BUSINESS
Starting a Business in Nepal
Formal requirements for starting a business consists of four steps
Each step will require some documents that needs to submitted for inspection and an application in a standard format. Additionally some other licensing and approval may also be required prior to commencing the registration process, this include approvals such as those in the case of businesses related to tourism which needs to be taken from the Department of tourism.
In general any person desirous of starting a business in Nepal can choose the form of business from one of two categories.
Selecting a Suitable Vehicle of Operation
| Particulars | Sole Trader |
| Legal status | Unlimited Liability vehicle |
| Commencement of Operation | After receiving certificate of registration |
| Permitted activities | Activities mentioned during registration |
| Accounting and audit | Generally based on self-assessment |
| Requirements for operation | Maximum of 1 owner having Nepalese Citizenship certificate |
| Capital requirement for registration | None |
| Permissibility for conversion into another business vehicle | Allowed |
| Transfer of ownership | Allowed |
| Term of the business establishment and renewal requirements | Five years from the date of registration after which period must be renewed every two years |
| Governing Law | For the state of Bagmati: Trade and Business Act, 2076 Federal Legislation: Private Firm Registration act |
| Particulars | Partnership Firm |
| Legal status | Unlimited Liability vehicle |
| Commencement of Operation | After receiving certificate of registration |
| Permitted activities | Activities mentioned during registration |
| Accounting and audit | Generally based on self-assessment |
| Requirements for operation | Minimum of 2 owners having Nepalese Citizenship certificate |
| Capital requirement for registration | None |
| Permissibility for conversion into another business vehicle | Allowed |
| Transfer of ownership | Allowed |
| Term of the business establishment and renewal requirements | Every year |
| Permissibility to increase capital | Allowed |
| Permissibility for enlarging the scope of operation | Allowed after receiving prior approval |
| Profit sharing/Liability of partners | As per the partnership agreement |
| Governing Law | For the state of Bagmati: Trade and Business Act, 2076 Federal Legislation: Private Firm Registration act |
| Particulars | Private Limited Company |
| Legal status | Limited Liability vehicle |
| Commencement of Operation | After receiving certificate of Incorporation |
| Permitted activities | Activities mentioned in the AoA/Consensus agreement |
| Accounting and audit | Prescribed financial statements needs to be prepared within six months from the end of the fiscal year and needs to be audited and signed by the BoD |
| Requirements for operation | Minimum 1 shareholder and a maximum of 101 shareholders |
| Capital requirement for registration | None |
| Permissibility for conversion into another business vehicle | Allowed but not into an unlimited liability vehicle |
| Transfer of ownership/shares | Allowed but only within existing shareholders |
| Transmission of Ownership/shares | Automatic |
| Public Trading of Shares | Not allowed |
| Term of the business establishment and renewal requirements | None |
| Permissibility to increase/decrease capital | Only after passing a special resolution |
| Permissibility for enlarging the scope of operation | Only after passing a special resolution |
| Directors | Upto 11 |
| Company Secretary | Optional |
| Provision of General Meeting | As per the AoA |
| Governing Law | Companies act, 2063 |
| Particulars | Single Shareholder Company |
| Legal status | Limited Liability vehicle |
| Commencement of Operation | After receiving certificate of Incorporation |
| Permitted activities | Activities mentioned in the AoA |
| Accounting and audit | Prescribed financial statements needs to be prepared within six months from the end of the fiscal year and needs to be audited and signed by the BoD |
| Requirements for operation | Maximum 1 Shareholder |
| Capital requirement for registration | None |
| Permissibility for conversion into another business vehicle | Allowed but not into an unlimited liability vehicle |
| Transfer of ownership/shares | Allowed |
| Transmission of Ownership/shares | Automatic |
| Public Trading of Shares | Not allowed |
| Term of the business establishment and renewal requirements | None |
| Permissibility to increase capital | Allowed |
| Permissibility for enlarging the scope of operation | Allowed |
| Directors | 11 |
| Company Secretary | Optional |
| Calling of General Meeting | Not required |
| Governing Law | Companies act, 2063 |
| Particulars | Profit not Distributing Company |
| Legal status | Limited Liability vehicle |
| Commencement of Operation | After receiving certificate of Incorporation |
| Permitted activities | Activities mentioned in the AoA |
| Accounting and audit | Prescribed financial statements needs to be prepared within six months from the end of the fiscal year and needs to be audited and signed by the BoD |
| Requirements for operation | Minimum 5 members |
| Capital requirement for registration | None |
| Permissibility for conversion into another business vehicle | Not allowed |
| Transfer of ownership/shares | Not allowed |
| Transmission of Ownership/shares | Not allowed |
| Public Trading of Shares | Not applicable |
| Term of the business establishment and renewal requirements | None |
| Permissibility to increase capital | Allowed |
| Permissibility for enlarging the scope of operation | Allowed but with the prior approval of OCR |
| Directors | As per the AoA |
| Company Secretary | Optional |
| Calling of General Meeting | Not required |
| Governing Law | Companies act, 2063 |
| Particulars | Public Limited Company |
| Legal status | Limited Liability vehicle |
| Commencement of Operation | After receiving Approval from OCR |
| Permitted activities | Activities mentioned in the AoA |
| Accounting and audit | Prescribed financial statements needs to be prepared within 21 days prior to holding AGM and needs to be audited and signed by the BoD |
