Nepal Streamlines Company Registration and Deregistration Processes

Kathmandu. Significant improvements have been made in the process of company registration and cancellation in Nepal. The Office of the Company Registrar has stated that it is performing its duties by setting deadlines for the convenience of service recipients.

The office has stated that company name registration will be decided within 1 working day of receiving the online request, new company registration within 1 working day of receiving the application in the prescribed format, post-registration tasks generally within 1 to 3 working days, and company cancellation within 5 working days.

Previously, it took seven days from the date of application to register a company. Cancelling (closing) it was even more difficult. The office has stated that arrangements have now been made to register and cancel companies in a short time.

How much time did it take before?

According to the Company Act 2063, there is a legal provision to register a company to systematically operate any industry, trade, or business in Nepal. It is mentioned that individuals or groups wishing to establish a company must first submit an application electronically to the Office of the Company Registrar for approval of the proposed name.

The Act specifies a clear process for cancellation if a company in operation needs to be closed for various reasons. If the directors are confident that the company can pay all its debts and liabilities, the process of voluntary cancellation can be initiated by passing a special resolution in the general meeting of shareholders. For this, a liquidator and an auditor must be appointed to settle the company's assets and liabilities.

After the name is approved, the founders must submit the necessary documents such as the articles of association and regulations, which outline the company's objectives, capital, and operating methods, to the office. If the company is private, there must be one founder, and if it is public, there must be at least seven founders.

The office was supposed to examine the submitted documents and provide a registration certificate within seven days of receiving the application. Only then could the company legally start its business, as mentioned in the Act.

However, according to Ram Prasad Gyawali, Deputy Registrar and Information Officer of the company, the company is now being registered within 1 working day of applying online with the necessary documents.

According to Gyawali, the office has also made the company cancellation process, which was considered cumbersome in the past, quick and efficient. Arrangements have been made to make a final decision on applications submitted through the online medium for company cancellation within 5 working days. Previously, there were complaints that this process took a long time and was cumbersome.

The Act specifies a clear process for cancellation if a company in operation needs to be closed for various reasons. If the directors are confident that the company can pay all its debts and liabilities, the process of voluntary cancellation can be initiated by passing a special resolution in the general meeting of shareholders. For this, a liquidator and an auditor must be appointed to settle the company''s assets and liabilities.

After all government dues, employee salaries, and debts are paid, the remaining assets are distributed to the shareholders, and finally, the office publishes a notice of company cancellation.

Even if a company is closed, its directors or shareholders are not fully absolved of their personal or legal responsibilities incurred during the period of registration, and legal action can be taken against them for past liabilities as per the Act.

In addition, if a company does not start operations for a long time after registration or fails to submit its annual statements and audit reports to the office for three consecutive financial years, the Office of the Company Registrar can itself initiate the process of cancellation.

Even if a company is closed, its directors or shareholders are not fully absolved of their personal or legal responsibilities incurred during the period of registration, and legal action can be taken against them for past liabilities as per the Act.

There was no fixed period for cancellation

According to the Company Act 2063, the exact number of days for cancellation after submitting documents depends on the cancellation process and the company's liabilities. Although a 7-day deadline was set for company registration, no specific day was set for cancellation.

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According to the Company Act, company cancellation can be voluntary or initiated by the office. Companies that can repay their debts can voluntarily cancel within one year by passing a special resolution and appointing a liquidator to settle all liabilities. On the other hand, the Registrar's office can cancel the registration of companies that do not submit annual statements for three consecutive years by giving them a 60-day period for explanation. Although there is no fixed deadline for cancellation, the office decides to remove the company's registration after the liquidator submits the final report or after the deadline expires, following necessary investigations.

Even if a company's registration is cancelled, the directors or shareholders are not released from their past legal and personal liabilities.

All processes from registration to cancellation online

The office has made company administration more transparent and accessible by adopting a 'faceless' service system that reduces the physical presence of service recipients to zero. From Chaitra 22, 2082, all tasks from company registration to cancellation will be done online, so service recipients will no longer need to be physically present at the office. In this context, the office has adopted a policy of completely prohibiting the entry of unrelated persons and intermediaries, allowing only authorized representatives entry based on their identity cards.

Other administrative tasks after company establishment, such as share registers, director changes, and articles of association amendments, have also been given a deadline of 3 working days for completion.

According to Deputy Registrar Gyawali, a separate digital account has been set up for each company, making all details and documents from company registration to cancellation automatically available online. It is believed that this optimal use of technology and the fixed deadlines for service delivery will allow industrialists and businessmen to operate and, if necessary, close their businesses in a hassle-free environment.

How many registered and cancelled?

So far, a total of 371,998 companies have been registered in Nepal. According to the details published by the Office of the Company Registrar under the Ministry of Industry, Commerce and Supplies on Wednesday, this number of companies have been registered.

According to the company, 56,092 company names have been approved so far, and 439,916 letters have been issued through digital signatures.

Similarly, the office, which has accelerated service delivery through the online system, has provided post-registration services 95,821 times. Similarly, the registration cancellation process for 2,835 companies has been completed.

Company Directive Being Amended

The office is amending the 'Company Directive' to make the processes of company registration, operation, and closure easier and more timely.

The office had invited public suggestions from stakeholders and the general public for the amendment of the directive.

According to Deputy Registrar and Information Officer Gyawali of the Office of the Company Registrar, the amendment process is underway to make the currently implemented directive time-appropriate. Gyawali informed that the draft of the new directive is being prepared, but suggestions have been sought regarding what improvements are needed in the old provisions for now.

It is understood that the office is amending the directive with the aim of making company registration and administration simpler, more transparent, and technology-friendly. Interested individuals or organizations can study the existing directive on the office's website and provide their suggestions.

"We have prepared to amend the old directive to make it time-relevant," Gyawali said, "We have requested suggestions based on what needs to be added or modified in the old directive currently on the office's website."

The office had issued a notice for suggestions in the first week of Baishakh. According to the notice, suggestions were requested to be sent by Baishakh 20.

According to Gyawali, a new integrated directive will be prepared by incorporating the appropriate suggestions received. "The new draft is not yet ready to be released, but after the integrated directive is prepared based on the suggestions received, it will be made public again for further feedback," he said.

It is understood that the office is amending the directive with the aim of making company registration and administration simpler, more transparent, and technology-friendly. Interested individuals or organizations can study the existing directive on the office's website and provide their suggestions.