Introduction
Company formation in Nepal involves establishing a legal business entity under the Company Act, 2063 (2006). The process requires compliance with specific regulatory requirements set by the Office of the Company Registrar. Understanding the types of companies, registration procedures, and ongoing compliance obligations is essential for entrepreneurs seeking to establish legitimate business operations in Nepal.
Types of Companies in Nepal
Private Limited Company
A private limited company in Nepal is a business entity with limited liability where shares are not offered to the public. According to the Company Act, 2063, a private limited company must have a minimum of two shareholders and a maximum of fifty shareholders. The company requires at least two directors for management purposes. This structure provides liability protection to shareholders while maintaining operational flexibility for business activities.
Public Limited Company
A public limited company operates with shares available for public subscription and trading. The Company Act, 2063 mandates that a public limited company must have a minimum of seven shareholders. Public companies require a minimum of three directors and must comply with additional regulatory requirements from the Securities Board of Nepal. This structure suits large-scale enterprises requiring substantial capital investment.
One Person Company (OPC)
The Company Act, 2063 permits the formation of a One Person Company with a single shareholder and director. An OPC provides limited liability protection while allowing individual entrepreneurs to establish formal business structures. The OPC structure simplifies management requirements while maintaining corporate legal status and liability protection.
Company Formation Requirements in Nepal
Minimum Capital Requirements
Company TypeMinimum CapitalShareholdersDirectorsPrivate LimitedNPR 100,0002-502 minimumPublic LimitedNPR 500,0007+3 minimumOne Person CompanyNPR 100,00011
Essential Documents for Registration
The following documents are required for company formation in Nepal:
- The Memorandum of Association must contain the company’s name, registered office location, objectives, and liability clause as per Company Act, 2063.
- The Articles of Association must outline internal management rules, shareholder rights, director responsibilities, and operational procedures.
- The Certificate of Incorporation application must be submitted to the Office of the Company Registrar with all required supporting documents.
- Proof of registered office must demonstrate that the company has secured a physical address in Nepal for official correspondence.
- Director identification documents must include citizenship certificates, passport copies, and residential addresses for all proposed directors.
- Shareholder identification documents must provide citizenship information and residential addresses for all shareholders.
- The Affidavit of Compliance must confirm that all legal requirements have been fulfilled before registration.
Company Registration Process in Nepal
Step-by-Step Registration Procedure
Step 1: Obtain a Digital Signature Certificate from a licensed certifying authority as required by the Digital Signature Act, 2063.
Step 2: Reserve the company name by submitting an application to the Office of the Company Registrar and receiving approval within specified timeframes.
Step 3: Prepare the Memorandum of Association and Articles of Association in accordance with the Company Act, 2063 requirements.
Step 4: Digitally sign all documents using the Digital Signature Certificate obtained in Step 1.
Step 5: Submit the Certificate of Incorporation application along with all supporting documents through the online portal of the Office of the Company Registrar.
Step 6: Pay the registration fee as prescribed by the Company Act, 2063 based on the company’s authorized capital.
Step 7: Receive the Certificate of Incorporation from the Office of the Company Registrar upon approval of the application.
Step 8: Obtain a Permanent Account Number (PAN) from the Inland Revenue Department for tax purposes.
Step 9: Register with the Social Security Fund if the company employs workers in Nepal.
Compliance Obligations for Registered Companies
Annual Compliance Requirements
Companies registered in Nepal must fulfill specific compliance obligations under the Company Act, 2063:
- The Annual General Meeting must be conducted within six months of the financial year-end to approve financial statements and elect directors.
- Audited financial statements must be prepared by a licensed chartered accountant and submitted to the Office of the Company Registrar annually.
- The Annual Return must be filed with the Office of the Company Registrar containing information about shareholders, directors, and company activities.
- Tax returns must be submitted to the Inland Revenue Department in accordance with the Income Tax Act, 2058.
- The Board of Directors must maintain detailed minutes of all board meetings and shareholder meetings as per Company Act, 2063 requirements.
Regulatory Filings and Deadlines
Filing TypeDeadlineResponsible AuthorityAnnual ReturnWithin 45 days of AGMOffice of Company RegistrarAudited Financial StatementsWithin 6 months of year-endOffice of Company RegistrarIncome Tax ReturnAs per tax calendarInland Revenue DepartmentBoard Meeting MinutesMaintained continuouslyCompany Records
Taxation and Financial Obligations
Corporate Tax Requirements
Companies in Nepal are subject to corporate income tax under the Income Tax Act, 2058. The standard corporate tax rate is 25 percent on taxable income. Companies must maintain proper accounting records and prepare financial statements in accordance with Nepal Accounting Standards. The Inland Revenue Department conducts tax audits and assessments based on filed returns and supporting documentation.
Value Added Tax (VAT) Registration
Companies with annual turnover exceeding NPR 5 million must register for Value Added Tax under the VAT Act, 2052. VAT registration requires submission of application forms to the Inland Revenue Department along with business registration documents. Registered companies must file monthly or quarterly VAT returns depending on their turnover classification.
Compliance with Labor Laws
Employment Regulations
The Labor Act, 2074 governs employment relationships in Nepal. Companies must register with the Social Security Fund and maintain employee records. The minimum wage rates are set by the government and vary by province. Companies must provide mandatory social security contributions, health insurance, and workplace safety measures as per legal requirements.
Why Choose Axion Partners for Company Formation in Nepal
Axion Partners stands as the best and No. 1 service provider in Nepal for company formation and compliance services. The firm offers comprehensive assistance throughout the entire registration process, from name reservation to Certificate of Incorporation. Axion Partners maintains expertise in Nepal’s Company Act, 2063 and all related regulatory requirements. The team ensures timely submission of all compliance documents and maintains updated knowledge of regulatory changes. Clients benefit from professional guidance on company structure selection, tax optimization, and ongoing compliance obligations. Axion Partners provides end-to-end support for company formation, making the process efficient and legally compliant.
Frequently Asked Questions
What is the minimum time required for company registration in Nepal?
Company registration typically takes 7-15 business days from application submission, depending on document completeness and regulatory processing timelines at the Office of the Company Registrar.
Can a foreigner establish a company in Nepal?
Yes, foreigners can establish companies in Nepal as shareholders and directors, subject to compliance with the Company Act, 2063 and foreign investment regulations.
What are the annual compliance costs for a private limited company?
Annual compliance costs include audit fees, registration renewal fees, and tax filing expenses, typically ranging from NPR 50,000 to NPR 150,000 depending on company size.
Is a Digital Signature Certificate mandatory for company registration?
Yes, the Digital Signature Act, 2063 requires all company documents to be digitally signed before submission to the Office of the Company Registrar.
What happens if a company fails to file annual returns?
Non-compliance with annual filing requirements results in penalties under the Company Act, 2063, and potential suspension of company operations by the Office of the Company Registrar.
Contact Axion Partners today for professional company formation and compliance services in Nepal.
