Company Act 2063 Nepal: Key Provisions and Latest Amendment

Khatapana

December 22, 2024 5 min read

Reviewed by Kailash Panday, Chartered Accountant & Corporate Lawyer

Company Act 2063 Nepal: Key Provisions and Latest Amendment

Quick answer

The Companies Act 2063 is Nepal's main company law, covering incorporation, governance, audit and winding up. Its latest amendment is the 2081 investment-environment act, which added non-cash share contributions and employee share plans.

Private companies may have up to 101 shareholders.
Public companies need Rs 1 crore paid-up capital and 3-11 directors.
The 2081 amendment allows non-cash share contributions and ESOPs.

The Companies Act 2063 (2006) is Nepal's main company law. It governs how companies are incorporated, run, audited and wound up, and is administered by the Office of the Company Registrar (OCR). It has 21 chapters and 188 sections, plus sections 136A and 187A added by later amendments. Its most recent amendment came through the Act to Amend Some Nepal Acts Relating to Improving Economic and Business Environment and Enhancing Investment, 2081, authenticated in March 2025. That amendment allowed shares for non-cash contributions and employee share purchase plans.

Key points
A private company can have up to 101 shareholders (section 9(1)).
A public company needs at least Rs 1 crore paid-up capital (section 11) and 3 to 11 directors (section 86(2)).
Listed companies with Rs 3 crore or more paid-up capital, and government-owned companies, must have an audit committee (section 164).
The 2081 amendment allows shares for non-cash contributions and employee share purchase plans.
Read the official text: Companies Act 2063 on the Nepal Law Commission website. The Act is also called the Company Act 2063; this article uses both names.

Companies Act 2063 amendments (latest 2081)

The Act has been amended four times since 2063. The table lists each amendment and what it changed.

Amendment	Date	Key changes
Act Amending Some Nepal Acts 2064	2064/5/9	Consequential amendments
Companies (First Amendment) Act 2074	2074/1/19 (2 May 2017)	Private-company shareholder limit raised from 50 to 101; private companies may have up to 11 directors; a woman director required in some public companies; online filing
Act amending laws to align with the Constitution, 2075	2075/11/19	Terminology and constitutional alignment
Act to Amend Some Nepal Acts Relating to Improving Economic and Business Environment and Enhancing Investment, 2081	Replaced the Magh 7, 2081 ordinance; authenticated 31 March 2025	Shares for non-cash contributions (up to 20% of paid-up capital, 40% for startups); employee share purchase plans; 90% late-filing fine waiver until Asar-end 2082; relaxed rules on directors across parent and subsidiary companies

The late-filing fine waiver ran until the end of Asar 2082 and has now expired. For more on how the 2081 changes affect startups and non-resident Nepalis, see key amendments in the Company Act 2063.

Types of companies under the Act

The Act groups companies by ownership and purpose.

Type	Key features	Examples
Private company	1 to 101 shareholders; shares cannot be offered to the public	Startups, family businesses
Public company	At least 7 promoters; at least Rs 1 crore paid-up capital; shares can be offered to the public	Banks, insurance companies
Single-shareholder company	A private company owned by one person	Solo founders
Foreign company	A branch or office of a company registered abroad	Branch and liaison offices of multinationals
Not-for-profit company	Profits are used for the company's objectives and not paid out as dividends	Foundations, member associations

Not sure whether a company or a sole proprietorship firm suits you? Read private firm vs private company under the Companies Act 2063.

How to register a company

Registration is done online through the Office of the Company Registrar (OCR).

Create an account and reserve a name on the OCR online system.
Prepare the constitutional documents:
- Memorandum of Association (MoA): the company's objectives, authorised capital and liability structure.
- Articles of Association (AoA): internal rules on meetings, directors and shares.
Submit the application with promoters' identity documents and the registration fee.
Get registered. OCR reviews the application and issues the registration certificate once everything is in order.

Fees depend on the company's authorised capital. Check the current fee schedule on the OCR website before you apply. For a full walkthrough, see private company registration in Nepal and fully online company registration.

Shares and debentures

Share capital: companies issue shares within their authorised capital. Since the 2081 amendment, shares can also be issued for non-cash contributions, up to 20% of paid-up capital (40% for startups).
Employee share plans: the 2081 amendment allows companies to run employee share purchase plans.
Debentures: companies can raise debt by issuing debentures, with a trustee appointed to protect debenture holders.

Board of directors

The board sets the company's direction and is responsible for compliance.

Public companies: 3 to 11 directors (section 86(2)). At least 1 must be an independent director, or 2 if the board has more than 7 members.
Private companies: up to 11 directors, as allowed by the First Amendment 2074.
Women directors: required on the board of some public companies since 2074.
Appointment: directors are elected by shareholders, or appointed by promoters when the company is formed.
Duties: follow the law and the company's own rules, and disclose any personal interest in a company deal.

Accounts, audit and annual reporting

Books of account: every company must keep accounts on a double-entry basis.
Audit: annual accounts must be audited by a qualified auditor.
Audit committee (section 164): required for a listed company with paid-up capital of Rs 3 crore or more, and for a company fully or partly owned by the government. It must have at least 3 members.
Annual filings: audited accounts and annual returns must be filed with OCR on time. Late filing attracts fines.

Liquidation and closing a company

Voluntary liquidation: shareholders pass a special resolution, provided the company can pay all its debts.
Insolvency: if a company cannot pay its debts, the process is handled through the courts under insolvency law.

Penalties and offences

The Act sets fines, and for serious cases imprisonment, for offences such as:

preparing false accounts or financial statements
falsifying or destroying company records
failing to file returns and reports with OCR
breaking audit and disclosure rules

The exact penalty depends on the offence. Check the official text of the Act for details.

Compliance tips

Keep your MoA and AoA up to date. Update them with OCR when you change capital, objectives or structure.
File on time. Prepare accounts well before the annual filing deadline to avoid fines.
Use a qualified auditor. Public companies in particular must meet strict audit standards.
Maintain registers. Keep share registers, board minutes and resolutions in order.
Disclose conflicts. Directors must declare any personal interest in a company transaction.

FAQ

What is the Companies Act 2063?

It is Nepal's main company law. It covers incorporation, governance, shares, audit, penalties and winding up, and is administered by the Office of the Company Registrar.

What is the latest amendment to the Companies Act 2063?

The Act to Amend Some Nepal Acts Relating to Improving Economic and Business Environment and Enhancing Investment, 2081, authenticated on 31 March 2025. It allowed shares for non-cash contributions and employee share purchase plans, among other changes.