Company Registration in Nepal: A Comprehensive Guide

Table of Contents

1. Introduction
2. Types of Companies in Nepal
– Private Limited Company
– Public Limited Company
– Non-Profit Organizations
3. Prerequisites for Company Registration
4. Step-by-Step Process for Company Registration
– Reserving the Company Name
– Document Preparation
– Submission of Application
– Verification and Approval
5. Post-Registration Compliance and Requirements
– Tax Registration
– Social Security Registration
6. Fees Associated with Company Registration
7. Conclusion
8. FAQ

1. Introduction

Company registration in Nepal is a formal legal process that transforms a business idea into a legal entity. It is essential for entrepreneurs to register their companies to obtain legal recognition, tax benefits, and to build trust with customers. The process involves choosing the appropriate company structure, preparing necessary documents, and complying with legal procedures set by the Office of the Company Registrar OCR in Nepal.

This guide covers the entire registration process, the documents required, and post-registration obligations. Following these steps carefully ensures a smooth registration process and minimizes legal complications.

 

2. Types of Companies in Nepal

Understanding the types of companies available is crucial as it determines the legal framework and requirements for registration.

 Private Limited Company
The most common business structure in Nepal, Private Limited Company, is suited for small to medium-sized businesses. The liability of shareholders is limited to their share contributions, and it typically has a smaller number of shareholders 1-50.

 Public Limited Company
Public Limited Companies are suitable for large-scale businesses that aim to raise capital by offering shares to the public. There is no upper limit on the number of shareholders, but a minimum of 7 shareholders is required to register.

 Non-Profit Organizations
For entities with charitable, educational, or social objectives, Non-Profit Organizations or Non-Governmental Organizations NGOs can be registered under the Company Act or Social Welfare Act, depending on their purpose.

 

3. Prerequisites for Company Registration

Before starting the registration process, several key factors must be prepared:

1. Company Name: It should be unique and not infringe upon any existing trademarks or registered companies.
2. Authorized Capital: This is the maximum capital the company can issue. It must be specified during registration.
3. Registered Address: The physical address where the company operates must be declared.
4. Directors and Shareholders: Information about the directors and shareholders must be prepared, including copies of their citizenship certificates.

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4. Step-by-Step Process for Company Registration

 

1. Reserving the Company Name
   To begin the registration process, the company name must be reserved through the OCR’s online system. It’s essential that the name is unique and complies with Nepal’s Company Act, 2063.
2. Document Preparation
   The primary documents required include:
   – Memorandum of Association MOA: Defines the company’s purpose and scope of activities.
   – Articles of Association AOA: Details the internal management, rights, and responsibilities of shareholders.
   – Shareholders Agreement optional: Outlines the responsibilities of the shareholders and their rights.
   – Director’s Citizenship Certificates: Each director must submit a copy of their citizenship certificate.
3. Submission of Application
   Once the documents are prepared, the application is submitted to the OCR through the online registration portal. All required documents should be uploaded along with the application form, ensuring accuracy to avoid rejection.
4. Verification and Approval
   The OCR reviews the submitted application and may request additional documents or clarifications. If all the documents are in order, the registration is approved, and a Certificate of Incorporation is issued. This certificate is the legal proof of the company’s existence.

 

5. Post-Registration Compliance and Requirements

 

1. Tax Registration
   After obtaining the Certificate of Incorporation, the company must register with the Inland Revenue Department IRD to obtain a Permanent Account Number PAN for tax purposes. Depending on the company’s activities, VAT registration may also be required.
2. Social Security Registration
   If the company employs staff, it must register with the Social Security Fund SSF to provide benefits to employees, such as pensions, health insurance, and maternity benefits.
3. Annual Reporting and Auditing
   All companies are required to file annual reports, including audited financial statements, to the OCR. Failure to comply with this requirement may result in penalties.

 

6. Fees Associated with Company Registration

The registration fee in Nepal is based on the company’s authorized capital. The structure is as follows:
– Up to NPR 100,000: NPR 1,000
– NPR 1,000,001 to NPR 10,000,000: NPR 9,500
– NPR 10,000,001 to NPR 50,000,000: NPR 19,500
– Above NPR 50,000,000: NPR 29,500

These fees are paid at the time of registration. Additional costs, such as government taxes and document certification fees, may also apply.

