Nepal’s Company Registrar faces backlash over 90% penalty waivers under the Company Act 2063! Discover how early filers were unfairly excluded.

Imagine running a business in Nepal. You struggle with deadlines, navigate paperwork, and do your best to stay compliant with the Company Act 2063. You rush to file your returns to avoid paying penalties and yet make a silly mistake! Consequence: Despite completing the compliance on time, you pay the full penalty! 

Then there is another company that did none of that. They skipped their filings for years, ignored the notices from the company registration office, and built up a mountain of unpaid penalties.

Fast forward to 2081! A sudden change in law wipes out 90% of their penalties. Just like that!

You have to pay the full penalty despite trying to be fully compliant. And they get 90% waiver despite being non-compliant all the time!
Sounds unfair? Well, that’s exactly what Nepal’s Company Registration Office i.e. the Company Registrar is saying. 

This article breaks down how a well-intended ordinance turned into a source of frustration for compliant businesses across Nepal. It exposes how the company registration office turned an opportunity for reform into what many now see as an unfair loophole.

To understand how we got here, let’s walk through the timeline, from hope to confusion to legal showdown.

Timeline of Events: Penalty Waiver Controversy

1. Policy Introduction

• 2081/09/29 (Mid-Jan 2025):
  The Government of Nepal issued the Ordinance to Amend Certain Nepal Acts to Improve the Economic and Business Environment and Increase Investment, introducing key relief measures under the Company Act 2063, including:
  • 90% penalty waiver for filings by Ashadh 2082
  • Simplified closure with capped penalty at 0.5% of paid-up capital

2. OCR’s Progressive Notices (and Escalation)

• 2081/10/08:
  The Office of the Company Registrar (OCR) issued its first notice, stating that further clarification on implementation would be provided.
• 2081/10/30:
   Second notice issued outlining documents required for companies seeking penalty relief.
• 2081/11/19:
  OCR published its third and most controversial notice, introducing five arbitrary conditions, including:
  • 90% waiver only for filings made after 2081/09/29 (Poush 29)
  • No waiver for those who filed earlier
  • Deferral of implementation for company closure waivers under Section 136Ka

3. Legal Pushback

• 2081/11/20–21:
  Ram Bahadur Shahi filed a writ petition at the Supreme Court, challenging OCR's notice and its working procedure as unconstitutional and contrary to the ordinance.
• 2081/12/04:
  The Supreme Court issued an interim order, instructing the OCR to halt all operations related to fine waivers until the case is reviewed.
• 2082/01 (Baisakh):
  A contempt of court complaint was filed against OCR for allegedly violating the interim order.
• 2082/01/23:
  The Supreme Court issued a show-cause order to OCR, asking them to justify their actions and clarify their legal basis for the implementation process.

The Ordinance: A Seemingly Fair Offer

In early 2081 BS, the Government of Nepal introduced a surprising amendment to the Company Act 2063 via an ordinance. Specifically, a new sub-section was added to Section 81:

"If a company submits the required details, information, or notices to the office by the end of Ashar 2082, a 90% discount will be given on the penalty for late submission of such details, information, or notices under this Act."

On the surface, this looked like a generous opportunity.

The logic seemed fair enough: too many companies were falling behind on compliance, and the fines had built up to unmanageable levels. Offering a one-time 90% penalty waiver would encourage them to clean up their records and return to compliance under the Company Act 2063.

It was marketed as a step towards easing the burden on entrepreneurs and helping formalize Nepal's business ecosystem. And for once, it felt like the company registration office was trying to be business-friendly.

But what wasn’t mentioned in the ordinance. What came later through internal decisions and unexplained directives completely changed the game.

How the Office of Company Registration Flipped the Narrative

Here’s where things took a dramatic turn. The ordinance was passed with one clear message: submit your overdue filings by Ashar 2082 and get 90% off your penalties.

But then, somewhere along the way, the company registration office added its own twist.

