Handbook

BUSINESS REGISTRATION

The Companies Act 2006 (2063) ("Companies Act") governs company formation in Nepal. The Office of Company Registrar ("OCR") is the competent authority in charge of company registration. This article focuses on the Company Registration Process in Nepal.

There are two sorts of limited companies:

1. Public limited companies
2. Private limited companies (Sole proprietorship firm and Partnership Firm)

Private Firm

A limited liability corporation, or LTD, is a sort of privately owned small business. This type of company structure restricts shareholders from openly exchanging their shares, limits owner responsibility to their shares, and limits the number of shareholders to 50. The start-up company that an individual can register is a single private shareholder company. If there is an increase in the number of investors in a single private company, the single private company shareholder should over time become a multi-stakeholder private company. There is no requirement for minimum paid-up capital for a private limited corporation. Shareholders can set capital according to operating needs.

According to Section 3 of the Private Firm Registration Act, 2014, the proprietor  must register the business (proposed form) with the Concerned Department.

  1. Department of Cottage and Rural Industry (where it is a cottage and rural industry).
  2. The Department of Commerce ( in the case of commerce related firm).
  3. The Department of Industry (for any other types of industries).

These are the required documents for private firm registrations:

  1. Application form in the prescribed format ( 1 set original).
  2. Memorandum of association and articles of association of the proposed company (2 sets original).
  3. The Entrepreneur must be present in DOC himself/herself with a Copy and Original Certificate of Citizenship.
  4. Shareholder’s agreement ( if any) (1 copy).
  5. Copy of certificate of registration and other registration documents (memorandum of association, articles of association) if the shareholder is company (1 Copy).
  6. Corporate resolution of the shareholder if the shareholder is a company (1 copy).
  7. Copy of prior approval of the DOI  in case the shareholder is a foreign investor (1 copy).
  8. Passport Size Photo- 3 copies (Recently Taken).
  9. License from the concerned authority (if any required) for example: license is required for the money – changer from Nepal Rastra Bank, transactions of medicines from medicine management Department etc.

Procedure / Process of Private Firm Registration

1.      Check the proposed company name's uniqueness: The Company shall submit an application to the Office of the Registrar of Companies to verify the desired company name is available and suitable.

SN Agency Time Cost Remarks
1 Office of the Company Registrar(CRO) Less than 1 day No charge The prescribed form must be filled up from
For Single Shareholding Private Company:
Link
For Multiple Shareholding Private Company:
Link The entrepreneur receives an email, notification of approval / rejection of the application from the CRO, following submission of the application online

2.      The memorandum and articles of association are verified and certified by an expert.

SN Agency Time Cost Remarks
1 Professional Agency (lawyers, CA, and legal practitioners) 5 day NPR 10,000, depending on the professional’s charges This stage is optional; instead, the entrepreneur can also use CRO website templates.
  • This stage is optional; instead, the entrepreneur can also use CRO website templates.
For Single Shareholding Private Company:
Link
For Multiple Shareholding Private Company:
Link
  • The Format for the AOA
For Single Shareholding Private Company:
Link
For Multiple Shareholding Private Company:
Link

3.      Buy a stamp to be attached to registration form

SN Agency Time Cost Remarks
1 Post office 1day NPR 5 The stamp should be provided to the CRO.

