For many first-time entrepreneurs, the road to success is filled with unexpected hurdles. Compliance with legal requirements often takes a backseat to the excitement of building a business, but this can have serious consequences.

Meet Ramesh, a bright and ambitious young entrepreneur who, like many others, fell into the trap of missed compliance under Nepal’s Company Act 2063. His story is a cautionary tale of how neglecting annual filings and penalties can quickly turn into a nightmare for clueless promoters.

The Beginning: Big Dreams, Small Realities

Ramesh and his friends co-founded TechNest Pvt. Ltd., aiming to connect freelancers with global clients. Full of enthusiasm, they registered their company under the Company Act 2063, obtained the necessary certifications, and celebrated the first step toward building their dream.

But soon, challenges started piling up:

• Funding Shortfalls: Their pitches failed to attract investors.
• Team Drift: Friends left for higher studies or jobs, leaving Ramesh alone to manage the company.
• Operational Inactivity: Without resources or a team, the company remained inactive, existing only on paper.

Missed Obligations: Falling Into the Compliance Trap

Unaware of his responsibilities under the Company Act 2063, Ramesh neglected critical compliance obligations:

1. Annual Returns Filing (Section 80):
   • He failed to submit financial statements, AGM minutes, and directors’ reports.
2. Penalties for Non-Compliance (Section 81):
   • Penalties for overdue filings accumulated year after year.
3. Unresolved Status:
   • With no filings or operations, TechNest Pvt. Ltd. became dormant, creating a compliance burden instead of a business asset.

A Clueless Promoter’s Dilemma

Years later, when Ramesh revisited TechNest, he was overwhelmed:

• Hefty Penalties: Accrued penalties ran into lakhs of rupees, far exceeding the company’s resources.
• Complex Deregistration Process: Deregistering the company seemed like a bureaucratic maze of approvals and notifications.
• Uncertainty: Ramesh didn’t know whether to restart operations or shut down the company.

“I felt trapped. Reviving the business was unrealistic, but shutting it down seemed even harder,” he admitted.

The Turning Point: A Ray of Hope Under the Amended Company Act 2063

Ramesh’s predicament took a positive turn when he learned about the recent amendments to the Company Act 2063, specifically Section 136A, which introduced:

1. Simplified Deregistration Process:
   • Non-operational companies like TechNest Pvt. Ltd. could now deregister with reduced procedural hurdles.
2. 90% Penalty Waiver:
   • Companies could settle their penalties at just 10% of the total amount if they acted before the deadline.

With renewed hope, Ramesh realized he could finally close TechNest and focus on new opportunities without financial or legal baggage.

Updated Penalty Calculation for TechNest Pvt. Ltd.

Company Profile:

• Paid-Up Capital: NPR 5 crore (50,000,000)
• Period of Non-Compliance: 4 years (Fiscal Year 2077/78 to 2080/81)

Penalty Breakdown

Applicable Penalty Options

1. Accrued Penalties Under Section 81: NPR 134,000 (calculated above).
2. 0.5% of Paid-Up Capital: NPR 250,000 (0.5% of NPR 5 crore).

Applicable Penalty: Since NPR 134,000 is lower, it is the amount considered.

With 90% Penalty Waiver:

• Waived Amount:
  • 90% of NPR 134,000 = NPR 120,600
• Payable Amount:
  • NPR 134,000 - NPR 120,600 = NPR 13,400

What’s Next in Ramesh’s Journey?

Now, we’ll explore how Ramesh can leverage the amended Company Act 2063 to deregister TechNest Pvt. Ltd., taking full advantage of the 90% penalty waiver and simplified processes.

This case study serves as both a cautionary tale and a roadmap for entrepreneurs struggling with non-compliance and inactive companies.

After years of struggling with non-compliance, penalties, and procedural confusion, Ramesh, the promoter of TechNest Pvt. Ltd., finally found a way out. Thanks to recent amendments to Section 136A of the Company Act 2063, Ramesh was able to deregister his dormant company at minimal cost and with reduced effort.