According to internal implementation guidelines that were never publicly released in time, only companies that submitted their documents after Poush 29, 2081 were eligible for the discount. Meaning if you filed before the date and were liable for penalties due to some delay or wrong filing, you will not get the waiver. 

No mention of this in the ordinance. No press release. No prior warning.

Suddenly, the promise of fairness and equal opportunity turned into a privilege reserved for latecomers or the defaulters.

If you submitted your filings early, say, in Mangsir 2081 or before, you were disqualified from receiving the discount. Even if you met every other condition under the Company Act 2063.

And the irony? Those who delayed their filings the longest, in some cases for years, were now being rewarded with massive penalty waivers.

This wasn’t a policy being implemented transparently. It was a silent bending of the rules. And for companies that followed the law in good faith, it felt like a betrayal.

Click here to understand in detail about the Company Act 2063.

How the Penalty Structure Works

To understand the scale of this issue, you need to look at how penalties are calculated under Section 81(2) of the Company Act 2063.

Penalties for failing to file required documents with the company registration office are based on two factors:

• The size of your paid-up capital
• The length of your delay

Here’s a simplified breakdown of the penalty structure:

Let that last row sink in; NPR 20,000 per year for each year of delay if your paid-up capital is over one crore.

For a business that hasn’t filed for five years, the total penalty can easily exceed one lakh, and that’s just for a single section of non-compliance. If the company failed to submit filings under multiple sections of the Company Act 2063, like Section 51 (which covers records of shares, debentures, and loans) and Section 80 (which requires AGM minutes and annual financials), the penalties stack up per section, making the total even more punishing.

These aren’t small amounts for most SMEs. And under normal circumstances, they’re unavoidable.

Unless, of course, you're lucky enough to file after Poush 2081, and that’s where the injustice really begins.

The Case of Company A vs. Company B: A Tale of Two Realities

Let’s bring this injustice to life.

Meet Company A. A regular private limited company in Nepal registered in financial year 2077/78 with a paid-up capital of NPR 5 crore. Unaware of the annual compliance requirement, they did not file their annual returns. But when they’re applying for a government tender that required a tax clearance certificate and an annual update letter from the Company Registrar, they swiftly filed their returns including for the financial year 2080/81 by the end of Poush 2081. And since they’ve heard about the penalty waiver, they were happy that they will get the waiver benefit too. 

Now meet Company B. Same capital. Same registration year. Same business structure. But for the past four years, they did nothing. No Section 51 filings. No Section 80 submissions. Not even an attempt. But when the ordinance came out, they waited. And then filed everything in Magh 2081.

So, who do you think will have to pay more penalty? Company A or Company B? 

Well, you are in for a big surprise if you guessed the right answer would be Company A! Because the Company Registrar came up with this weird logic that only Company B will get the waiver because it filed its return after Poush 2081 (ideally a non-compliant company) and Company A will not get any benefit just because it filed all the returns before the Poush end. 

So, the Company Registration Office is asking Company A to pay a penalty of Rs. 120,000 while Company A will only pay a penalty of just Rs. 13,400! 

Here is how the penalty numbers are calculated: 

Penalties without the waiver:

Here’s the twist:

Company A filed before the Poush deadline in FY 2080/81. So they aren’t liable for that year’s penalties.

• Total Penalty Paid: NPR 120,000
• Relief Received: None

Company B, who filed after Poush?

• Same non-compliance.
• Got the 90% waiver.
• Total Penalty Paid: NPR 13,400

Same mistake. Different timing. Completely different outcomes.

This isn’t a hypothetical scenario. This is happening to real companies across Nepal. And it doesn’t just feel unfair, it feels deliberately rigged.

Why This Doesn’t Sit Right

Because this isn’t just about numbers on a ledger. It’s about trust, fairness, and what kind of message we’re sending to thousands of hardworking entrepreneurs.

When the company registration office rewards companies for ignoring deadlines and penalizes those who try to stay compliant, it flips the entire purpose of the Company Act 2063 on its head.

