Company Registration process in Nepal

Starting a new business, the very first step is to register a company with name, logo, and all required identification of the company. In Nepal, the registration of the company is governed and controlled by the Companies Act 2006 (2063). The Office of Company Registrar (OCR) consists of the authority to govern and regulate the company registration and all procedure.

This article will be helpful to understand the whole process of company registration.

Types of companies

Different types of companies can get registered and operate services under the prevailing Companies Act. The category of the company is defined by the investment, shareholders, profit, profession, and many more criteria.

Basically, companies can be registered as:

a) Private company

b) Public company

c) Profit not distributing company

Generally, public companies can raise funds by issuing shares, bonds, and debentures from the general public whereas private firms are not allowed to raise funds in this manner. Public companies have a minimum limit of 7 shareholders to no limit of maximum shareholders. In the case of private, the maximum number of shareholders cannot exceed more than 101. Profit and earning are equally distributed to the shareholder in the case of public and private companies.

Profit not distributing companies are incorporated for the development and promotion of any profession; for the protection of collective right and interest of person engaged in a specific profession and for educational, social, or public utility or welfare. The motive is just to help and enhance social work and with the purpose of not distributing dividends.

The most common form of business in Nepal

In Nepal, limited liability companies are the most common business vehicles. A private limited company is the most usually registered business vehicle. A public corporation must be registered if it conducts business in the areas of banking and financial transactions, insurance, stock exchange, pension fund, or mutual fund.

Forming of limited liability company limits the responsibility of the shareholders and the amount of investment is also made by such shareholders only.

The procedure of Company registration

For the registration procedure initially, you need to file the application in the office of the company registrar with the required documents as included in the prevailing law.

• Reservation of the company name at the OCR. Check if the proposed name is already registered as a company or not.

• Submission of a physical copy of documents at OCR as mentioned in the prevailing law of Nepal.

• OCR check and verify the related submitted documents and make necessary inquiries and make a decision for the registration

• Issuance of company registration certificate by OCR to the applicant

• Tax registration with the appropriate PAN and VAT at the inland revenue office

For the registration of a new company, it takes 7 up to 10 days. Certain regulated organizations, such as banks and financial institutions, hydropower, travel and trekking companies, hospitals, and others, require additional clearances and licenses before the registration.

Documents required for the registration of Company

1. A set of the original applications for the registration of the company.

2. Two sets of original Memorandum of association (NIYAMAWALI) and articles of association (PRABANDHA PATRA) of the proposed company

3. A copy of citizenship in case of Nepalese promoter and passport in case of foreign promoter

4. A copy of shareholder’s mutual agreement if exist

5. A copy of the corporate resolution, certificate of registration of incorporation and decision of BoD, and major documents regarding the incorporation if the shareholder is a company

6. A copy of prior approval of the DOI in the case of the foreign investor.

7. A copy of the power of Attorney

Amount of investment and government fee

For a public company the minimum amount of investment is 10000000 and for a private company is 100000 in NPR.

A government fee is charged depending upon the authorized capital and investment of the company.

For a private company

For a public company

Tax registration

Depending on the volume of the business's yearly transaction, all company investors need to obtain a PAN or VAT Registration certificate from the Inland Revenue Department before starting operations. Foreign investors need to open accounts at the central bank of Nepal.

Some more information

• Management letters and manuals should be typed on one side and printed on Nepali paper or other durable paper.

• All the documents must be written in clear Nepali language and in the case of a foreign investment company the documents must be in clear and simple English.

• Proper Signature at the end of each paper, full personal details must be included at the last episode of the document.

• For the purposes of company registration, at least one original shareholder should be found and identified.

• In the Company Register Office, only hardcover files are used.

The Company Register Office has just launched an online registration system. For further information, visit the Company Register Office's website.