--- title: "Legal provisions for starting a company in Nepal" subject: "Entrepreneurship Development" chapter: 8 key: "semester_7/entrepreneurship_development:company-registration-legal-provisions-nepal" source: https://www.bctengineer.com/q/semester_7/entrepreneurship_development/company-registration-legal-provisions-nepal site: BCT Engineering --- # Legal provisions for starting a company in Nepal Entrepreneurship Development · Chapter 8: Entrepreneurship in Nepal - Asked in: year not given, 6 marks - Video: [How To Register A Company In Nepal | Fees, Documents, PAN/VAT, Capital, Online Portal, Locations](https://www.youtube.com/watch?v=QF6ObGUWClU) — FromEverest - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/entrepreneurship_development/company-registration-legal-provisions-nepal - Whole chapter: https://www.bctengineer.com/md/semester_7/entrepreneurship_development/chapter-8 ## Question Explain the legal provisions and the procedure for registering a company in Nepal. ## Short answer A company is registered under the Companies Act, 2063 at the Office of the Company Registrar through name approval, memorandum and articles, certificate of incorporation, then PAN/VAT and other licences. ## Answer Companies in Nepal are governed mainly by the **Companies Act, 2063 (2006)**, with the Industrial Enterprises Act, 2076 for industries, and tax laws. Registration is done at the **Office of the Company Registrar (OCR)**, under the Ministry of Industry, Commerce and Supplies. #### Types of company under the Act | Type | Main features | |---|---| | Private limited | One to 101 shareholders; shares not offered to the public; restricted transfer of shares; limited liability | | Public limited | Can offer shares to the public; at least seven promoters; minimum paid-up capital of Rs 1 crore; more disclosure | | Non-profit company | Formed for social or charitable aims; profit is not distributed | (These limits can be changed by amendment, so check the current Act.) #### Procedure 1. **Select and reserve a company name** at the OCR. 2. **Prepare the Memorandum of Association and Articles of Association** (objectives, capital, share structure, management rules). 3. **Submit the application** with promoters' citizenship documents, capital details and fee. 4. **Obtain the certificate of incorporation** from the OCR; the company becomes a legal person, separate from its owners. 5. **Tax registration:** Permanent Account Number (PAN) from the Inland Revenue Department, and VAT registration where required. 6. **Other licences** as needed (industry registration, local ward or municipality business registration, sector-specific approvals, foreign-investment approval where applicable). 7. Open a bank account and register staff for social security as per labour laws. **Answer:** A company is registered under the Companies Act, 2063 at the Office of the Company Registrar through name approval, memorandum and articles, certificate of incorporation, then PAN/VAT and other licences. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Under which Act and at which office are companies registered in Nepal? A. Companies Act, 2063 at the Office of the Company Registrar B. Labour Act at the Inland Revenue Department C. Industrial Enterprises Act at the ward office D. Income Tax Act at Nepal Rastra Bank Answer: A. Registration is at the Office of the Company Registrar under the Companies Act, 2063. (Key point: Governing law and registry) 2. What distinguishes a public limited company from a private limited company? A. Public company cannot have limited liability B. Private company can offer shares to the public C. Public company can offer shares to the public and has more disclosure D. Public company is formed only for charity Answer: C. Only a public limited company can offer shares to the public, with at least seven promoters and more disclosure. (Key point: Private vs public company) 3. Which documents set out the objectives, capital, share structure and management rules of the company? A. PAN and VAT certificates B. Bank statement C. Employment contracts D. Memorandum and Articles of Association Answer: D. The Memorandum and Articles of Association contain these details and are prepared before applying. (Key point: Constitutional documents) 4. What is the effect of obtaining the certificate of incorporation? A. The company becomes a legal person separate from its owners B. The company is automatically tax-exempt C. The company gets foreign investment approval D. The company becomes a public company Answer: A. On incorporation the company becomes a separate legal person; PAN/VAT and other licences follow afterwards. (Key point: Certificate of incorporation) ## Related in Entrepreneurship Development - [Regulations and opportunities for startups in Nepal](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Aregulations-and-opportunities-nepal) — Entrepreneurship Development, chapter 8 ## Related in other subjects - [IPR and company registration in Nepal](https://www.bctengineer.com/question.md?key=semester_8%2Fengineering_professional_practice%3Aipr-company-registration-nepal) — Engineering Professional Practice, chapter 5 - [Licensing provisions in hydropower policy](https://www.bctengineer.com/question.md?key=semester_7%2Fhydropower_engineering%3Ahdp-licensing-provisions) — Hydropower Engineering, chapter 1, asked 2× - [Joint stock company and its formation](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Ajoint-stock-formation) — Organization and Management, chapter 4 - [Proposal to start a company: title, abstract, objectives](https://www.bctengineer.com/question.md?key=semester_5%2Fcommunication_english%3Aproposal-company-big-organization) — Communication English, chapter 6