 

7. Conclusion

Registering a company in Nepal is a straightforward but meticulous process that requires proper planning and documentation. By choosing the right company structure and ensuring compliance with the legal steps outlined by the OCR, you can set up a business with a strong legal foundation. Following the guidelines in this article will help entrepreneurs complete the process efficiently and avoid unnecessary delays or complications.

Proper post-registration compliance, including tax and social security registration, is crucial for the smooth operation of the company. Entrepreneurs should also keep in mind the legal requirements of filing annual reports and conducting audits, ensuring the company’s long-term sustainability in the market.

 

      8. FAQ: Company Registration in Nepal

1. What are the types of companies I can register in Nepal?

In Nepal, you can register various types of companies, including:

– Private Limited Company: Suitable for small to medium-sized businesses.

– Public Limited Company: Ideal for larger businesses intending to raise capital through public offerings.

– Non-Profit Organizations: Registered for charitable or social causes under specific legal frameworks.

 

2. How long does the company registration process take?

The company registration process typically takes around 5-7 working days, provided all documents are in order and the Office of Company Registrar (OCR) approves the application.

 

3. What documents are required for company registration?

Key documents include:

– Memorandum of Association (MOA)

– Articles of Association (AOA)

– Citizenship certificates of directors and shareholders

– Company name reservation form

– Passport-sized photos of directors

 

4. Can a foreigner register a company in Nepal?

Yes, foreigners can register a company in Nepal, but they need to follow specific procedures, especially for Foreign Direct Investment (FDI). Foreign investors must obtain approvals from the Nepal Investment Board and comply with FDI regulations.

 

5. What is the minimum capital required for company registration?

The minimum authorized capital for a Private Limited Company is typically NPR 100,000, but this can vary based on the company type and business activities. Public companies may require higher capital depending on the scale of operations.

 

6. Is it necessary to have a registered office address?

Yes, you must provide a valid registered office address in Nepal during the registration process. This is where official communications will be sent.

 

7. How can I reserve a company name in Nepal?

You can reserve a company name by submitting an application to the OCR online. The name must be unique and comply with Nepal’s Company Act.

 

8. What are the post-registration requirements?

Post-registration, companies must:

– Register for Permanent Account Number (PAN) with the Inland Revenue Department.

– Register for VAT if applicable.

– File annual reports and financial audits with the OCR.

– Register with the Social Security Fund if employing staff.

 

9. What are the penalties for non-compliance?

Failure to comply with the regulations, such as missing annual report filings or tax registration, can result in fines, penalties, or even the cancellation of the company’s registration.

 

10. How much does it cost to register a company in Nepal?

The fees vary based on authorized capital:

– Up to NPR 100,000: NPR 1,000

– Above NPR 50,000,000: NPR 29,500

 

11. Can Indian citizens register a company in Nepal?

Yes, Indian citizens can register a company in Nepal, but they must follow the specific Foreign Direct Investment (FDI) guidelines and legal processes set by the government of Nepal. The procedure involves obtaining approval from various regulatory bodies, including:

1. Nepal Investment Board: Indian nationals must first apply for FDI approval from the Nepal Investment Board if they intend to bring foreign capital into Nepal.
2. Office of the Company Registrar (OCR): Once the FDI approval is obtained, the company registration process can begin with the OCR. The documents required are similar to those for Nepali citizens, but Indian investors must provide additional documents such as passports and FDI-related approvals.
3. Department of Industry (DOI): Foreign companies or investments may need further approvals from the DOI, depending on the nature and scale of the business.
4. Capital Requirement: Foreign investors must bring in a minimum investment of USD 50,000 (or equivalent in Nepali Rupees) to register a Private Limited Company in Nepal. This requirement may vary based on the business type and sector.
5. Tax and Compliance: Post-registration, Indian investors must adhere to Nepal’s tax laws, register for VAT (if applicable), and meet other legal and regulatory requirements.

While the process is straightforward, foreign investors, including Indian nationals, are encouraged to seek professional guidance to ensure smooth registration and compliance with all relevant regulations in Nepal.

To view the full article for Indian nationals click here.