Company Registration in Nepal
Company registration in Nepal
The registration of company in Nepal is governed by the Companies Act 2006 (2063) (“Companies Act”) . The Office of Company Registrar (“OCR”) is the competent authority to govern the company registration.
Types of companies under Companies Act
Under the Companies Act, the following types of companies can be registered:
- Private company;
- Public company; and
- Profit not distributing company
The basic difference between public companies and private companies are the ability to raise the fund from the general public. Public companies can raise the fund from the general public by issuing securities such as shares, bonds or debentures. However, the private companies are restricted from collecting the fund by offering the shares in such a manner. Similarly, a public company should have minimum of 7 shareholders with no maximum limit. However, the maximum number of shareholders of a private company cannot exceed more than 101.
Similarly, profit not distributing companies can be incorporated for the following objectives:
- Development and promotion of any profession;
- Protection of collective rights and interests of the persons engaged in a specific profession or occupation; and
- For the attainment of any scientific, academic, social, benevolent or public utility or welfare objective on the condition of not distributing dividends.
NGO registration
Since the reestablishment of the multiparty democracy in 1990, the number of non-government organizations (NGOs) is steadily on the rise, and the pace has been accelerated after the 2006 people’s movement. Although many NGOs are criticized for making the country dependent on foreign aid and colluding with the donors to help them meet vested interests, there is no denying that the NGOs have also contributed to the social development in the country.
Perhaps that is why, the number of NGOs is increasing all the time, and people involved in other sectors are also interested in registering their NGOs and contribute to the development process. The registration process of NGOs in Nepal in step by step is
- Step 1: Obtaining recommendation letter from the ward office. ...
- Step 2: Obtaining recommendation letter from District Coordination Committee. ...
- Step 3: Obtaining registration certificate from District Administration Office. ...
- Step 4: Affiliation from Social Welfare Council.
- Step 5: Obtaining PAN certificate from Inland Revenue Department
Social Work Registration Frameworks
A professional audit of legal architectures governing non-profit operations, public benefit entities, and social service deployment.
NGO (Non-Governmental Organization)
An NGO is a membership-driven, public-benefit civic entity. Professionally, it operates under strict bureaucratic supervision from local home-affairs ministries.
Registered under district-level civic laws (e.g., Association Registration Act, 1977 in Nepal or Societies Registration Act, 1860 in India).
Requires a minimum of 7 Nepali citizens to form a founding general assembly. All members must submit a clean police clearance report.
- Local Ward Office recommendation.
- District Coordination Committee (DCC) clearance.
- Final registration certificate from the District Administration Office (DAO).
Highly demanding. Requires annual renewals at the DAO, requiring an annual audit report, a tax clearance certificate from the Inland Revenue Office, and a renewed office lease.
The end-to-end registration process typically spans 1 to 2 months, contingent upon fulfillment of all requisite institutional steps.
Allowed to raise funds publicly via membership fees, local donations, or domestic corporate CSR (Corporate Social Responsibility) grants.
The following local records must be collected in full physical dossiers for district authority review:
- Ad-Hoc Minutes: A certified copy of the minutes of meeting of the ad-hoc committee detailing the formal approval to establish the proposed NGO.
- Identification Credentials: Certified copies of citizenship certificates for all participating board members.
- Vetting & Backgrounds: Passport-sized photographs along with official copies of character reports issued by the Nepal Police for all members from their respective relevant districts.
- Governance Blueprint: The proposed formal draft of the Organization's Constitution (Bidhan).
- Premises Verification: A legally executed rent agreement settled between the proposed NGO and the house owner of the designated NGO headquarters office.
INGO (International NGO)
An INGO is an external legal entity operating locally as a foreign branch. It is treated under diplomatic, national security, and international development laws.
Handled directly by the central government via the Social Welfare Act, 1992 and managed comprehensively by the Social Welfare Council (SWC).
They do not register as a local company. Instead, they must execute a formal General Agreement (GA) for institutional presence and a Project Agreement (PA) for explicit development goals with the SWC and relevant line ministries.
The institutional onboarding process takes approximately 4 to 6 months. This expanded window accounts for mandatory cross-ministry vetting, including security clearances from the Ministry of Home Affairs and final tracking by the Ministry of Finance.
Professionally, INGOs cannot execute projects directly at the grassroots level. They are legally mandated to select, vet, and fund local, registered NGOs to act as their operational "implementing partners."
International entities must submit formal dossier structures to the SWC, translated into English or Nepali, and apostilled by the respective home state registry:
- Apostilled Parent Charter: Authenticated legal proof of the Certificate of Incorporation and current operational standing of the parent organization in its home country.
- Global Governing Constitution: Certified copies of the primary international institutional bylaws and structural charter.
- Board Resolution Mandate: A formal, signed resolution from the international board of directors declaring explicit intent to expand operations and establish a branch office in Nepal.
- Power of Attorney (PoA): A legally binding executive instrument appointing and authorizing a Country Representative to execute all state-level transactions.
- Financial Credentialing Statement: Formal bank reference credentials and certified financial audit records covering the preceding three consecutive fiscal years of the parent entity.
- Strategic Project Portfolio Plan: A formal layout mapping out specific target geographic districts, multi-year thematic development sectors, and an explicit fund allocation roadmap.
