Private Company Registration in Nepal | Complete Guide 2025

What is a private company registration in Nepal?

Private company registration in Nepal entails the legal process of establishing a company with limited liability, owned and managed by a closed group of individuals or entities.

This type of registration restricts the transfer of shares, limits the number of shareholders, and prohibits public trading of company shares.

Private companies are commonly preferred for their flexibility in decision-making, reduced regulatory requirements, and privacy in financial matters.

 

What are the requirements for private company registration?

To register a private company in Nepal, several prerequisites must be met.

These typically include drafting and notarizing the company’s memorandum and articles of association, obtaining a company name reservation certificate, preparing a company seal, securing directors’ consent and identification documents, and acquiring a PAN (Permanent Account Number) card.

A company must appoint a registered office address within Nepal and fulfill any specific industry-related licensing or permits.

Can I register a private company with a single shareholder?

Yes, it is possible to register a private company in Nepal with a single shareholder. The Companies Act allows for a minimum of one shareholder to establish a private company.

This provides flexibility for entrepreneurs or small business owners who wish to operate independently or maintain full control over their ventures.

Even with a single shareholder, the company must still comply with all legal requirements for registration, including drafting necessary documents, obtaining approvals, and fulfilling any financial or administrative obligations.

How does private company registration differ from public registration?

Private company registration differs from public registration primarily in terms of ownership structure, shareholder rights, and regulatory requirements.

In a private company, ownership is limited to a closed group of individuals or entities, whereas public companies offer shares to the general public through stock exchanges.

Private companies have fewer regulatory obligations compared to public companies, such as less stringent reporting and disclosure requirements. private companies often have a more streamlined decision-making process due to the smaller number of shareholders and less public scrutiny.

What is the process for registering a private company name ?

The process for registering a private company in Nepal involves several steps. 

1. Name Selection: Choose a unique and appropriate name for your company. It should be easy to remember, reflect your business activity, and comply with naming regulations (avoiding offensive or already registered names).
2. Availability Check:

1. • Online: The OCR website (https://ocr.gov.np/) might offer an online name reservation system (availability might depend on website features). Check for such a service on the OCR website.
   • Offline: If no online system exists, visit the OCR office in person and submit a name reservation application form with your desired company name.

3. Response from OCR:

1. • Online: If available, the online system should provide immediate feedback on the name’s availability.
   • Offline: The OCR will process your application form and inform you (potentially within a few days) about the name’s availability.

4. Name Reservation (if available):

1. • Online: If online reservation is available and your chosen name is available, you might be able to reserve it through the website for a specific period (details depend on the system).
   • Offline: Upon confirmation of availability, you can formally request the name reservation by submitting the required fee (if any) to the OCR.

Can I convert a sole proprietorship into a private company?

Yes, it is possible to convert a sole proprietorship into a private company in Nepal. The process involves several steps, including drafting and notarizing a memorandum and articles of association, obtaining necessary approvals, and fulfilling any regulatory requirements for private company registration.

The proprietor must also transfer assets and liabilities from the sole proprietorship to the newly formed private company. the conversion process may involve obtaining new licenses or permits required for operating as a private company.

Are there any restrictions on the business activities of a private company?

Private companies in Nepal are generally free to engage in a wide range of business activities, subject to compliance with applicable laws, regulations, and licensing requirements. certain restrictions may apply depending on the nature of the business activities and industry-specific regulations.

How many directors are required for private company registration?

In Nepal, a private company must have a minimum of one director to register. there is no maximum limit on the number of directors allowed for a private company. The director(s) must be individuals who meet the eligibility criteria set forth by the Companies Act and other relevant regulations. They are responsible for managing the affairs of the company, making strategic decisions, and ensuring compliance with legal and regulatory requirements.

Can a private company issue shares to the public?

No, a private company cannot issue shares to the public. Private companies are restricted from offering their shares to the general public or trading them on stock exchanges. The ownership of shares in a private company is typically limited to a specific group of individuals or entities, often comprising founders, investors, and employees. Private companies can offer shares to existing shareholders or private investors through private placement.

What are the advantages of private company registration?

Registering a private company offers several advantages:

1. Limited Liability: Shareholders’ liability is limited to their investment, protecting personal assets.
2. Separate Legal Entity: The company is distinct from its owners, allowing it to own property, enter contracts, and sue or be sued independently.
3. Continuity: The company’s existence is not affected by changes in ownership or the death of shareholders.
4. Capital Raising: Easier to raise capital through the sale of shares.
5. Credibility: Registered companies are often viewed as more credible and trustworthy by customers, suppliers, and investors.
6. Tax Benefits: Potential for various tax advantages and incentives.

Can I register a foreign-owned private company in Nepal?