Step 1: Determining Eligibility for Deregistration

Ramesh started by assessing whether TechNest Pvt. Ltd. qualified for deregistration under the amended Section 136A of the Company Act 2063. The criteria included:

1. Non-Operational Status: The company had not engaged in any business activities for the past four years.
2. Non-Compliance: No annual filings had been submitted since registration, and penalties had accumulated under Section 81.

Eligibility Met: TechNest met both criteria, making it eligible for deregistration.

Step 2: Calculating Penalties

The next step was determining the applicable penalties for non-compliance. Under the amendments, penalties could be reduced significantly if the company applied for deregistration by Ashar 31, 2082.

Under the amended Company Act 2063, Ramesh calculated the penalties for TechNest Pvt. Ltd. as follows:

• Accrued Penalties (FY 2077/78 to 2080/81): NPR 134,000.
• 0.5% of Paid-Up Capital (NPR 5 crore): NPR 250,000.
• Applicable Penalty: NPR 134,000 (lower amount considered).

With the 90% penalty waiver, the payable amount was reduced to:

• NPR 13,400, saving a total of NPR 120,600.

This made the process financially viable for Ramesh, enabling him to proceed with deregistration.

Step 3: Preparing the Deregistration Application

With the penalties settled, Ramesh prepared the deregistration application. Key requirements included:

1. Company Details Under Section 80:
   • Filing overdue financial statements, AGM minutes, and resolutions.
2. Resolution to Deregister:
   • As TechNest could not convene a general meeting due to quorum issues, Ramesh and the remaining directors approved the resolution to deregister.
3. Submission to OCR:
   • The application was submitted to the Office of the Company Registrar (OCR), along with proof of penalty payment.

Step 4: Public Notification and Objection Period

After receiving the application, the OCR issued a public notice in a national daily, allowing a 30-day objection period. During this time:

• No Objections Were Raised: Stakeholders, including creditors, did not dispute the application.

With no objections and all documentation in order, the OCR proceeded to process the deregistration request.

Step 5: Final Approval and Deregistration

Within 45 days, the OCR:

• Approved the deregistration of TechNest Pvt. Ltd.
• Published the decision on its official website for transparency.

Ramesh received the official confirmation, marking the end of his compliance burden.

Lessons Learned from Ramesh’s Journey

1. Act Before It’s Too Late:

By leveraging the 90% penalty waiver, Ramesh saved NPR 120,600 in penalties and avoided the complexities of ongoing compliance obligations.

2. Stay Proactive:

Ramesh’s story highlights the importance of addressing non-compliance issues early to prevent penalties from escalating.

3. Engage Professionals:

Seeking advice from corporate experts helped Ramesh navigate the deregistration process smoothly and accurately.

The Simplified Deregistration Process Under Company Act 2063

Here’s an overview of the deregistration process as outlined in Section 136A:

Key Benefits of Deregistration Under the Amendments

1. Cost Efficiency:
   • The 90% penalty waiver reduces financial liabilities, making deregistration affordable.
2. Simplified Process:
   • Clear steps and reduced procedural complexity make deregistration faster and more accessible.
3. Legal and Financial Relief:
   • Deregistration eliminates compliance obligations for non-operational companies, allowing promoters to move on to new ventures.

Conclusion: A Golden Opportunity for Non-Operational Companies

Ramesh’s story underscores the transformative impact of the recent amendments to the Company Act 2063, particularly for non-operational companies burdened by compliance issues. By simplifying the deregistration process and introducing a 90% penalty waiver, the government has created a rare opportunity for businesses to close operations efficiently and cost-effectively.

If your company is dormant or struggling with non-compliance, now is the time to act. With the Ashar 31, 2082 deadline approaching, don’t miss the chance to save big and secure a clean exit.

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