Company renewal is a mandatory compliance requirement under the Companies Act, 2063 (2006) of Nepal. Every registered company must file annual returns with the Office of Company Registrar (OCR) to maintain its active status. This article provides detailed information about the costs, procedures, and requirements for renewing a company in Nepal.
Understanding Company Renewal in Nepal
Company renewal refers to the annual compliance process where registered companies submit their financial statements, audit reports, and other required documents to the Office of Company Registrar. According to Section 110 of the Companies Act, 2063, every company must file its annual returns within six months from the end of its fiscal year. The fiscal year in Nepal runs from Shrawan 1 to Ashad 32 (mid-July to mid-July).
The renewal process ensures that the company maintains its legal status and remains in good standing with the regulatory authorities. Companies that fail to complete this process face penalties and may eventually be struck off from the company register. The Office of Company Registrar maintains records of all registered companies and monitors their compliance status throughout the year.
OCR Fees for Company Renewal
The Office of Company Registrar does not charge any fees for the standard renewal process when companies file their annual returns within the prescribed timeline. This policy makes compliance more accessible for businesses operating in Nepal. However, this fee waiver applies only to timely submissions made within six months of the fiscal year end.
Companies must understand that while the OCR does not charge renewal fees, the absence of fees does not eliminate the obligation to file annual returns. The Companies Act, 2063 makes it mandatory for all registered companies to submit their documents regardless of whether they are actively conducting business or remain dormant.
Penalties for Delayed Filing
The Companies Act, 2063 and subsequent regulations impose strict penalties on companies that fail to file their annual returns on time. According to Section 110 of the Act, delayed applications or non-filing of applications results in fines that escalate based on the duration of delay.
Fine Structure for Late Filing
| Duration of Delay | Fine Amount (NPR) |
|---|---|
| Up to 1 Year | 1,500 – 5,000 |
| 1 to 2 Years | 5,000 – 10,000 |
| 2 to 3 Years | 10,000 – 15,000 |
| More than 3 Years | 15,000 – 20,000 |
The fines start from NPR 1,500 and can reach up to NPR 20,000 per year depending on the length of non-compliance. These penalties accumulate annually, meaning a company that has not filed returns for multiple years will face compounded fines. The Office of Company Registrar has the authority to impose these penalties and may refuse to process renewal applications until all outstanding fines are paid.
Companies that remain non-compliant for extended periods risk being struck off from the company register under Section 111 of the Companies Act, 2063. Once struck off, the company loses its legal status and cannot conduct business operations until it is restored through a formal application process.
Service Charges for Company Renewal
Professional service providers and law firms in Nepal offer company renewal services to assist businesses with their compliance obligations. These services include preparation of necessary documents, filing applications with the OCR, and obtaining approval certificates.
Our Service Charges
Our firm provides comprehensive company renewal services at a competitive rate of NPR 7,500. This fee covers all aspects of the renewal process from document preparation to obtaining the final approval letter from the Office of Company Registrar. The service charge remains fixed regardless of the company’s size or complexity, making it predictable for budgeting purposes.
The service fee includes professional expertise in handling OCR procedures, ensuring that all documents meet regulatory requirements, and managing any queries or issues that may arise during the processing period. Companies benefit from engaging professional services as it reduces the risk of rejection due to incomplete or incorrect documentation.
Required Documents for Company Renewal
The Office of Company Registrar requires specific documents to process company renewal applications. Companies must ensure that all documents are current, accurate, and properly prepared according to regulatory standards.
Essential Documents
- User ID and Password of Company Registrar’s Office: Every registered company receives unique login credentials for the OCR online portal. These credentials are essential for accessing the company’s profile and submitting renewal applications electronically. Companies must maintain the security of these credentials and update them if there are changes in authorized personnel.
- Audit Report of the Company: According to Section 109 of the Companies Act, 2063, every company must prepare annual financial statements and have them audited by a registered auditor. The audit report must comply with Nepal Financial Reporting Standards (NFRS) or Nepal Accounting Standards (NAS) as applicable. The report should include the balance sheet, profit and loss account, cash flow statement, and notes to accounts for the relevant fiscal year.
The audit report must be signed by a chartered accountant registered with the Institute of Chartered Accountants of Nepal (ICAN). The auditor’s report should provide an opinion on whether the financial statements present a true and fair view of the company’s financial position. Companies must ensure that the audit is completed before the renewal deadline to avoid delays in the filing process.
Scope of Work in Company Renewal
Professional service providers undertake several tasks to complete the company renewal process efficiently. Understanding the scope of work helps companies appreciate the value of professional assistance and ensures transparency in service delivery.
Preparation of Application for Company Renewal
The first step involves preparing the annual return application according to the format prescribed by the Office of Company Registrar. This application includes details about the company’s registered office, directors, shareholders, share capital, and business activities during the fiscal year. The application must be accurate and complete to avoid rejection or requests for additional information.
The preparation process requires gathering information from various sources within the company, including the board of directors, shareholders’ register, and accounting records. Professional service providers verify all information against official company documents to ensure consistency and accuracy. The application must be prepared in the Nepali language and follow the specific format required by the OCR.