Yes, it is possible to register a foreign-owned private company in Nepal. Foreign investors can establish private companies in Nepal either as wholly-owned subsidiaries or joint ventures with local partners. The process typically involves registering the company with the Company Registrar’s Office and obtaining necessary approvals from relevant government authorities. Foreign-owned private companies must comply with foreign investment regulations, company law, and other applicable laws and regulations in Nepal. Foreign-owned companies may need to obtain special permits or licenses from regulatory authorities.

Process:

• Eligibility: There are no restrictions on nationality for company registration. However, depending on your specific business activity, you might need prior approval from relevant regulatory bodies.
• Company Type: The most popular choice for foreign investors is a private limited company (Pvt. Ltd.) due to its simpler structure and limited liability protection.
• Foreign Investment Approval: While not always required, in some cases, you might need permission from the Department of Industry (DoI) or the Investment Board of Nepal (IBN) before registering your company. This depends on the nature of your business activity.
• Registration Process: The general registration process involves:
  • Obtaining any necessary permits or approvals for your specific business activity.
  • Submitting the required documents, including proof of foreign investment permission (if applicable), to the Office of the Company Registrar (OCR).
  • Completing any additional steps, such as tax registration with the Inland Revenue Office (IRO).

Are there any tax benefits for private companies in Nepal?

Yes, private companies in Nepal can avail certain tax benefits, including corporate tax rates that are generally lower compared to individual tax rates. private companies may qualify for tax incentives or exemptions provided by the government to promote specific industries or investment activities. For example, companies engaged in certain priority sectors or located in designated development zones may be eligible for tax holidays or reduced tax rates.

Can I operate multiple businesses under one private company registration?

Yes, one can operate multiple businesses under one private company registration in Nepal. This is typically done by setting up different divisions or business units within the same company, each focusing on a distinct line of business. All these activities are managed under the umbrella of the single registered company, using the same legal entity.

How often do I need to file financial statements for a private company?

Private companies in Nepal are required to file financial statements annually with the Company Registrar’s Office and the Inland Revenue Department. The financial statements must comply with the applicable accounting standards and provide a true and fair view of the company’s financial position, performance, and cash flows for the fiscal year. Timely preparation and submission of financial statements are crucial to meet regulatory deadlines and avoid penalties for non-compliance.

What are the post-registration compliance requirements for private companies?

After successfully registering your private company in Nepal, there are ongoing compliance requirements you need to fulfill to maintain good standing with the authorities. Here’s a breakdown of some key post-registration obligations:

• Annual Returns and Filings:
  • Annual General Meeting (AGM): Private companies must hold an AGM at least once a year to discuss financial statements, appoint auditors, and address other company matters. Minutes of the AGM need to be properly documented and maintained.
  • Annual Report Filing: Following the AGM, a company must file an annual return with the Office of the Company Registrar (OCR) within a specific timeframe (usually within 3 months of the AGM). This report typically includes financial statements, director and shareholder information, and details of any significant events during the year.
• Maintaining Proper Accounts:
  • The Companies Act 2063 mandates that all companies, including private companies, maintain proper books of accounts. These accounts should be kept in Nepali or English and follow double-entry bookkeeping principles. They should accurately reflect the company’s financial position and transactions.
• Tax Compliance:
  • Private companies are subject to various taxes in Nepal, including income tax, value added tax (VAT), and others depending on the nature of their business. Companies need to register with the Inland Revenue Office (IRO) and fulfill all tax filing and payment obligations on time to avoid penalties.
• Company Secretary Appointment (Optional):
  • While not mandatory for private companies with a small number of shareholders, appointing a company secretary can be beneficial. The company secretary ensures adherence to corporate governance practices, maintains company records, and assists with meetings and filings.
• Changes in Company Information:
  • Any significant changes to the company, such as a change in directors, shareholders, registered address, or authorized capital, need to be reported to the OCR within a specified timeframe.
• Auditing Requirements:
  • Private companies generally do not require mandatory audits unless they meet certain criteria (e.g., exceeding a specific threshold for turnover or paid-up capital). However, the company’s Articles of Association (AoA) may stipulate an audit requirement regardless of these thresholds.

Can I change the ownership structure of a private company?

Yes, the ownership structure of a private company can be changed through various means, such as transferring shares, issuing new shares, or admitting new shareholders. any changes to the ownership structure must comply with the company’s memorandum and articles of association.

There are a couple of ways to achieve this, depending on the desired outcome:

1. Transfer of Shares:
2. Issuing New Shares:

Private Company Registration in Nepal

What is the minimum number of shareholders for a private company?

A private company in Nepal requires at least 1 and a maximum of 101 shareholders.

Can a private company issue shares to the public?

No, private companies in Nepal are not allowed to issue shares to the public.

What is the minimum paid-up capital for a private company?

The minimum paid-up capital for a private company is NPR 100,000.

How long does private company registration take in Nepal?

Private company registration typically takes 1-2 weeks, depending on documentation completeness.

Can foreigners be shareholders in a private company?

Yes, foreigners can be shareholders in private companies, subject to investment regulations.