December 19, 2024
INCORPORATION OF A PUBLIC LIMITED COMPANY IN NEPAL
INTRODUCTION
Nepal, with its emerging market, has enormous capacity for businesses across various sectors. For large-scale operations and for those seeking to raise funds from the public, incorporating a public limited company (“PLC”) in Nepal is the perfect business plan. The Companies Act of 2006 governs the incorporation process and ensures clarity, compliance, and governance.
WHAT IS A PUBLIC LIMITED COMPANY
A Public Limited Company can generate its capital by offering its shares to the general public through an Initial Public Offering (“IPO”) and has limited liability for its shareholders. This type of business structure in Nepal is more appropriate for businesses whose objective is to work on a larger scale and require a significant amount of capital. Public Limited Companies are also required to follow strict compliance and reporting regulations.
KEY REQUIREMENTS FOR INCORPORATION
To Incorporate a Public Limited Company in Nepal, a minimum of 7 shareholders and 3 directors is necessary. The company must acquire name approval, specify authorized capital, and submit required documents, including the Memorandum and Articles of Association, details of directors and shareholders, and a registration application to the Office of the Company Registrar (“OCR”). A valid registered office address and payment of the registration fee, on the basis of authorized capital, are compulsory. Additionally, compliance with the Companies Act of 2006, is essential.
STEPS
The following provides the company registration process in Nepal:
- The company’s name should be reserved at the Office of the Company Registrar (“OCR”).
- Preparation of Required Documents – Memorandum of Association (“MoA”), Articles of Association (“AoA”), Details of Directors and Shareholders and Consent Letters Registered Office Address.
- Submission of signed documents (AOA, MOA, and Application) in online mode at OCR
- Examination of submitted documents by OCR
- Issuance of company registration certificate by OCR
- Tax Registration Value Added Tax (“VAT”) Permanent Account Number (“PAN”) at the Inland Revenue Office should be completed.
- After the incorporation process, the company must issue share certificates, conduct the first Board Meeting to approve primary decisions, appoint an independent auditor for annual compliance, and maintain statutory registers.
- The company must obtain Securities Board of Nepal (“SEBON”) approval by submitting a detailed prospectus and complying with regulations on public offerings, disclosures, and investor protection.
TIMELINE AND COSTS:
- The procedure of incorporation typically takes 15-30 working days, depending on the completeness of documents and approvals.
- The registration fees may vary based on the company’s authorized capital, which ranges from NPR 1,000 to NPR 30,000 or more for larger companies.
LEGAL FRAMEWORK
In Nepal, the Companies Act of 2006 is the primary legislation governing and regulating the incorporation, operation, and dissolution of public limited companies. It provides the framework for the processes and regulations for establishing, managing, and wrapping up such corporations.
CONCLUSION
Incorporating a public limited company in Nepal provides an opportunity for businesses to attract investments. Nepal’s emerging economy offers a conducive environment for public companies to survive and grow. However, this process requires long-term planning and careful compliance with legal and regulatory necessities. By understanding the steps involved and looking for professional guidance when essential, entrepreneurs can successfully set up a public limited company and position it for long-term success in Nepal’s dynamic market.
HOW WE CAN HELP?
- Our Team of professionals can provide comprehensive direction on Nepal’s regulations, ensuring full compliance with Nepal’s legal framework for businesses.
- Our specialists can offer expert advice on Nepal’s tax regulations and ensure compliance with respect to the same.
- Our specialists can help in preparing and drafting all essential documents required.
For more information or queries, please email us at
[email protected]
Key Contact
Surendra Singh Chandrawat
Managing Partner