Let’s be honest:

• How do you justify a policy that disadvantages early filers?
• How does this help build a culture of timely compliance?
• And how do you explain to a small business owner who paid lakhs in penalties last year that someone else paid only a fraction just because they waited longer?

The businesses that should’ve been appreciated were instead left out. Left feeling foolish for playing by the rules.

It creates a chilling effect: next time there’s a deadline, companies may wait, hoping another ordinance will come and save the day.

And once that trust erodes, no amount of legalese or discount schemes can bring it back.

Did you know that company registration in Nepal is fully digital now? More on that Here.

Why This Feels Like a Setup

If you’re starting to feel like this whole thing wasn’t just an innocent misstep, but a carefully choreographed move, you’re not alone. This penalty waiver drama raises uncomfortable questions that are too loud to ignore:

1. Ordinances Don’t Come With Terms, Until Someone Sets Them

Let’s go back to the actual ordinance. It simply said: “Submit filings by Ashar 2082 and get 90% off.”

Nowhere did it say “Only if you file after Poush 2081.” That mysterious cut-off was added later, quietly, by the company registration office.

And why would they add such a selective condition, especially one that favors the very companies that were the most negligent?

Well, it smells like someone’s dormant company, sitting on piles of fines, needed a last-minute rescue. And what better way than lobbying for a rule change with just the right terms to magically erase most of those penalties?

2. Fines Are a Cash Cow

Let’s not forget, penalties collected by the company registration office are big money. Around five years ago, the office reportedly collected over NPR 28 crore annually just from fines. With more companies registered today, that number is likely far higher.

So why would the government willingly give up this much revenue? Was it really about helping struggling businesses?

Or was this just a cleverly disguised PR move? Or worse, a targeted bailout for a few well-connected insiders?

3. Most Companies Get Penalized for Tiny Errors

Anyone who has filed under Section 51 knows how unforgiving the process is. Forget a date? File in the wrong format? Miss a signature? That’s a penalty.

90% of companies end up getting penalized not because they intentionally broke the rules, but because of clerical mistakes.

And now they’re watching businesses that filed nothing at all walk away with a 90% discount?

That’s not just frustrating. It’s demoralizing. It sends a loud and clear message:

“Don’t bother complying. Just wait for the next amnesty.”

4. The Rule of Law Takes a Hit

In theory, the law is meant to apply equally to everyone.

But the arbitrary notice issued by the Office of Company Registrar wasn’t just unequal, It was unannounced, unexplained, and completely opaque.

• There were no advance notices.
• No official implementation guidelines published.
• And yet, the company registration office implemented internal criteria, like the “after Poush only” rule that was never part of the actual law.

If rules can be changed this quietly, after the fact, what stops it from happening again?

It sets a dangerous precedent. A precedent where:

• Law-abiding companies are kept in the dark.
• Insider companies are tipped off in time.
• And the rest are left wondering if compliance even matters.

The result? A blow to the credibility of the Company Act 2063, and a growing belief that governance in Nepal is not about fairness, it’s about who you know.

Are We Silent Despite OCR’s Arbitrary Notice?

Thankfully, no. Business owners and professionals didn’t stay silent.

When the Office of the Company Registrar (OCR) started implementing the penalty waiver ordinance with unfair and unexpected conditions, people raised their voices, and one of them, Advocate Ram Bahadur Shahi, went straight to the Supreme Court.

A writ petition was filed, arguing that the OCR's actions directly violated both the Constitution and the Company Act 2063 as amended by a new ordinance titled "Ordinance to Amend Certain Nepal Acts to Improve the Economic and Business Environment and Increase Investment."

The ordinance promised:

• A 90% waiver on penalties for companies that submit pending documents by Ashadh 2082 (July 2025).
• A simplified closure process, where companies would pay the lesser of the full penalty or 0.5% of their paid-up capital.