| Requirements for operation | Minimum 7 shareholders |
| Capital requirement for registration | 10,000,000 |
| Permissibility for conversion into another business vehicle | Allowed |
| Transfer of ownership/shares | Allowed |
| Transmission of Ownership/shares | Allowed |
| Public Trading of Shares | Allowed |
| Term of the business establishment and renewal requirements | None |
| Permissibility to increase capital | After the adoption of special resolution |
| Permissibility for enlarging the scope of operation | Allowed but with the prior approval of OCR |
| Directors | 3-11 |
| Company Secretary | Mandatory |
| Calling of General Meeting | Annually |
| Record of General Meeting | To be submitted to the OCR within 30 days of General Meeting |
| Issuance of Prospectus | Mandatory |
| Governing Law | Companies act, 2063 |
Business Registration Process
- Sole trader/Partnership registration can be done at either the local level offices or the state level offices depending on the proposed capital of the firm. In case it is a business related with commerce, registration will be done at the Department of Commerce. In case it is a business falling under the category of industry, registration will be done at the either at the local level or provincial offices depending on the capital size. The fees for registration is also depended on the capital. Standard format application needs to be submitted along with the necessary documents. For more details click here
- PAN/VAT registration is compulsory for all businesses. This can be done by filling the prescribed application online and presenting the application for verification. The process takes 1-2 days to complete depending on the volume of applications received by the IRD. For details regarding documents to be submitted and other procedures click here.
- Local Level registration is to be done at the relevant local body where business operation will take place. A copy all prior registration certificate needs to be submitted and an application needs to be filled out. After such registration, a yearly payment of Business tax distinct from Corporate Income tax needs to be submitted on a yearly basis based on the prevailing rates.
- As per the prevailing Contribution Based social security act, all employers must be mandatorily registered in the Social Security fund in order to make their due contributions. The process is relatively simple to complete and takes on average a day to complete.
- Sole trader/Partnership registration can be done at either the local level offices or the state level offices depending on the proposed capital of the firm. In case it is a business related with commerce, registration will be done at the Department of Commerce. In case it is a business falling under the category of industry, registration will be done at the either at the local level or provincial offices depending on the capital size. The fees for registration is also depended on the capital. Standard format application needs to be submitted along with the necessary documents. For more details click here
- PAN/VAT registration is compulsory for all businesses. This can be done by filling the prescribed application online and presenting the application for verification. The process takes 1-2 days to complete depending on the volume of applications received by the IRD. For details regarding documents to be submitted and other procedures click here.
- Local Level registration is to be done at the relevant local body where business operation will take place. A copy all prior registration certificate needs to be submitted and an application needs to be filled out. After such registration, a yearly payment of Business tax distinct from Corporate Income tax needs to be submitted on a yearly basis based on the prevailing rates.
- As per the prevailing Contribution Based social security act, all employers must be mandatorily registered in the Social Security fund in order to make their due contributions. The process is relatively simple to complete and takes on average a day to complete.
- As per the prevailing laws of Nepal, an electronic signature can be used instead of handwritten signatures for submission of documents online. A digital signature certificate is required which can be obtained from private certifying companies upon filling of a form and payment of applicable fees. User profile can be created by accessing the website of OCR which will be used for submission of all other relevant documents at the OCR. After creating a user profile, the name chosen for the firm must be submitted to the OCR. After approval of chosen name, an application along with a copy MoA and AoA/consensus agreement needs to be submitted to the OCR along with the relevant fees. Relevant fee is dependent on the capital of the proposed business. The list of applicable fees can be found here
- Industry registration is not mandatory for all firms. Only those category of business that fall under the definition of Industry as per the Industrial Enterprise act , 2076 will require Industry registration. A standard application needs to be submitted to either the DoI or the DoCSI depending on the nature of businesss along with all other prescribed documents. For details click here.
- PAN/VAT registration is compulsory for all businesses. This can be done by filling the prescribed application online and presenting the application for verification. The process takes 1-2 days to complete depending on the volume of applications received by the IRD. For details regarding documents to be submitted and other procedures click here.
- Local Level registration is to be done at the relevant local body where business operation will take place. A copy all prior registration certificate needs to be submitted and an application needs to be filled out. After such registration, a yearly payment of Business tax distinct from Corporate Income tax needs to be submitted on a yearly basis based on the prevailing rates.
- As per the prevailing Contribution Based social security act, all employers must be mandatorily registered in the Social Security fund in order to make their due contributions. The process is relatively simple to complete and takes on average a day to complete.
