Introduction
Once a company is registered in Nepal, it must adhere to specific post-registration compliance requirements. These include obtaining licenses, setting up financial systems, filing regular reports, and maintaining accurate records. Compliance is essential for the smooth operation and legal standing of the business.
Steps after Incorporation
| Requirement | Description |
|---|---|
| Information of Permanent Address to OCR (स्थायी ठेगनाको जानकारी) |
As per Section 184 of The Companies Act, 2063 B.S., the company must inform OCR of its registered address within three months of incorporation. The company must display its name and address in Nepali on a signboard outside its registered office. Contact details like phone, fax, and email should also be submitted to OCR. |
| Formation of Board of Directors (BOD) (सञ्चालकहरुको नियुक्ती) |
Section 86 mandates the formation of a BOD for companies with more than one shareholder. The BOD, consisting of 2-11 members, should be appointed from shareholders and documented in the Articles of Association (AOA). The initial BOD is selected by the promoters until the first AGM, after which new appointments are made if necessary. |
| Appointment of Auditor (लेखा परिक्षको नियुक्ती) |
Per Section 111, the company appoints an auditor through a general meeting. The OCR must be informed within 15 days of the appointment. Although not mandated to be done within three months, companies typically appoint an auditor in this timeframe. |
| Disclosure by Directors (सञ्चालकहरुले जानकारी गराउनुपर्ने) |
Section 92 requires directors to disclose any personal interest in company transactions or appointments within seven days of their appointment. This includes interests in contracts, shareholdings, or related appointments. OCR must be informed of this disclosure. |
| Allotment of Shares (शेयरको विवरणको कार्यलयमा पठाउने) |
Section 31 states that companies must file a return of shares allotted within thirty days of allotment, detailing issued shares, allottees’ information, and paid amounts. The allotment should be completed within three months of operation. |
Key Post-Registration Requirements
- Obtain Necessary Licenses and Permits
- Construction companies: License from local authority
- Media companies: Approval from the Department of Communications
- Industrial companies: Registration with the Department of Industries
- Travel companies: License from the Department of Tourism
- Permanent Account Number (PAN) and VAT Registration
All companies must obtain a PAN from the Internal Revenue Department to conduct financial transactions, pay taxes, and open a business bank account. VAT registration is required if annual revenue exceeds specific thresholds.
Transaction Type Threshold (NPR) Goods Turnover 50,00,000 Service Turnover 30,00,000 Goods and Service Turnover 30,00,000 - Open a Bank Account
Opening a dedicated bank account is crucial for separating personal and business transactions, maintaining credibility, and accessing financial facilities like loans.
- Submit Initial 3-Month Statement
Newly registered companies must submit an initial report to the Registrar of Companies within three months of registration, including the company address, share structure, and board meeting minutes. Late submissions incur penalties.
- Hold an Annual General Meeting
The first general meeting should be held within a year of registration, followed by regular annual meetings within six months of each fiscal year-end.
Ongoing Compliance and Reporting
- Compliance with Tax Regulations
Businesses must comply with tax requirements under the Income Tax Act and Value Added Tax Act. Monthly VAT returns and quarterly advance income tax filings are mandatory.
- Maintain Financial Records
Companies must keep detailed financial records in Nepali or English. This includes double-entry bookkeeping for the following reports:
- Balance Sheet
- Profit and Loss Statement
- Cash Flow Statement
- Statement of Changes in Equity
- Annual Audit Report
An ICAN-licensed auditor must audit the company’s financial records annually. The audit report is submitted to the OCR and presented during the annual general meeting.
- Annual Report Submission
Companies must submit their annual report, including the audit report, board minutes, auditor appointment letter, and shareholder information to OCR within six months of the fiscal year-end (Poush End). Non-compliance can lead to fines.
Conclusion
Following post-registration compliances ensures your business remains legally compliant and operates smoothly. These steps also strengthen the credibility and transparency of your company, setting a strong foundation for future growth.