How to Register a Business or a Company in Nepal?

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In this article, you will find the information about how to register a business firm or a company in Nepal. We have listed the documents and the fees required to register a company in Nepal.

Business is one of the most intriguing factors for the development of any country. More business companies mean more earning, more employment, and the overall development of the nation. Choosing the right business as per the market demand is the first and foremost requirement for any business person and entrepreneur. And, another very important thing is to understand the legal requirement and systematic registration process of your business or company.

In addition, for many of us, business and company are the same things. However, there is a major difference between a company and a business that we all need to know before investing our time and money in the best way possible. 

For setting up a business or a new company in relation to establishment or incorporation, one must go deep into knowing what exactly stands behind the terms.  The core difference is actually the legal and financial structures.

Business:

The structure of a business is relatively easy to set up as it requires a less monetary investment, easier paperwork, and less governmental regulation. The structure of the owner cannot be determined by just the name of the business. Moreover, all the investments, profit, and loss are the personal possessions of the owner(s). A business structure does not allow for corporate tax. The owner should pay Income Tax for all the income.

Company:

The structure of a company is more complicated and cost more to set up requires more paperwork, but offers more protection and benefits for the owner. A company follows an organizational hierarchy of director(s), who runs the company, and proprietor or shareholders, who own the company.

The owners of a company are not personally responsible for any loss or debts the company bears, in fact, all the loss, debts and profit remain the possessions of the company. A company structure allows for corporate tax.

If you are planning to setup a small business and there are no plans for major expansion a business structure may be just right. However, if you have bigger plans, a company structure will help you to achieve your goals.

Now, when we have gained some concept about business and company, it is time that we go further into learning about how to register a company or a business in Nepal.

Watch the video here:

Registering a Business in Nepal

In the context of Nepal, there are two major business categories on the basis of ownership.

  • Sole Proprietorship
  • Partnership Business

Sole Proprietorship

A sole proprietorship is a business owned by a single owner. For small businesses without large capital, sole proprietorships work the best.

Registration Process:

First, you will have to obtain necessary documents from the relevant government bodies such as departments/bodies (Nagarpalika Karyalaya / Wada Karyalaya) for permit/license to the business conduct business.

The information required:

  1. The name of the Private Firm
  2. The address of the Firm
  3. The objectives, functions and the particulars of goods or services
  4. The name and address of the owner, and the name of his/her father, mother, and grandfather, grandmother.
  5. Authorized Capital

Next, after obtaining the necessary documents, you need to visit the Income Tax Department to obtain your authorized PAN Number.

Finally, the Municipal Office (Nagarpalika Karyalaya / Wada Karyalaya) will provide you a permit certificate (Ijajat Praman Patra) of your business registration.

Partnership Business:

Any business comprising of two or more people who invest a shared amount of capital and share the total profit of the business under a legal agreement made with each other is called a partnership business/firm. Those persons who enter into the agreement are called partners.

Subsequently, after entering into the agreement of partnership, the partners need to register the business within six months from the date of the agreement.

Registration Process:

At first, obtain necessary documents from the relevant government bodies such as departments/bodies (Nagarpalika Karyalaya / Wada Karyalaya) for permit/license to the business conduct business.

The information required:

  1. Full Name of the firm
  2. The main location of the firm
  3. The objectives of the firm including the short description of the nature of the goods or services the business will be providing
  4. The full name, surname and permanent address of the partners
  5. The copy of the contract of agreement between the partners
  6. The restriction imposed on the power of a partner, if any
  7. Type of partnership and the capital amount invested by each partner
  8. The mode to calculate and share the profit and loss between /among the partners

Registering a Company in Nepal

If you are planning to establish a company, here is the information of the step-wise process and required documents to assist you. Furthermore, now as we know the concept of a company, let’s move forward to the types of companies in Nepal.

There are two types of companies in Nepal:

  • Private Limited Company
  • Public Limited Company
  • Profit Non-distributing Company

Private Limited Company:

A private company is owned by the company’s founders, management, or group private investors. Private companies cannot borrow money from the public and their stock is not allowed to float in the market.

Public Limited Company:

A public company is a company that can sell all or a portion of itself to the public via an initial public offering. Public companies are ones which can raise money by inviting the public to purchase their shares.

Profit Non-Distributing Company:

A company that is established with the intention of not distributing any dividends among its owners is called a profit non-distributing company. However, this does not imply that the company cannot make a profit for itself. The earned profit cannot be distributed to the owners but is utilized for the benefit of the company itself.

Basis of DifferencePrivate CompanyPublic Company
Minimum paid-up CapitalMinimum authorized capital not prescribedRs.1,00,00,000
Number of Members1 – 507 to any numbers
Number of Board of Directors113-11
Company SecretaryOptionalMandatory
General AssemblyOptional ( As per company rule)Mandatory (Once in a year)
Transfer of shares and securitiesTransferred to only the existing shareholders of the companyFreely transferrable

Registration Process:

According to the Company Registration Act, 2063, in order to register a company, an application should be made to the Company Registrar’s Office. The company registration process is done online through the official website of the Office of Company Registrar.

The legal format and official fee (depending on the Authorized capital of the company) is prescribed by the Company Registrar’s Office with reference to the Company Registration Act, 2063.

