
|4.||20,00,00,001 to 30,00,00,000||1,00,000|
|5.||30,00,00,001 to 40,00,00,000||1,30,000|
|6.||40,00,00,001 to 50,00,00,000||1,60,000|
|7.||Above 50,00,00,000||3000 for each 1,00,000|
8. Business specific approval/licenses:
Certain regulated businesses related to bank and financial institutions, hydropower, travel and trekking businesses, hospitals etc. are subject to additional approvals or licenses for the commencement of their business activities.
9. Tax Registration:
Every company is required to obtain a PAN or VAT Registration certificate from Inland Revenue Department prior to the commencement of its business depending on the value of the annual transaction of the business.