But the OCR’s implementation notice on 2081/11/19 added five conditions, none of which were in the law. The most controversial? That the 90% waiver would only apply to filings made after 29th Poush 2081, effectively punishing companies that complied early.

The petition stated that:

• The OCR went beyond its legal authority.
• The five added conditions are arbitrary, unfair, and discriminatory.
• The actions caused confusion, system delays, and hardship for businesses.

These are What The Petition Asked For:

• Cancel the OCR’s 2081/11/19 notice and its conditions.
• Instruct the OCR to follow the actual ordinance without any additional restrictions.
• Immediately stop implementation of unfair rules through an interim order.

And the Supreme Court responded.

Supreme Court’s Interim Order: A Ray of Hope

In response to the writ, the Supreme Court issued an interim order.

The directive? A temporary freeze on all penalty-related operations under the new ordinance, until further review.

That means, for now:

• No more 90% discounts being processed.
• No selective application of the waiver.
• And no backdoor benefits for a few while the rest wait in confusion.

This move has, at least temporarily, restored some balance. It sends a message that arbitrary changes to public policy, especially ones that affect thousands of businesses, cannot go unchecked.

But this is just an interim measure. What happens next depends on:

• How the Supreme Court rules in the final verdict.
• Whether the company registration office revises its implementation strategy.
• And whether the government steps in to clarify or rectify the situation.

Either way, one thing is clear: businesses in Nepal are no longer willing to stay silent when fairness is thrown out the window.

What Needs to Change

This whole episode isn’t just about one unfair waiver or one misguided directive. It’s a deeper reflection of how we treat compliance, and those who actually try to follow the law in Nepal.

Here’s what urgently needs to change:

1. Apply the Waiver Equally to All Companies

If the goal was to give companies a second chance, make it universal. Every company, whether they filed in Mangsir or Falgun should get the same opportunity to rectify past delays. Selective forgiveness only deepens the trust gap.

2. Publish Clear Implementation Guidelines

An ordinance should not be left to the whims of internal memos. Any major legal relief must come with published terms, publicly available clarifications, and official communication, so no one is caught off guard or left out because they played by the (unwritten) rules.

3. Improve the Filing System

Right now, companies get penalized after they file. That makes no sense.

• The company registration office should reject flawed filings upfront.
• Introduce a grace window to correct minor errors without penalty.
• Use tech to make the system smarter, not more punishing.

4. Make Penalties Proportionate and Predictable

Penalties under the Company Act 2063 should act as deterrents, not punishments. Minor clerical errors should not cost tens of thousands. There should be:

• Caps on maximum annual penalties
• Differentiation between genuine mistakes and willful non-compliance

5. Ensure Transparency in Every Reform

Whether it’s a one-time waiver or a new filing requirement, reforms must be built on transparency. That includes:

• Consultation with stakeholders
• Advance public notice
• Consistent implementation

Nepal’s entrepreneurs and business owners deserve clarity, consistency, and dignity in how they’re treated. When rules change behind the scenes and favors are handed out silently, the system becomes the enemy, not the enabler of economic growth.

Let’s fix that.

Final Thoughts

This isn’t just a story about penalties and paperwork. It’s a story about what happens when a system stops rewarding integrity and starts incentivizing negligence.

The ordinance could have been a meaningful step toward improving compliance. Instead, because of how it was executed by the company registration office, it turned into a moment of disillusionment for thousands of companies who did everything right.

Let’s be clear: people didn’t get angry because others got a discount. They got angry because those who broke the rules were rewarded more than those who followed them. And because the rules kept changing quietly, without notice, without fairness.

If the Company Act 2063 is to mean anything at all, it must treat everyone equally. Whether you filed in Poush or Magh shouldn’t decide whether you pay NPR 1.2 lakhs or just Rs. 13,000.

This article isn’t a call for revenge. It’s a call for reform. For consistency. For clarity.

Because at the end of the day, the most dangerous fine isn’t the one you can calculate.

It’s the price we pay when businesses stop trusting the system.

And that’s one discount we can’t afford.

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