Starting A Private Limited Company in Nepal

What?

A Private Limited Company is a type of business organization where the owners’ liability is limited, meaning their personal assets are protected if the company faces financial problems. In simple terms, if the company can’t pay its debts, the owners are not personally responsible for covering those debts. Instead, their liability is limited to the amount they’ve invested in the company.

For example, imagine you and your friend start a private limited company called “Tech Innovators Pvt. Ltd.” You both invest money into the business. If the company runs into financial trouble and owes money to suppliers or creditors, your personal savings and assets, like your car or house, are not at risk. Your liability is limited to the money you put into the company. This legal structure offers a level of protection for business owners and is a popular choice for many small and medium-sized businesses around the world.

A key difference between public and private companies is that public companies offer their shares to the general public and are listed on a stock exchange, while private companies have restrictions on share ownership and do not offer shares to the public.

Why?

Starting a business can be fun, and registering it as a private limited company has some great perks. Let’s use simple cases to break it down.

1. Limited Liability: If you start a business and it goes bankrupt, you don’t have to worry about losing your home or car. For example, you won’t lose your house if your shop goes out of business.

2. Perpetual Existence: Even if the owners change, your business can keep going. Imagine that you and your friends start a software company, but one of you wants to leave. The business can go on without any trouble.

3. Raising Money: Say you run a popular cafe and want to open more locations. By setting up a private limited business, you can sell shares to investors to get the money you need.

4. Credibility and believe: When your business is registered, people are more likely to believe it. Customers are more likely to buy handmade furniture from “ABC WoodCraft Pvt. Ltd.” than from an unregistered “ABC Furniture Shop.”

Where?

In Nepal, you can register a company through the Office of Company Registrar (OCR). The OCR is the government authority responsible for overseeing the registration, regulation, and administration of companies in Nepal.

You can visit OCR website from here: https://ocr.gov.np/

When?

The time it takes to receive the registration certificate for a private limited company in Nepal can vary based on several factors, including the workload at the Office of Company Registrar (OCR) and the completeness of your application. While it’s difficult to provide an exact timeline, here’s a rough estimate of the time required to obtain registration certificate

Name Reservation: 3 to 7 working days
Document Preparation: 2 to 7 working days.
Document Submission: 1 working day.
Document Review: 1 to 3 working days.
Approval and Certificate Issuance: 1 to 2 working days.

So in total, obtaining Company Registration Certificate from starting can take anywhere between 7 working days to over 15 working days.

Keep in mind that these are approximate timelines, and the actual duration can be longer or shorter based on various factors.

How?

1. Choose a Company Name: The first step is to select a unique name for your company. The name should not already be in use, and it must comply with the naming rules and restrictions set by the OCR.

2. Memorandum of Association and Articles of Association: Prepare the Memorandum of Association and Articles of Association for your company. These documents outline the company’s objectives, rules, and regulations. You may need legal assistance in drafting these documents.

3. Collect Required Documents: Gather the necessary documents, including identification and address proof of the company’s promoters and shareholders, as well as other required forms and declarations.

4. Pay Fees: Pay the prescribed registration fees and other charges as required by the OCR. (Please note that Government of Nepal had announced that no statutory fees would be levied during registration process. But the same has been officially yet with OCR)

5. Submit Application: Submit the company registration application, along with all the required documents and fees, to the OCR. The application forms can be obtained from the OCR’s office or website.

6. Review and Approval: The OCR will review your application, documents, and company name. If everything is in order and compliant with the Companies Act, they will approve your registration.

7. Certificate of Incorporation: Once your registration is approved, you will receive a Certificate of Incorporation from the OCR. This document officially recognizes your company as a legal entity.

8. Tax Registration: After company registration, you should also obtain a PAN (Permanent Account Number) and VAT registration, if applicable, for tax purposes.