Documents required:

  1. Memorandum of Association
  2. Article of Association
  3. Approval or license from a competent authority, if required
  4. In the case of the public company, a copy of the agreement, if any, entered into between the promoters prior to incorporation
  5. In the case of a private company: a copy of the consensus agreement
  6. Where the promoter is a Nepalese citizen, a certified copy of the citizenship certificate
  7. Where the promoter is a body corporate: registration certificate of such body, the decision of the Board of Directors, and major documents relating to the incorporation of such body.
  8. Single Shareholder Company: Article of Association not required

Company Registrar’s Office will make the necessary inquiries and register the company within 15 days.  The company will then obtain the certificate of company registration.

Cost Estimation as per 2077/2020:

Public Limited Company

Authorized CapitalAmount
Rs.1,00,00,000/-Rs.15,000/-
Rs.1,00,00,001/- To Rs.10,00,00,000/-Rs.40,000/-
Rs.10,00,00,001/- To Rs.20,00,00,000/-Rs.70,000/-
Rs.20,00,00,001/- To Rs.30,00,00,000/-Rs.1,00,000/-
Rs.30,00,00,001/- To Rs.40,00,00,000/-Rs.1,30,000/-
Rs.40,00,00,001/- To Rs.50,00,00,000/-Rs.1,60,000/-
Rs.50,00,00,001/- and AboveIncrement by Rs.3000/- per Crore
As per 2077 AD / 2020 BS
Source: Official website of Company Registrar’s Office

Private Limited Company

Authorized CapitalAmount
Rs.1,00,000/-Rs.1000/-
Rs.1,00,001/- To Rs.5,00,000/-Rs.4500/-
Rs.5,00,001/- To Rs.25,00,000/-Rs.9500/-
Rs.25,00,001/- To Rs.1,00,00,000/-Rs.16,000/-
Rs.1,00,00,001/- To Rs.2,00,00,000/-Rs.19,000/-
Rs.2,00,00,001/- To Rs.3,00,00,000/-Rs.22,000/-
Rs.3,00,00,001/- To Rs.4,00,00,000/-Rs.25,000/-
Rs.4,00,00,001/- To Rs.5,00,00,000/-Rs.28,000/-
Rs.5,00,00,001/- To Rs.6,00,00,000/-Rs.31,000/-
Rs.6,00,00,001/- To Rs.7,00,00,000/-Rs.34,000/-
Rs.7,00,00,001/- To Rs.8,00,00,000/-Rs.37,000/-
Rs.8,00,00,001/- To Rs.9,00,00,000/-Rs.40,000/-
Rs.9,00,00,001/- To Rs.10,00,00,000/-Rs.43,000/-
Rs.10,00,00,001/- and AboveIncrement by Rs.30/- per Lakh
As per 2077 / 2020
Source: Official website of Company Registrar’s Office

Post-Registration Responsibilities

Company registration also requires to fulfill post-registration responsibilities which are given below:

  1. Registered Office Notification: The Company should provide the details of the address where the company is established within three months to the Company Registrar’s Office. A board showing the name and registration number of the company should be displayed clearly at the location of the company. For any construction work for your company please visit www.magiccubeenineering.com
  2. Filing Shareholders Details: After issuing share capital and paying the amount to the company by a shareholder, the company needs to prepare a Shareholders Register and provide it to the Company Registrar’s office within one month.
  3. Directors’ Details: The necessary details of the directors of the company should be submitted within seven days of the Director’s taking office.
  4. Annual General Meeting: Public Company should conduct an annual general meeting of shareholders within one year of establishment. Also, if clearly mentioned in the Articles and Memorandum of Association, this is not required for Private Companies.
  5. Accounting Requirements: The Company should keep an account of the financial transactions and audit them by an authorized auditor every year. The company should notify the Office of Companies Registrar within 15 days of appointment, the appointment of an auditor. To find the registered auditor service please visit www.proaffix.com.
  6. Filing Requirements: Annual audited accounts, auditor’s report, and the report about the number of shareholders of the company have to be filed within 6 months by the end of the running financial year.

Points to Remember while Registering a Company:

  • In the case of a private limited company, at least one and up to 50 shareholders. For a public limited company, at least 7 shareholders and above that as many as possible.
  • The management letter and rules should be typed in Nepali paper as far as possible or A4 size paper, only on one side.
  • Management letters and rules should be prepared in pure and clear Nepali language. In the case of a company with foreign investment, pure and clear English language can be used but requires the Nepali version as well.
  • At the bottom of each page of the management letter and rules should be signed by all the founding shareholders. In the last chapter of the management letter and rules, the full name, address, the number of shares, and signatures of the founding shareholders as well as the signature of each founder should be clearly signed.
  • Each witness must have the full name, address, and signature of each of the founding shareholders.
  • When the new company is registered, if there is a provision for the old company to buy the shares of such a company, then the proof of the financial condition of the old company should be submitted.
  • To register a company, at least one of the founding shareholders must be present in person at the shareholder’s office.

Read here about life and business after the end of the lock-down here.

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Author: Barsha Bishwakarma

Writing makes me happy. Do what you like, and like what you do.

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