A list of everything you need to incorporate your business in Nepal.
How to get started?
There are many forms of business entities that you may register in Nepal depending on how you plan to start. If you are starting small, for example a freelance consulting business or let’s say a small trading concern, then you may register it as a sole proprietorship (if you are starting alone) or a partnership firm (if you are starting with your friends) with your local ward office within your municipality or the metropolitan city, based on where you are. You should also register the business with the Department of Small and Cottage Industries or the Department of Commerce depending upon the nature of business i.e. if it is an industry or a trade (commerce).
You can also register as a company. Lex Advise usually advises businesses to incorporate as a company due to it’s inherent benefits such as:
a. Lawful business administration
b. Tax incentives
c. Limited liability
d. Investment opportunities
e. Avoid possible future disputes.
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Required Documentation for Company Registration
Here are a few things that you might want to consider while selecting your company’s name:
- Name of your company must be as certain as the name of a natural person.
- Your company name must not reflect as if it is affiliated with the Government of Nepal, any government institution or body or any other states.
- Name your company that is compatible with the objectives of your company.
- It should not be the same or identical to an existing company or trademark.
An address is a must for registration. Ideally – place of operation.
Objectives are what you drive your company for. Your objectives must be lawful. You need to point out your core objectives for incorporating your business.
As a company needs capital to finance itself, you have to set capital structure for your company. Capital structure depends on the type and nature of company that you are going to incorporate. For example, in order to incorporate a public company, a minimum of ten million rupees is required as paid up capital.
Likewise, a company related to a travel agency should have a minimum of 1 million as paid up capital, similarly, 6 lakh for trekking agency as paid up capital. Thus, capital structure has to be determined based on nature and type of company
Authorized capital: Authorized capital is the sum total capital that a company could issue at maximum. Whenever, it has to be altered, a definite procedure has to be fulfilled as provided for in the articles of association or company laws of Nepal.
Issued capital: Issued capital represents a portion of authorized capital that the company will issue to the promoters. What company receives from payment out of issued and subscribed capital is the paid up capital of the company.
Subscribed Capital (Capital Commitment from Promoters): This is the commitment made by the promoters to pay to the company to start the business and the OCR has directed that the subscribed capital should be equal to the issued capital.
This is another important matter to consider while proceeding for incorporation. A private company may be incorporated even with a single promoter. But if you are considering incorporating a public company, there should be a minimum of seven promoters. So, you have to settle the number of promoters for your company.
The shareholding ratio of the promoters should also be priorly determined so as to maintain possible balance in your company. As shareholding ratio affects voting rights in the company’s annual general meetings, you should give a watch to this.
Determining the first BOD is to be done while incorporation. This shall last until the first annual general meeting of your company. So, the composition has to be figured.
If you have ideas on the type of company you want to operate, maybe the next step is to carry out company name check and find if the company name is available or a registered trademark.