If you are starting a new business in Nepal, one of the first steps you will need to take is to register an entity. Private limited company registration is a popular option for many startups in Nepal, as it provides several benefits, such as limited liability protection, greater access to funding, and ease of ownership transfer. 

In this post, we will provide:

A step-by-step guide to registering a private limited company in Nepal. 

Step 1: Choose and reserve a unique name for your company

The first step in registering your company is to choose a unique name for your business. Your company's name should be unique, easy to remember, and relevant to your business. The name should reflect the objectives or nature of your business. 

Once finalized, you may reserve the preferred name by visiting the online platform of the Office of Company Registrar (“OCR” or “CRO”). You will need to sign up and create an account at the OCR website using an email and phone number. It usually takes a week to get the name approved.  

While there is no name check facility available, you may check the company database to search whether companies with the same or similar name have been registered earlier. 

Step 2: Prepare the necessary documents

To register a private limited company in Nepal, you will need to prepare several documents, including the Memorandum of Association (“MoA”) and Articles of Association (“AoA”). Here is a checklist of information and documents required for registering a company in Nepal. While your company name is being approved by the OCR, you may compile and prepare these documents. 

The MoA and AoA needs to be signed by the promoter. Nepal does not accept electronic as well as digital signatures yet and promoters are required to sign the documents physically using wet ink. 

Step 3: Register the company

Once you have prepared the necessary documents and your company name is approved, you can file the application for company registration online with the OCR. The application should include an application, the MoA and AoA, notarized copies of the promoter's citizenship certificate, and the application fee.

The application fee for registration of a private limited company is based on the proposed amount of authorized capital of your company. The registration fee can be paid online to the OCR directly. Here is the current list of registration fee for private limited company:

To get the documents certified, the physical documents will have to be submitted separately. Once the registration process is completed, the OCR will issue a certificate of incorporation which contains the registration number of your company as well as date of incorporation. In addition, you will also get 3 copies of letters notifying the incorporation of your company for: 

1. One for your own record
2. Second to be submitted to the Inland Revenue Office/Taxpayer Service Office (“Tax Office”) for tax registration
3. Third for industry/department of commerce registration

In addition, the OCR also issues a PAN reservation letter that is to be presented to the Tax Office at the time of tax registration. And a legal person is now born! Now it can do everything a legal person can do including having its own official seal as well as buying and owning properties in its name. So, please prepare a company seal as well!  

Step 4: Execute lease agreement for registered office and register at ward office

Once the company is registered, the company can now officially enter into a lease agreement for its registered office location. Even if it is the promoter’s office, the company will have to enter into a lease agreement (Remember once the company is registered, it is a separate legal person now and distinct from the promoter(s)). 

Then the next step is to register the company at the ward office. In addition to the registration fee (which varies depending upon the type and size of municipalities), you are also required to pay a rental tax (if the landlord is an individual), In some cases, you may request for the deferral of rental tax deposit until the end of the financial year. Please note that the registration at the ward office has to be renewed every financial year. The ward office will also charge you for advertising and putting up the sign board of your company, which again varies. 

It is also recommended to obtain a letter of recommendation from the ward office for obtaining further registrations like the industry registration or for obtaining any specific licenses or approvals depending on the nature of your company’s business. 

Step 5: Obtain a tax registration certificate

The next step then is to obtain a tax registration certificate, generally referred to as Permanent Account Number or PAN, from the Inland Revenue Office or the Taxpayers Service Office, as the case may be. We will refer to these as Tax Office for our ease. The application has to be filed online using the credentials and details provided by the OCR in the PAN Reservation Letter at the time of company incorporation. One of the promoters needs to be present at the tax office to obtain the PAN where his biometric details will be recorded. Also note that the promoter himself needs to have his/her personal PAN too. Therefore, make sure that you have your personal PAN ready. 

Additionally, you may be required to register your company for Value Added Tax or Excise Duty. 

Step 6: Open a bank account

Once you have obtained the tax registration certificate, you can open a bank account in the name of the company. This will allow the company to receive the committed investment from the promoters and also receive payments from clients and customers. You may consider any of the 22 A Class Commercial Banks in Nepal to open your company’s bank account. The availability of the branch office near your company location, the quality of customer service, availability of online banking services, etc. are some important considerations while opening a bank account.  

Step 7: Obtain other licenses and permits

Depending on the nature of your business, you may need to obtain other licenses and permits from the relevant government agencies. At the same time, it is mandatory for your company to obtain either an industry registration or registration at the Department of Commerce depending on the nature of your company’s business. If the primary business of your company involves manufacturing or providing services, you will have to obtain an industry registration based on classification of various industries by the Industrial Enterprises Act, 2020. On the contrary, if your company is engaged in trading or export/import business, then you will have to register with the Department of Commerce. Your company may also be required to obtain an EXIM code from the Department of Customs if it needs to import any goods or export its products. 

Once these registration formalities are over, your company is finally ready to commence its business and then there are further regular legal formalities and compliances, which we will discuss in other articles. 

