January 17, 2025
INCORPORATION OF A LIMITED LIABILITY COMPANY (LLC) IN NEPAL
INTRODUCTION
Nepal is recognized for its scenic landscapes and unique culture, and now it begins to unfold an emerging economy for doing business. The established Limited Liability Company (“LLC”) have offered entrepreneurs and investors a flexible and sometimes protected way to enter this evolving economy. In other words, this is a limited liability company in Nepal, in which a shareholder’s liability is capped by their contribution to the company. Preferred basically by small and medium enterprises.
WHY CHOOSE A NEPAL LLC
A Limited Liability Company in Nepal provides several advantages:
- Restriction on Liability: Democratic liability of shareholders shall be limited to the amount contributed as share capital.
- Scope for Joint Ventures: An LLC agreement may indulge in joint investments with foreign partners.
- Separate Legal Entity: A company will be treated as a distinct legal entity; hence, personal properties are not liable for the debts accrued by the business.
- Minimal Capital Requirement: There is no minimum capital requirement for most companies.
- Access to Emerging Markets: An LLC puts one in a good position in the ever-growing market of Nepal and offers opportunities for trade with South Asia.
PROCESS OF REGISTRATION
Under the Companies Act, 2006, incorporating an LLC in Nepal involves the following steps:
- Choose a Unique Name:
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- Select a name for your LLC that complies with the guidelines of the Office of the Company Registrar (“OCR”).
- Verify the availability of the name on the OCR portal to ensure it is unique and not already registered.
- Prepare Required Documents:
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- Memorandum of Association (“MoA”): Outlines the company’s objectives and activities.
- Articles of Association (“AoA”): Contains the rules and regulations for managing the company.
- Application form for company registration.
- Copies of citizenship certificates or passports of shareholders and directors.
- Proof of the registered office address (e.g., a lease agreement or ownership deed).
- Details of the authorized capital and share distribution among shareholders.
- Submit Application to the Registrar:
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- File the application and all required documents with the OCR.
- Pay the applicable registration fees, which vary based on the company’s authorized capital.
- Obtain Company Registration Certificate:
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- Once the documents are verified and approved, the OCR issues the Company Registration Certificate, confirming the establishment of the LLC.
- Tax Registration:
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- Register the company with the Inland Revenue Department (“IRD”) to obtain a Permanent Account Number (“PAN”).
- If applicable, register for Value Added Tax (“VAT”).
- Other Registrations:
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- If the company employs staff, register with the Social Security Fund (“SSF”) for employee welfare contributions.
BASIC INCORPORATION REQUIREMENTS
The following requirements must be met to set up an LLC in Nepal:
- Registered Office: The registered office in Nepal must be maintained by the company.
- Shareholders: A minimum of two shareholders is essential.
- Directors: One director is minimally required.
- Memorandum and Articles of Association: Must be drafted, signed, and submitted.
- Capital Contribution: There is no stipulated minimum capital, but it should be enough in measure to achieve specific corporate objectives and must be declared during the registration process.
ANNUAL FILING AND COMPLIANCE REQUIREMENTS
LLCs in Nepal must adhere to the following annual compliance requirements:
- Annual Returns are to be submitted to the OCR, containing information on shareholders, directors, and other statutory details.
- Financial Statements: Prepare and submit the OCR with audited annual financial statements.
- Tax Compliance: There should be regular tax returns filed along with compliance with tax obligations as stipulated by Nepalese tax laws.
CONCLUSION
Incorporation of an LLC in Nepal thereby provides a firm ground for business undertakings and limited liability to considerably protect shareholders’ interests. Due mainly to the strategic location of Nepal and access to a growing market, Nepal provides unique opportunities for entrepreneurs and investors. While every entrepreneur must adhere to a strict procedure for registration and compliance, a solid and lasting foundation can be laid in this budding economy if the process is followed with care. Sought-after professionals should always be around during the incorporation process to ease the way for smooth operations and keeping in touch with the processes of the law.
HOW WE CAN HELP?
- Our team of professionals may guide you through the process of setting up a business in Nepal. We can also ensure compliance with all requirements, including registration, licensing, tax obligations, employment, and labour laws
- Our team offers advice to help set up successful businesses in emerging sectors.
- Our team of experts can conduct extensive market research to assist businesses in understanding and comprehending their target audience, industry trends, and potential competitors.
For more information or queries, please email us at
[email protected]
Key Contact
Surendra Singh Chandrawat
Managing Partner
