Thinking about being your own boss and starting your own business here in Nepal? This blog post will guide you through the process and provide valuable information to ensure a smooth registration experience. Company Registration in Nepal becomes easy with Company Khata!
Well, starting a business in Nepal is not only a way to contribute to the country’s economy and create job opportunities but also a rewarding venture. Let’s first learn about the types of companies, we get to choose in Nepal.
The Companies Act 2006 (2063) governs the registration of companies in Nepal.
Under the Companies Act, you can register the following types of companies:
- Private company
- Public company
- Non Profit Company/NGO
Difference between Private Company and Public Company
| Private Limited Company | Public Limited Company |
|---|---|
|
• Are restricted from collecting funds through share offerings. • Minimum of 1 shareholder but cannot exceed 101 shareholders. • Minimum Capital Requirement is Rs. 100 (budget 2023-24) |
• Can raise funds from the general public by issuing securities like shares, bonds, or debentures. • Minimum of 7 shareholders with no maximum limit. • Minimum Capital Requirement is Rs. 1 crore |
Non-Profit Company, are dedicated to activities that benefit society and focus on public welfare. Such organizations are restricted to distribute its profits to shareholders or members. Instead, they use the funds to carry out their mission centered around social works.
Step-wise process for Company Registration in Nepal
Now let’s dive into the procedure and requirements.
Step-wise process to register a company in Nepal:
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
Step 1: Reservation of company name at the OCR
First and important step in registration is to select a unique name for your business. If you are unaware, Office of Company Registrar (OCR) serves as the government agency responsible for overseeing company registration in Nepal. Your proposed business name should be approved by OCR to continue the registration process.
So how to get your name approved?
First of all, you should apply for the name online via OCR Portal. You should write down your business name in both English and Nepali. Then, search and add objectives relevant to your business. Click on ‘Submit’ button once done.
That’s Easy Right? Yes and No!!
If everything is right, your name will be approved and then, go ahead with the documentation part. If name rules are not met, your name will be rejected and you will have to reapply with correction or alternative name.
Reasons for Name Rejection:
Following are some of the reasons why name can be rejected by OCR:
- The proposed name resembles the name of an already registered company under the Company’s Act.
- The Registrar deems the chosen name to potentially involve a criminal offense or be offensive to the public.
- Business with certain objectives selected are restricted from registration.
- Name has been approved but remain unregistered for more than 35 days.
- Name rules are not met:
- Company name cannot be of single word. eg: Ramesh Pvt Ltd (not allowed), Ramesh Traders Pvt Ltd (Allowed)
- Typing error or mismatch in English and Nepali name. eg Ramesh Trading à रामस ट्रेडिङ
Use of the words like ‘The’, ‘Shree’, ‘New’, ‘Mero’, ‘Hamro’, ‘My’, ‘Our’, in the beginning of the proposed name. eg: The Ramesh Trading (Not Allowed)
Step 2: Submission of physical copy of documents at OCR
Once your name is approved, you should prepare your registration documents.
- First identify the documents and details required for document preparation:
- Citizenship and share-holding ratio of every shareholder
- Address of the company
- Capital of the company
- Objectives of the company
- Preparation of MOA and AOA
- First understand what these documents really are:
- The Memorandum of Association outlines the fundamental details and objectives of the company. It serves as a legal document that defines the company’s scope of activities and its relationship with shareholders.
- The Articles of Association lay out the internal rules, regulations, and procedures for the company’s operation and management. It provides guidance on how the company will be governed, the rights and responsibilities of shareholders and directors, and the procedures for meetings and decision-making.
- First understand what these documents really are:
These documents are prepared in accordance to Company’s Act 2063 which might be a bit technical for yourself to handle.
- Finalized documents should be duly signed by every shareholder on every page. Don’t forget to sign on two copies of AOA and MOA.
- Once complete, documents are verified by your lawyer, and the original signed documents are submitted to OCR along with an application. Details of the company should also be entered in OCR portal.
Step 3: Examination of submitted documents by OCR
Once the OCR receives the documents, it thoroughly reviews the documents. They check for following issues on your documents:
- Any mismatch on details entered in the online portal and physical documents.
- Whether documents prepared are in accordance to the provisions stated in the Act.
- Documents left unsigned by all shareholders
- Most importantly, they verify the objectives stated in your documents.
Sometimes, you may have to make corrections in the documents as required by the registrar and resubmit the documents. Once the documents are all good to go, you will have to make payment of government fee as required. Following fee table will help you understand better:
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. | On every next 1 crore | Increase by 3,000 |
Please note, as per budget 2023-24, government fees will not be charged in company registration for FY 80-81
Step 4: Issuance of company registration certificate BY OCR
When step 1 to step 3 is completed, registrar issues registration certificate for your company. Don’t forget to check the name and details printed on the certificate. Sometimes, small error does happen.
Step 5: Tax Registration (VAT/PAN) at the Inland Revenue Office
Hurray!! Your dream company comes alive, now you can run your business in your terms!!
Well Not Yet!!
One last step, before you can start a business transaction. Your business entity needs Permanent Account Number (PAN) registered with your Inland Revenue Office (IRO). Submit an online form via IRD Portal for Business PAN Registration and visit your IRO carrying the following documents:
- Company Registration documents
- Online Form Submission No
- Address Proof
- Board Minute for registration
- Shareholders Citizenship
- Company Stamp
Please note, some local government rules or industry standards may require your company to be registered in local government departments. If so, register as required to avoid future complications.
How long does it take?
Company registration process in Nepal, typically takes a few days ranging from 7 days to 12-15 days. Once your company is successfully registered, you will be issued a certificate of incorporation, which serves as official proof of your company’s legal recognition by the government.
Here are some additional tips to facilitate the company registration process in Nepal:
- Initiate the registration process early, as it may take a few days to get approval for name and complete all the necessary paperwork.
- Ensure you possess all the required documents, as the OCR will not accept incomplete applications.
- Be clear on your company’s objectives, as the OCR requires this information to approve your registration.
How can we help you?
We understand that starting a business can be an overwhelming task. That’s why we offer comprehensive services to support you throughout the company registration process in Nepal.
Our process include:
- Check the availability of proposed name of your company
- Suggest when required and apply with OCR your company’s name
- Drafting memorandum and articles of association
- Filing applications for company registration
- Obtaining and forwarding the certificate of incorporation
- Tax registration support and guidance
- Guiding and follow up on annual compliance requirements.
Our dedicated team is committed to ensuring your company is properly registered and compliant with all relevant laws and regulations. We are here to assist you every step of the way.