- As per the prevailing laws of Nepal, an electronic signature can be used instead of handwritten signatures for submission of documents online. A digital signature certificate is required which can be obtained from private certifying companies upon filling of a form and payment of applicable fees. User profile can be created by accessing the website of OCR which will be used for submission of all other relevant documents at the OCR. After creating a user profile, the name chosen for the firm must be submitted to the OCR. After approval of chosen name, an application along with a copy MoA and AoA/consensus agreement needs to be submitted to the OCR along with the relevant fees. Relevant fee is dependent on the capital of the proposed business. The list of applicable fees can be found here
- Industry registration is not mandatory for all firms. Only those category of business that fall under the definition of Industry as per the Industrial Enterprise act , 2076 will require Industry registration. A standard application needs to be submitted to either the DoI or the DoCSI depending on the nature of businesss along with all other prescribed documents. For details click here.
- PAN/VAT registration is compulsory for all businesses. This can be done by filling the prescribed application online and presenting the application for verification. The process takes 1-2 days to complete depending on the volume of applications received by the IRD. For details regarding documents to be submitted and other procedures click here.
- Local Level registration is to be done at the relevant local body where business operation will take place. A copy all prior registration certificate needs to be submitted and an application needs to be filled out. After such registration, a yearly payment of Business tax distinct from Corporate Income tax needs to be submitted on a yearly basis based on the prevailing rates.
- As per the prevailing Contribution Based social security act, all employers must be mandatorily registered in the Social Security fund in order to make their due contributions. The process is relatively simple to complete and takes on average a day to complete.
- As per the prevailing laws of Nepal, an electronic signature can be used instead of handwritten signatures for submission of documents online. A digital signature certificate is required which can be obtained from private certifying companies upon filling of a form and payment of applicable fees. User profile can be created by accessing the website of OCR which will be used for submission of all other relevant documents at the OCR. After creating a user profile, the name chosen for the firm must be submitted to the OCR. After approval of chosen name, an application along with a copy MoA and AoA/consensus agreement needs to be submitted to the OCR along with the relevant fees. Relevant fee is dependent on the capital of the proposed business. The list of applicable fees can be found here .
- Industry registration is not mandatory for all firms. Only those category of business that fall under the definition of Industry as per the Industrial Enterprise act , 2076 will require Industry registration. A standard application needs to be submitted to either the DoI or the DoCSI depending on the nature of businesss along with all other prescribed documents. For details click here.
- PAN/VAT registration is compulsory for all businesses. This can be done by filling the prescribed application online and presenting the application for verification. The process takes 1-2 days to complete depending on the volume of applications received by the IRD. For details regarding documents to be submitted and other procedures click here.
- Local Level registration is to be done at the relevant local body where business operation will take place. A copy all prior registration certificate needs to be submitted and an application needs to be filled out. After such registration, a yearly payment of Business tax distinct from Corporate Income tax needs to be submitted on a yearly basis based on the prevailing rates.
- As per the prevailing Contribution Based social security act, all employers must be mandatorily registered in the Social Security fund in order to make their due contributions. The process is relatively simple to complete and takes on average a day to complete.
- As per the prevailing laws of Nepal, an electronic signature can be used instead of handwritten signatures for submission of documents online. A digital signature certificate is required which can be obtained from private certifying companies upon filling of a form and payment of applicable fees. User profile can be created by accessing the website of OCR which will be used for submission of all other relevant documents at the OCR. After creating a user profile, the name chosen for the firm must be submitted to the OCR. After approval of chosen name, an application along with a copy MoA and AoA/consensus agreement needs to be submitted to the OCR along with the relevant fees. Relevant fee is dependent on the capital of the proposed business. The list of applicable fees can be found here . A public Limited company can only commence business after it receives a certificate of commencement of business. The certificate becomes available once all other proceedings excet the registration of company is completed such as, Issuance of Share, allocation of shares etc.
- Industry registration is not mandatory for all firms. Only those category of business that fall under the definition of Industry as per the Industrial Enterprise act , 2076 will require Industry registration. A standard application needs to be submitted to either the DoI or the DoCSI depending on the nature of businesss along with all other prescribed documents. For details click here.
- PAN/VAT registration is compulsory for all businesses. This can be done by filling the prescribed application online and presenting the application for verification. The process takes 1-2 days to complete depending on the volume of applications received by the IRD. For details regarding documents to be submitted and other procedures click here.
- Local Level registration is to be done at the relevant local body where business operation will take place. A copy all prior registration certificate needs to be submitted and an application needs to be filled out. After such registration, a yearly payment of Business tax distinct from Corporate Income tax needs to be submitted on a yearly basis based on the prevailing rates.
- As per the prevailing Contribution Based social security act, all employers must be mandatorily registered in the Social Security fund in order to make their due contributions. The process is relatively simple to complete and takes on average a day to complete.
Additional Approval and Compliances