After registration, a company registered as a private limited company should comply with specific compliance requirements as per the Company Act 2063. Failing to meet such requirements shall result in a levy of penalties and fines. A company should be aware of such provisions and their timeline to prevent unwanted consequences of fine payment or deregistration.
We have listed some of the important compliance requirements which are easy to comply with that you might not be aware of:
1. Office of the company: (Sec 184)
The registered office is the address mentioned in the MOA of the company. This address is important because OCR or any other institution shall use this address for any sort of communication.
- A company should place a signboard containing its name and address in the Nepali language outside its registered office.
- In the first three months of registration, OCR should be updated about the current address of the registered office, even if there is no change as mentioned in MOA.
- In case of a change of its registered address, a company should notify the Company Registrar Office of such change within 30 days.
2. Allotment of Shares(Sec 31)
At the time of registration, shareholding details are submitted to OCR, where each shareholder specifies the number of shares they would purchase later when the Company asks. After registration, a company shall issue the shares and ask its shareholders to pay for the subscribed shares. The paid amount should be deposited in the company’s bank account. Shareholders are then allotted the shares.
A registered company shall give information about the allotments of shares to OCR within 30 days, specifying the following details:
- The number of shares issued and allotted,
- The total amount of the shares,
- The names and addresses of the buying shareholders,
- The amount paid or due and payable by each shareholder
3. Amendments to MOA AOA (Sec 21)
MOA (Memorandum of Association) is the fundamental document that must be prepared for the company’s registration. MOA defines the objectives and powers of the company. However, the company shall not prepare MOA in opposition to the provision of the Companies Act.
AOA (Article of Association) is the secondary document that must be prepared for the company’s registration. AOA defines the regulations by which those objectives and power are to be achieved and exercised. However, the company shall not prepare AOA in opposition to the provision of the MOA.
OCR registers a company after thoroughly checking and verifying the contents of the MOA and AOA of the company. It checks whether or not MOA & AOA is prepared as per requirements specified in the Act or rules. Company Act 2063 allows the amendment in MOA and AOA after incorporation. However, such amendments should be made as prescribed in the Act. It is important to notify the OCR if any contents of MOA and AOA are changed, added, or removed, along with the reasons for the same.
A company should comply with the following provisions in this regard:
- A special resolution should be passed in General Meeting for any amendment in MOA and AOA.
- OCR should be informed of such amendment along with necessary documents within 30 days of passing the resolution.
- In case the name has to be amended, the company should make an application for the prior approval of OCR and should make payment of the fee prescribed.
4. Annual Return Filing (Company Update/ Adhyawadhik)
4.1 Conducting Annual General Meeting (Sec 76)
- Every public company shall conduct:
- 1st AGM: within one year after obtaining permission to commence its business.
- Subsequent AGM: within six months of expiry of F/Y
- Every private company shall conduct AGM as per the provision mentioned in its AOA.
4.2 Annual Return Filing (Sec 80)
(a) Every company should file an annual return with OCR after holding the AGM within 30 days of conducting AGM.
The following details should be provided as a part of the annual return filing:
- No. of SHs present
- No. of directors attending through video conference or similar other technology.
- Decision of the meeting
- Copy of Annual Financial Statement
- Director’s Report
(b) Every company should submit a copy of the annual financial statement certified by the auditor to the OCR within six months of the completion of its financial year.
4.3 Fine on Non-Compliance (Sec 81)
OCR shall levy a fine on non-compliance or delay in compliance with provisions relating to annual return filing. Fine is imposed according to the paid-up capital and delay period as prescribed in section 81 of the Act. Fine can extend up to Rs. 20,000 per year if the company hesitates to file the return for a longer period of time, as shown below:
|S.N||Paid up capital||First 3 months||Next 3 months (3m+3m)||Next 6 months (3m+3m+6m)||After 1 year|
|1||Up to 25 lakhs||Rs 1000||Rs 1500||Rs 2500||Rs 5000 p.a|
|2||Up to 1 crore||Rs 2000||Rs 3000||Rs 5000||Rs 10000 p.a|
|3||More than 1 crore||Rs 5000||Rs 7000||Rs 10000||Rs 20000 p.a|
5. Inventory of shares, Debentures, and Loans. (Sec 51)
Every company should maintain a record of the existing shareholders and debenture -holders. Such record should also include details of shareholders or debenture-holders who have sold or transferred the shares or debentures and have no rights for the same.