For now, here is a summary of all the steps discussed above: 

Step 1: Choose and reserve your company name

Step 2: Prepare necessary documents

Step 3: Register your company

Step 4: Register at ward office

Step 5: Obtain PAN

Step 6: Open a bank account

Step 7: Obtain other licenses/permits

Glossary of some important terms related to company incorporation

Promoter

Any person who plays a major part in incorporating a company i.,e. they are  the first people who agree to incorporate a company and are the subscribers of the shares of the company. They sign in the MOA, AOA, cover application and letter of power of attorney that are to be submitted at OCR at the time of incorporating the Company.  The Promoters later on may or may not be Shareholders of the Company.

Shareholder

A person, company or institution that owns at least one share of a company stock.

Director

Officers of the company who are responsible for managing the company and making decisions as to its operation on a day to day basis. 

Auditor

An auditor is a person authorized to review and verify the accuracy of financial records and ensure that companies comply with tax laws.

Certificate of Incorporation

A Certificate of Incorporation is a legal document or license proving the formation of a company that is issued by the Office of the Company Registrar. 

Board Of Directors (BoD)

The collective body of directors is known as the board of directors.

Registered Office

The main office of the company to which all communication relating to the company is sent by the governmental departments. 

Memorandum of Association (MoA)

The memorandum of association of a company represents the charter of the company that is prepared during the formation and registration process of a company to define its relationship with the Shareholders and specifies the objectives of the company.

Article of Association (AoA)

An article of association regulates the way in which the company's internal affairs are managed. 

Office of the Company Registrar (OCR)

The Office of the Company Registrar is an administrative body that registers the company, puts their records and ensures compliance under the Companies Act.

Consensus Agreement

Consensus agreement is unanimous agreement between all Promoters/Shareholders of a private company.  

Authorized capital

Authorized capital is the sum total capital that a company could issue at maximum. Whenever, it has to be altered, a definite procedure has to be fulfilled as provided for in the articles of association or company laws of Nepal. 

Issued capital

Issued capital represents a portion of authorized capital that the company will issue to the Promoters. What company receives from payment out of issued and subscribed capital is the paid up capital of the company.

Subscribed capital (capital commitment from Promoters)

This is the commitment made by the Promoters to pay to the company to start the business and the OCR has directed that the subscribed capital should be equal to the issued capital.

PAN

PAN is the abbreviated form for Permanent Account Number, a unique registration number issued by the tax office in Nepal. 

Some Frequently Asked Questions (FAQs) about registering a company in Nepal

1. Is there any criteria to choose the name for a private limited company?

Yes, the name of the company must be certain, unique, compatible with the objectives of the company, must not coincide with the name of any governmental organization and should end with the suffix ‘Pvt. Ltd.’. 

2. How long does it take to get the name of the company approved?

OCR approves the name based on the uniqueness of the name. Your company name may be approved quickest as, within a day and may also take 14 days at maximum. So, naming your company is the foremost significant deal. 

3.How long does it take to register a private limited company in Nepal?

You can get your company registered within a week.

4. Do I need to be physically present during the registration process?

No, not required to be present physically. You may appoint an agent delegating him/her the authority to register your company.

5. What is limited liability?

Limited liability is a form of legal protection for Shareholders and owners that prevents individuals from being held personally responsible for their debt or financial losses. You are liable to the extent of your shareholding in the company. Personal assets are not procured in the case of bankruptcy. 

6. Do I need a lease agreement at the time of selecting a registered address?

Yes, a lease agreement is required at the time of selecting a registered address. 

7. Why must a company be registered?
It proves legal existence, identity and credibility to your operation. 

8. What is the difference between Shareholders and Promoters?

Promoters  are the ones that incorporate the company. Typically, the Promoters are  Shareholders of the company at the time of incorporation i.e they are the first subscribers to the MoA of the company whereas the Shareholders are the ones who own a part or whole of the share of the company. The Shareholders are not necessarily the Promoters of the company.  

9. Are there any annual compliances to be fulfilled by a private company?

Yes, companies must appoint an auditor before the first Annual General Meeting (“AGM”), and annually in the subsequent AGMs. Thereafter, prepare an audit report, report as per Section 51 of Companies Act, 2063, conduct the Annual General Meeting of the Company, elect BoD, if needed as per the Articles of Association. These must be notified to the OCR within six months from the end of fiscal years. 

10. Can a private limited  company sell their shares and debentures publicly ? 

Private limited companies cannot share their shares and debentures publicly.

11. What should we consider while submitting MOA and AOA?

The MoA and AoA should be printed on only one side in either Nepali paper or some other good paper written in clear Nepali language and must have signatures of witnesses and all the Promoters.

12. Can a company incorporate a firm or be a partner in a partnership firm?

No, companies can neither incorporate a partnership or private firm.

13. What is the minimum and maximum number of the directors?

The number of directors of a private limited company shall be minimum 1 maximum 11. 

14. What is the maximum tenure of the directors?

The tenure of the directors of a private limited company will be as mentioned in the Article of Association. 

15. Is there any specific capital structure for your company?

You have to set the capital structure for your company. depending upon the type and nature of the company you are trying to set up. Eg. Travel Agency company must have minimum paid up capital of Rs 25,00,000.00

In conclusion, private limited company registration in Nepal can be a complex and time-consuming process. However, by following the steps outlined in this post and using relevant keywords in your company details, you can make your business more visible and searchable online. We at Startup Law Advisers have helped hundreds of entrepreneurs register their companies in Nepal and also manage their corporate compliance. Book a free consultation to know more about company registration in Nepal.