Verify the uniqueness of the proposed company name and reserve it online
Agency: Office of the Company Registrar (“OCR”)
Verification of the uniqueness of a company name and name reservation can be done free of charge online at http://www.ocr.gov.np/index.php/en/. After the request for unique name reservation is submitted online, the founder(s) will receive email and notification on approval or rejection for the request from the Office of Company Registrar.
Time and cost: Less than 1 day (online procedure), no charge
A professional verifies and certifies the memorandum and articles of association
Agency: Professional Agency (lawyers, CA and legal practitioners)
Although professional verification or certification prior to submission to the official agency is no longer mandatory, entrepreneurs continue to use the services of legal professionals for verifying and drafting the memorandum and articles of association in practice. Although templates are available on the OCR website, entrepreneurs still prefer to use services of legal professionals because the templates provide basic guidelines and require technical expertise for preparation.
Time and cost: 5 days, NPR 10,000
Buy a stamp to be attached to registration form
Agency: Post Office
Company founders can buy a stamp to be attached to the registration form for NPR 5 at the Post Office. The stamp must be provided to the Office of the Company Registrar.
Time and cost: 1 day, NPR 5
Register at the Office of the Company Registrar, Department of Industry
Agency: Office of the Company Registrar
To register a company, the promoter must submit an application as prescribed by the Ministry of Industry, Commerce, and Supplies. Online filing of the required documents has been introduced and made mandatory. After the online filing, entrepreneurs are required to visit the Office of Company Registrar and submit all the original documents for further verification. The following documents must be submitted:
- An application in the format as per the ‘ANUSUCHI 1’ along with a 5 rupees stamp attached to it.
- Two copies of ‘PRABANDHA PATRA’ (Article of Association) in the format as per ‘ANUSUCHI 2’.
- Two copies of ‘NIYAMAWALI’ (Article of Memorandum) in the format as per ‘ANUSUCHI 3’.
- Attested copies of the citizenship certificates of the founder shareholders.
- In case of a public company, a copy of the agreement made among the founder members before the establishment of the company.
- In case of a private company, a copy of the mutual agreement (if any).
- If the founder company is a Nepali registered company, a copy of the company registration certificate, and a copy of the decision of the managing committee regarding details of the investment to be made upon the aspiring company, as well as the name and a copy of the citizenship certificate of the person representing the founding company.
The registration fee is based on the company’s registered capital (according to the index 21):
- Up to NPR 100,000 (authorized capital): NPR 1,000.
- NPR 100,001 to NPR 500,000: NPR 4,500.
- NPR 500,001 to NPR 2,500,000: NPR 9,500.
- NPR 2,500,001 to NPR 10,000,000: NPR 16,000.
- NPR 10,000,001 to NPR 20,000,000: NPR 19,000.
- NPR 20,000,001 to NPR 30,000,000: NPR 22,000.
- NPR 30,000,001 to NPR 40,000,000: NPR 25,000.
- NPR 40,000,001 to NPR 50,000,000: NPR 28,000.
- NPR 50,000,001 to NPR 60,000,000: NPR 31,000.
- NPR 60,000,001 to NPR 70,000,000: NPR 34,000.
- NPR 70,000,001 to NPR 80,000,000: NPR 37,000.
- NPR 80,000,001 to NPR 90,000,000: NPR 40,000.
- NPR 90,000,001 to NPR 100,000,000: NPR 43,000.
- More than NPR 100,000,000: NPR 43,000 plus NPR 30 for each additional NPR 100,000.
Time and cost: 1 week, NPR 9,500
Make a company rubber stamp
Agency: Sealmaker
Entrepreneurs obtain a company rubber stamp in practice for the following purposes:
- Reports and records to be submitted on company’s behalf and business letters to be used in its name;
- Statements of accounts, bills, invoices, requisition order forms;
- Notices and official publications;
- Negotiable instruments, bills of exchange, promissory notes;
- Official documents signed or issued on its behalf.
Company founders can make a company rubber stamp at the Seal maker for approximately NPR 275-300.
Time and cost: 1 day, NPR 275
Register at the Local Ward and pay business registration tax
Agency: Local Ward Office
Section 3(19) of Schedule 1 of the Local Governance Ordinance 2017 issued by Ministry of Federal Affairs and General Administration mandates business registration at the local ward. During business registration at the Local Ward an entrepreneur needs to bring the following documents: registration certificate from OCR, memorandum of association, articles of association, shareholder’s agreement, application form, lease agreement, and details of the property. There are 741 local units in Nepal, and around 30 local units in Kathmandu. The business registration time depends on the local ward and varies between 1 to 5 days.
The amount of the business registration tax depends on the nature of the business and its size. The business tax for a general retail business varies between NPR 1,000 – 3,000 in Kathmandu.
Under the Inter-governmental Fiscal Management Act 2017 and Notice of Ministry of Finance published in the Nepal Gazette dated 23 April 2018, Nepali businesses also are required to pay the rental tax withholding at the local ward instead of the Inland Revenue Service (IRD). However, the rental tax can be paid at the IRD if the lessor is a corporate body. Nevertheless, the business is required to be registered with the Local Ward and pay the business registration tax to the Local Ward office before registering for VAT tax at the IRD.
Time and cost: 2 days on average, NPR 2,000
Register for VAT and Income Tax, and Withhold Rental Tax at the Inland Revenue Office
Agency: Inland Revenue Office
As per Income Tax Act, 2058 (2002), Section 78, each company should be registered for Income Tax purpose in the Inland Revenue Office and get a Permanent Account Number (PAN) before starting any business. If the company’s objectives include goods or services subject to VAT, both registration (VAT and Income Tax) should be obtained simultaneously.
According to the Value Added Tax Act 2052, of 1996, the company must disclose the office address and withhold 10% tax of the rent for at least 3 months and deposit it to the tax office. Advance rental tax can be paid at the Tax Office itself if the lessor is a corporate body and advance rental tax should be paid at the Ward Office if the lessor is a natural person.
Time and cost: 1 day, no charge
Enroll the employees in the Social Security Fund
Agency: Social Security Fund
According to the Labor Act 2017 and Social Security regulations (November 19,2018) companies are required to deduct every month 10% from the basic salary of each employee, matched by a contribution from the employer. The contribution is made to the Social Security Fund. The employer further needs to pay gratuity amount at the rate of 8.33 percent of basic remuneration and deposit at social security fund at the time of payment of services may it be daily or monthly.
The application in the prescribed format must be submitted to the SSF along with the following documents for listing with the SSF:
- Employer’s firm, organization or company registration certificate;
- Employer’s PAN Certificate or VAT certificate;
- Board of Director’s Decision on listing with the Fund;
- Contributor’s (employee) detail.
The registration of employee by the employer at SSF must be done within 3 months of entering into an employment agreement with such employee. (Section 20(1), Contribution Based Social Security Act 2017). Registration needs to be done online, where number of details of the employer need to be provided. The Social Security Fund will provide verification to the entity that registers itself via phone or email after the completion of online registration. Applicant must then go to the Social Security Fund office to receive the Certificate of Registration for completion of the registration process.
Time and cost: 5 days on average, no charge