This record should be updated at least before21 days prior to the holding of the AGM. The following details should be mentioned in the record:
- Share Capital details – Amount of authorized, issued, and paid up
- Amount paid and due from shareholders for issued capital
- Share forfeited details, if any – No. of shares, reasons, and date of forfeiture
- Loans borrowed from any financial institutions or guarantees provided by the company.
- Name and address of existing directors.
This record should be submitted to OCR within the time prescribed in the Act as given below:
- Details as per section 51 should be submitted within 30 days of holding AGM.
- For a company not holding an AGM, it has to be submitted
5.1 First Submission
- Within 1 year after obtaining permission to carry on business.
- Within 1 year of incorporation date if no such license or permission is required to carry on business
5.2 Subsequent Submission
- Within 6 months after expiry of each fiscal year.
6. Company to appoint Auditor (Sec 110)
Every company registered under Company Act 2063 should audit its books of account every fiscal year. A company should appoint an auditor for each fiscal year, as per the provisions mentioned in the Act.
Following are some of the provisions one should comply with:
- Shareholders of a company appoint an Auditor in a General Meeting.
- A company should notify OCR about such an appointment within 15 days from the date of appointment.
7. Disclosure by Director (Sec 92):
- When a company appoints a director, he/ she is responsible to disclose certain information to the company within 15 days of such appointment. It should be in writing and contain the following disclosures:
- If the director or his/her close relative has direct involvement or personal interest in the transactions of the company like sales, purchases, or other kinds of contracts,
- If the director has any kind of interest in the appointment of the managing director, company secretary, officer of the company;
- If the director is a director of any other company;
- If the director has made any dealing in the shares or debentures of the company or of its holding or subsidiary company about matters of such dealing.
- The company should then forward such disclosure to OCR within 7 days of receiving such disclosure.
8. Bonus share (Sec 179)
A company earning profit is allowed to distribute bonus shares to its shareholders out of the amount available for the distribution as a dividend. A special resolution should be passed by 3/4th of the quorum in the general meeting, to distribute such bonus shares. Company Act 2063 requires the company to notify the OCR before issuing such shares.
9. Register of Director and Company Secretary (Sec 107)
- Every company shall maintain a separate register of directors and of the company secretary. Following details shall be mentioned in the record:
- Their personal information such as name, surname, address, citizenship, profession, and occupation.
- Date of appointing or removing them as director or secretary.
- The register shall be updated every time a person is appointed or removed as director or secretary.
- The company shall provide the information of such alteration to Company Registrar’s Office within 15 days.
10. Merger of Company (Sec 177)
The companies incorporated under the Companies Act 2063 can combine with each other to form a new company. If your company is planning to merge with another company, then the following are the provisions that you should comply with:
- A public company can be merged with another company by passing a special resolution by 3/4th of the quorum in its general meeting. However, private companies should follow the provision of their MOA, AOA, or consensus agreement for its merger.
- After passing the resolution, the company should make an application to Company Registrar Office for approval of the same within 30 days.
Who is Company Khata?
Company Khata Pvt. Ltd. is a start-up specially dedicated to providing compliance as well as corporate services to new entrepreneurs. We help entrepreneurs with the following:
- Applying name in OCR
- Preparation of related documents
- PAN/VAT Documentation
- Amendment related works of a Company
- Annual Return Filings of a Company
- Continuous Client Relationship