Non-Profit Organization (NPO)
Professionally, "Non-Profit Organization" is an accounting and tax designation applied to an existing legal vehicle, rather than an independent standalone registration track.
An entity that qualifies for tax-exempt status under national tax codes (e.g., the Income Tax Act, 2002). It simply means that any net surplus generated at the end of the fiscal year cannot be skimmed off by the board; it must be zeroed out or rolled into the next year's operational reserve.
An NPO can generate income from commercial activities (like selling merchandise or charging for training programs), but those revenues must legally feed back into the core social mission.
Acquiring a formal Public Benefit Tax-Exempt Certificate from the Inland Revenue Department (IRD) takes approximately 3 to 4 weeks *after* your base legal entity (NGO or Company) is fully incorporated.
Demands strict annual submission of audited accounts to the IRD. Failure to file within 3 months of the fiscal year closing triggers immediate suspension of tax-exempt privileges.
To upgrade a base legal structure into a recognized tax-exempt public benefit entity, the following records must be submitted to the Inland Revenue Department (IRD):
- Base Entity Incorporation Credentials: Certified true copies of your structural registration certificate from either the DAO (for NGOs) or the OCR (for Non-Sharing Companies).
- Validated Organizational Constitution: Formally approved bylaws (Bidhan or Memorandum/Articles of Association) indicating strict profit non-distribution clauses.
- Permanent Account Number (PAN) Record: An official copy of the pre-issued PAN certificate from the local Inland Revenue Office.
- Tax Compliance Undertaking: A formal declaration signed by all active board members pledging structural allegiance to statutory charity tax codes.
- Physical Office Localization Ledger: Validated copy of the registered house rent contract accompanied by land ownership certifications (Lalpurja) of the leased headquarters premises.
Non-Sharing Company (Company Not Distributing Profits)
This is a modern corporate hybrid designed for professionals who want the structural agility of a private business with the strict moral mission of a charity.
Registered under national corporate law (e.g., Chapter 19 of the Companies Act, 2006 in Nepal, or Section 8 of the Companies Act, 2013 in India).
Registered entirely online through the national Office of the Company Registrar (OCR). It requires a minimum of 5 promoters (unlike the 7 required for an NGO).
Highly optimized. The entire setup window takes only 7 to 14 business days due to centralized digital processing at the Office of the Company Registrar (OCR), circumventing slow regional bureaucratic loops.
Unlike an NGO, it never needs annual renewals at a district administrative office. It has perpetual succession. It only requires regular corporate filing (submitting audited financial statements and annual general meeting minutes to the OCR).
Members do not own "shares" that can be sold for profit, and their liability is strictly limited to what they pledge in writing. Foreign nationals and foreign corporate bodies can be registered as founding promoters much more easily than in a local NGO setup.
Because this track utilizes a digital workflow under the Office of the Company Registrar (OCR), all documentation must be rendered into compliant PDF structures for electronic submission:
- Memorandum of Association (MoA): The core corporate constitutional draft specifying that all operational surpluses will be reinvested into the public-benefit mandate, explicitly disabling dividends.
- Articles of Association (AoA): The internal administrative blueprint detailing promoter voting rules, managing board appointments, and internal audit mechanisms.
- Promoter Identification Matrix: Certified digital copies of national citizenship cards (or passports for foreign nationals) of a minimum of five founding promoters.
- Self-Declaration Attestation Forms: Signed personal verification statements from every promoter certifying a clean legal history, absence of criminal records, and freedom from insolvency.
- Name Reservation Voucher: Digital validation receipt proving approval of the corporate name string via the OCR electronic portal interface.
Trust (Guthi)
A Trust is a fiduciary mechanism designed to lock financial assets or property to a permanent cause. It is asset-centric rather than people-centric.
Registered under national trust laws or the Guthi Act / National Trust Frameworks via land administration registries, district courts, and judicial registration departments.
- Settlor: The individual providing the capital/property.
- Trust Deed: The unchangeable, legally binding asset constitution.
- Trustees: The permanent board managing the assets.
Takes approximately 3 to 5 weeks. This timeframe includes the formal validation of asset transfers, title deeds mapping, and judicial registration of the core Trust Deed.
Unlike an NGO or a Corporate Hybrid, there is no rotating membership base or general assembly voting loops. Trustees are appointed for life or succeed one another strictly via the rules locked into the original Trust Deed.
Ideal for long-term institutional permanence. If an individual wishes to endow a permanent school building, a wildlife sanctuary, or a specific medical research fund that cannot be dissolved or altered by future changing boards, they lock it into a Trust.
Trust configurations are legally binding, immutable structures. Their validation process demands rigorous title validation and asset lock archiving:
- The Executed Trust Deed: The core fiduciary charter defining the unchangeable social objectives of the fund, trustee replacement procedures, and capital allocation restrictions.
- Asset Ownership Certifications: Official title deeds (e.g., land registry papers or certified banking security deposit slips) proving clear ownership of the initial wealth being endowed.
- Settlor Identification Dossier: Complete identity proofs, tax compliance verifications, and permanent address records of the individual providing the seed asset.
- Trustee Consent Affidavits: Formally witnessed, signed consent declarations from each incoming member of the Board of Trustees accepting permanent fiduciary liability.
- Property Appraisement Certificate: An official, certified valuation report detailing the current financial market worth of real estate or assets allocated to the trust.
