Starting a company is an exciting journey filled with dreams of growth and success. However, for many budding entrepreneurs in Nepal, the legal and compliance requirements related to company registration and annual filings can seem confusing and overwhelming. This article aims to provide a clear understanding of the procedure to register a company in Nepal and the basic yearly tasks every company must perform to avoid penalties and legal troubles.
1. Company Registration Procedure in Nepal
In Nepal, company registration is governed by the Companies Act, 2063 (2006) and is managed by the Office of the Company Registrar (OCR). Any person intending to do business in a formal manner can register a Private Limited, Public Limited, or Non-Profit Company, based on their objectives.
Steps for Company Registration:
a) Name Reservation
The first step is to propose a company name online through the OCR portal (www.ocr.gov.np). The name must be unique and not misleading.
b) Documentation:
After name approval, the following documents must be submitted:
• Application in the prescribed format (form A)
• Memorandum of Association (MOA)
• Articles of Association (AOA)
• Copy of citizenship certificates of promoters
• Consent of directors and a verified office address
c) Submission and Fees:
All documents are submitted online or at the OCR office along with the applicable registration fee, which depends on the company’s authorized capital.
d) Certificate Issuance:
Upon approval, the OCR issues a Certificate of Incorporation, allowing the company to operate legally.
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2. Post-Registration Basic Annual Requirements
Registering a company is just the beginning. To keep your business compliant and avoid penalties, every company must fulfill several annual obligations.
a) Tax Registration and Compliance:
• PAN/VAT Registration: Mandatory from the Inland Revenue Office after company registration.
• Regular Tax Filing: Includes monthly VAT (if applicable), TDS, and income tax filings.
• Annual Tax Return: Companies must submit a final income tax return within 3 months after the end of the fiscal year (i.e., by Ashwin end).
b) Financial Audit:
• Every company must get its financial statements audited annually by a registered auditor.
• The audit report must be approved in the Annual General Meeting (AGM).
c) Holding Annual General Meeting (AGM):
• Companies are required to hold an AGM within 6 months of the end of the fiscal year.
• Agenda includes approval of audit report, appointment of auditors, director’s report, etc.
d) Submission to OCR:
• Companies must submit the audited financial statement, director’s report, and details of AGM to the OCR within 6 months of fiscal year-end.
• Failure to submit leads to monetary fines and legal complications.
e) Renewal of Licenses (if applicable):
• Sector-specific businesses must renew their industry license, local body license, or other regulatory licenses annually.
f) SSF and Labor Law Compliance:
• If employees are hired, companies must register with the Social Security Fund (SSF) and deduct and deposit employee contributions accordingly.
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3. Consequences of Non-Compliance
Non-fulfillment of annual compliance requirements can result in:
• Fines ranging from a few thousand to lakhs of rupees depending on the delay period.
• Disqualification of directors.
• Restriction on taking loans, participating in tenders, or doing foreign transactions.
• Forced company strike-off in serious cases.
Conclusion
Proper company registration and regular compliance help build trust among investors, customers, and government institutions. Entrepreneurs should either build internal capacity or consult with legal and accounting professionals to ensure that these responsibilities are met timely. In a growing economy like Nepal, compliant and well-managed companies not only avoid legal hassles but also contribute significantly to national development.
(Writer Mr. Ramesh Ghimire is an Advocate by his profession. He writes on issues related to law, justice and public interest as a writer)