4.      File documents with the COR /DOI

SN Agency Time Cost Required Documents Remarks
1 Office of the Company Registrar Department of Industry 15 day Based on the capital of the firm, the registration fee needs to be paid:
  • Up to NPR 100,000 (authorized capital): NPR 1,000.
  • NPR 100,001 to NPR 500,000: NPR 4,500.
  • NPR 500,001 to NPR 2,500,000: NPR 9,500.
  • NPR 2,500,001 to NPR 10,000,000: NPR 16,000.
  • NPR 10,000,001 to NPR 20,000,000: NPR 19,000.
  • NPR 20,000,001 to NPR 30,000,000: NPR 22,000.
  • NPR 30,000,001 to NPR 40,000,000: NPR 25,000.
  • NPR 40,000,001 to NPR 50,000,000: NPR 28,000.
  • NPR 50,000,001 to NPR 60,000,000: NPR 31,000.
  • NPR 60,000,001 to NPR 70,000,000: NPR 34,000.
  • NPR 70,000,001 to NPR 80,000,000: NPR 37,000.
  • NPR 80,000,001 to NPR 90,000,000: NPR 40,000.
  • NPR 90,000,001 to NPR 100,000,000: NPR 43,000.
Over NPR 100,000,000: NPR 43,000 + NPR 30 for each additional NPR 100,000 		The following documents are to be submitted:
  • An application in the format as per the ‘ANUSUCHI 1’ along with a 5 rupees stamp attached to it.
  • Two copies of ‘PRABANDHA PATRA’ (Article of Association) in the format as per ‘ANUSUCHI 2’.
  • Two copies of ‘NIYAMAWALI’ (Article of Memorandum) in the format as per ‘ANUSUCHI 3’.
  • Attested copies of the citizenship certificates of the founder shareholders.
  • In the case of a private company, a copy of the mutual agreement (if any).
  • If the founder company is a Nepali registered company, a copy of the company registration certificate, and a copy of the decision of the managing committee regarding details of the investment to be made upon the aspiring company, as well as the name and a copy of the citizenship certificate of the person representing the founding company.
 To register a company, the promoter must submit an application as prescribed by the Ministry of Industry, Commerce, and Supplies.

5.      Make a company rubber stamp

SN Agency Time Cost Remarks
1 Post office 1day NPR 275 – 300 The rubber stamp is to be used by the company for the following:
  • Official document signed or issues on its behalf
  • Negotiable instruments, promissory notes, bills of exchange
  • Statement of accounts, bills, invoices, requisition order forms
  • Reports and business reports used/submitted in their name.

6. Register at the local ward office and pay registration tax:

SN Agency Time Cost Required Documents Remarks
1 Local Ward Office 1-5 day Free
  • Registration Certificate from CRO
  • Memorandum of association
  • Articles of association
  • Shareholder’s agreement
  • Application Form
  • Lease Agreement
  • Details of the property
 The rental tax withholding is also required to be paid at the Local Ward Office. However, rental tax can be paid at the IRD if the lessor is a corporate body. Link

7.  Register for VAT and income Tax with the Inland Revenue Office, the Ministry of Finance

SN Agency Time Cost Remarks
1 Inland Revenue Office(IRO) 1-5 day Free The company must disclose the office address and withhold 15% tax of the rent for at least 3 months and deposit it to the tax office. If the company's objectives include goods or services subject to VAT, both registrations (VAT and income tax) should be obtained simultaneously.

8. Enroll the employees in the Provident Fund

SN Agency Time Cost Remarks
1 Social Security Fund 1day Free From the basic salary of each employee, 10 percent is deducted each month, and a matching contribution is made by employer. The contribution is made to the provident fund and released on employee retirement. The employer also has to pay gratuity on retirement of an employee at the rate prescribed by labor regulation. Both of these rules are applicable only if the company appoints 10 or more employees.

Public Firm

Under the Company Act 2013, a public limited company is one that has limited liability and sells shares to the general public. Anyone can buy its stock, either privately through an initial public offering (IPO) or publicly through stock market exchanges. Any public firm must have a minimum capital requirement of NPR 1, 00, 00,000. While registering a public limited company, there must be a minimum of 7 shareholders. Due to the higher number of compliances necessary in the latter, startup enterprises prefer to register as a private company rather than a public company.

1.      Filling up of prescribed application for Registration of Public Firms

SN Agency Time Cost Remarks
1 Office of the Company Registrar(CRO) Less than 1 day No charge The prescribed form must be filled up from Link

2. The memorandum and articles of association are verified and certified by an expert.

SN Agency Time Cost Remarks
1 Office of the Company Registrar(CRO) Format for MOA Link
Format for AOA Link