Preparation of Minutes for Company Renewal
Companies must prepare board minutes and, in some cases, shareholders’ meeting minutes to authorize the filing of annual returns. According to Section 110 of the Companies Act, 2063, the board of directors must approve the annual financial statements before submission to the OCR. The minutes document this approval and provide evidence of proper corporate governance.
The minutes must record the date, time, and place of the meeting, names of attendees, matters discussed, and resolutions passed. For company renewal purposes, the minutes should specifically mention the approval of financial statements, audit report, and authorization to file annual returns with the OCR. The minutes must be signed by the chairperson of the meeting and kept in the company’s statutory records.
Filing of Application at OCR
After preparing all necessary documents, the application is filed with the Office of Company Registrar through the online portal. The filing process involves uploading scanned copies of all required documents, completing online forms, and submitting the application electronically. Professional service providers ensure that all documents are properly formatted and meet the technical requirements of the OCR system.
The OCR system generates an acknowledgment receipt upon successful submission, which serves as proof of filing. Companies should retain this receipt for their records. The filing must be done using the company’s registered user ID and password, and the system maintains an audit trail of all submissions. Professional service providers monitor the application status and respond promptly to any queries from the OCR.
Obtaining Approval with Company Renewal Letter
The final step involves obtaining the approval certificate from the Office of Company Registrar. After reviewing the submitted documents, the OCR issues a company renewal letter confirming that the annual returns have been accepted and the company’s registration remains active. This letter serves as official proof of compliance and should be maintained in the company’s statutory records.
The processing time varies depending on the OCR’s workload and the completeness of submitted documents. Typically, applications are processed within 7 to 15 working days if all documents are in order. Professional service providers follow up with the OCR to expedite processing and collect the approval letter on behalf of the company. The renewal letter includes the company’s registration number, renewal date, and validity period.
Legal Framework for Company Renewal
The legal basis for company renewal in Nepal stems from several provisions in the Companies Act, 2063. Section 110 specifically addresses the requirement for filing annual returns and prescribes the timeline and content of such returns. The Act empowers the Office of Company Registrar to enforce compliance and impose penalties for violations.
The Companies Regulations, 2064 (2007) provide detailed procedures for implementing the provisions of the Companies Act. These regulations specify the format of annual returns, the documents to be submitted, and the process for filing applications. Companies must comply with both the Act and the Regulations to fulfill their renewal obligations.
Consequences of Non-Renewal
Companies that fail to renew their registration face several serious consequences. Under Section 111 of the Companies Act, 2063, the Office of Company Registrar may strike off companies that have not filed annual returns for consecutive years. A struck-off company loses its legal status and cannot conduct business operations, enter into contracts, or maintain bank accounts.
Directors of non-compliant companies may face personal liability under certain circumstances. Section 110 of the Act provides that directors are responsible for ensuring timely filing of annual returns. Failure to fulfill this duty may result in penalties imposed on individual directors in addition to the company.
Non-renewal also affects the company’s ability to participate in government tenders, obtain licenses, and conduct banking transactions. Many regulatory authorities and financial institutions require proof of current company registration before processing applications or providing services. Companies must maintain their renewal status to avoid operational disruptions.
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Best Practices for Company Renewal
Companies should establish internal systems to ensure timely compliance with renewal requirements. Designating a compliance officer or engaging professional service providers helps maintain consistent adherence to regulatory deadlines. Companies should maintain a compliance calendar that tracks important dates such as fiscal year end, audit completion deadline, and renewal filing deadline.
Maintaining organized records throughout the year simplifies the renewal process. Companies should keep updated registers of directors, shareholders, and share transfers. Financial records should be maintained according to accounting standards to facilitate audit completion. Regular communication with auditors ensures that the audit is completed well before the renewal deadline.
Companies operating in Nepal should budget for renewal costs including audit fees, professional service charges, and potential penalties for late filing. Planning ahead prevents last-minute rushes and reduces the risk of non-compliance. Companies should also ensure that their registered office address and contact information with the OCR remain current to receive official communications.
What is the deadline for filing company renewal in Nepal?
Companies must file annual returns within six months from the end of their fiscal year. The standard fiscal year in Nepal ends on Ashad 32, making the deadline Poush end (mid-January).
Can a company operate without renewing its registration?
No, companies must maintain current registration by filing annual returns. Operating without renewal violates the Companies Act, 2063 and may result in penalties and striking off from the register.
What happens if a company misses the renewal deadline?
The company faces fines ranging from NPR 1,500 to NPR 20,000 per year depending on the duration of delay. Extended non-compliance may result in the company being struck off.
Is the audit report mandatory for company renewal?
Yes, Section 109 of the Companies Act, 2063 requires all companies to prepare audited financial statements and submit them with annual returns to the Office of Company Registrar.
How long does the renewal process take?
The Office of Company Registrar typically processes renewal applications within 7 to 15 working days if all documents are complete and accurate.
Can dormant companies skip the renewal process?
No, all registered companies must file annual returns regardless of whether they are actively conducting business. Dormant companies must still prepare financial statements and complete the renewal process.
What documents prove that a company has renewed its registration?
The Office of Company Registrar issues a company renewal letter upon approval. This letter serves as official proof that the company has filed its annual returns and maintains active status.
Who is responsible for ensuring company renewal?
The board of directors is responsible for ensuring timely filing of annual returns. Directors may face personal penalties if the company fails to comply with renewal requirements.