3.  File documents with the COR /DOI

SN Agency Time Cost Required Documents Remarks
1 Office of the Company Registrar Department of Industry 15 day Based on the capital of the firm, the registration fee needs to be paid:
  • Up to100, 00,000: NPR 15,000.
  • 1, 00, 00,001 to 10, 00, 00,000: NPR 40,000.
  • 10, 00, 00,001 to 20, 00, 00,000: NPR 70,000.
  • 20, 00, 00,001 to 30, 00, 00,000: NPR 1, 00,000.
  • 30, 00, 00,001 to 40,00,00,000: NPR 1,30,000
  • 40,00,00,001 to 50,00,00,000: NPR 1,60,000
  • Above 50,00,00,000: NPR 3000 for each 1,00,000
 The following documents are to be submitted:
  • An application in the format as per the ‘ANUSUCHI 1’ along with a 5 rupees stamp attached to it.
  • Two copies of ‘PRABANDHA PATRA’ (Article of Association) in the format as per ‘ANUSUCHI 2’.
  • Two copies of ‘NIYAMAWALI’ (Article of Memorandum) in the format as per ‘ANUSUCHI 3’.
  • Attested copies of the citizenship certificates of the founder shareholders.
  • In the case of a private company, a copy of the mutual agreement (if any).
  • If the founder company is a Nepali registered company, a copy of the company registration certificate, and a copy of the decision of the managing committee regarding details of the investment to be made upon the aspiring company, as well as the name and a copy of the citizenship certificate of the person representing the founding company.
 To register a company, the promoter must submit an application as prescribed by the Ministry of Industry, Commerce, and Supplies.

Partnership Firm

A partnership firm is a type of private company that functions similarly to a sole proprietorship. An entrepreneur can start a business by forming a partnership firm with two or more partners and entering into a partnership deed. . It also needs to be renewed on a regular basis and is only allowed to offer corporate guarantees. Partnership firms are prohibited by the Partnership Act from carrying on any business under the same name without renewing their registration. Partnership firms must be registered every year within 35 days of the end of the fiscal year. It is prohibited to operate a partnership firm without registering it and then renewing it. According to Partnership Act, 2020, it can be registered within the six months from the date of its formation.

According to Partnership Act, 2020, it can be registered within the six months from the date of its formation.
These are the required documents for partnership firm registrations:

  1. Agreement among Partners: 3 copies in the prescribed format of  partnership agreement
  2. Certified copy of Nepali Citizenship Certificate of each  partner
  3. Recent Passport sized photo of each  partner: 3 copies each
  4. Concerned partners must self- present with original citizenship
  5. License from the concerned authority (if any required) for example: license is required for the money – changer from Nepal Rastra Bank, transactions of medicines from medicine management Department etc.

Procedure / Process of Private Firm Registration

1.       Filling up of prescribed application for Registration of Partnership Firms

SN Agency Time Cost Remarks
1 Office of the Company Registrar(CRO) Less than 1 day No charge The prescribed form must be filled up from https://www.doc.gov.np/Downloads

2.  Submission of the application along with prescribed fees and documents to the concerned Documents.

SN Agency Time Cost Required Documents
1 Office of the Company Registrar Department of Industry 15 day Based on the capital of the firm, the registration fee needs to be paid:
  • Up to 1,00,000: NPR 600
  • More than 1,00,000 and up to 3,00,000 : NPR 2,000
  • More than 3,00,000 and up to 5,00,000 : NPR 4,000
  • More than 5,00,000 and up to 10,00,000 : NPR 7,500
  • More than 10,00,000 and up to 50,00,000 : NPR 10,000
  • More than 50,00,000 : NPR 15,000
  • Full Name of the firm
  • The Principal place of business of the firm,
  • The objectives of the firm including the short description of the
    • nature of the goods or services, as the case may be, which the firm intends to run the business,
  • The full name, surname and permanent address of the partners,
  • The matter of restriction imposed on the power of a partner, if any,
  • The types of partnership and the capital subscribed by each partner,
  • The name of a partner or partners, who represent the firm,
  • The mode to share the profit and loss between /among partners,
  • The mode to calculate the profit of a firm.
  • Any other matters prescribed by the concerned Department stating which should be set out in the application.

3.  Issuance of Registered Certificate

SN Agency Time Cost Remarks
1 Office of the Company Registrar(CRO) No charge The regulatory authority will provide a registration certificate after verifying the supplied documentation. The primary goal of the name check will be to rule out any names that are identical to those of existing companies or partnerships.
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