Introduction to Corporate Compliance in Nepal
Corporate compliance in Nepal refers to the set of legal, regulatory, and procedural requirements that companies must follow to operate lawfully. These obligations are primarily governed by the Companies Act, 2063 (2006), and supplemented by sector-specific regulations. Compliance ensures transparency, accountability, and lawful operation of a company. All registered entities in Nepal must maintain updated records, submit reports, and fulfill tax obligations on a periodic basis. Corporate compliance applies to both domestic and foreign companies operating within Nepal. Medha Law and Partners Is a leading law firm in Nepal.
Legal Requirements for Corporate Compliance
Under the Companies Act, 2063, legal requirements for corporate compliance include the appointment of directors, maintenance of statutory registers, holding of annual general meetings (AGMs), preparation and submission of financial statements, and tax filings. Companies must also adhere to applicable laws like the Income Tax Act, 2058; Labor Act, 2074; and sectoral regulations from authorities like the Department of Industry and Nepal Rastra Bank. Non-compliance may lead to fines, penalties, or suspension of operations.
Annual Corporate Compliance Checklist in Nepal
The yearly compliance checklist includes:
- Conducting the Annual General Meeting (AGM)
- Submitting the annual financial statement to the Office of the Company Registrar
- Renewing the company registration
- Filing tax returns with the Inland Revenue Department
- Updating shareholder and director information
- Maintaining statutory books and records
- Fulfilling sectoral licensing requirements (if applicable)
Companies must follow this checklist annually to remain compliant.
Process for Corporate Compliance Filing
The standard process involves:
- Preparation of financial reports and audit
- Convening of AGM within six months from the end of the fiscal year
- Submission of AGM minutes and audit report to the Office of the Company Registrar
- Filing of tax returns with the Inland Revenue Department
- Renewal of business license if sector-specific
Companies must also inform authorities about changes in the company structure, such as change of directors, shareholding, or office address.
Statutory Documents Required for Compliance
The following documents are needed for annual and periodic compliance:
- Audit report signed by a registered auditor
- AGM minutes and resolution copies
- Updated shareholder register
- Updated director register
- PAN/VAT filings and tax clearance certificates
- Renewal documents for licenses
- Memorandum and Articles of Association (updated if amended)
These documents ensure legal and financial compliance.
Timeline for Completing Compliance Filings
The standard timeline is as follows:
- AGM: Within six months of fiscal year-end
- Audit report submission: Within 30 days of AGM
- Annual return to Company Registrar: Annually
- Tax filing (Income Tax): Within three months of fiscal year-end
- Tax filing (VAT): Monthly or quarterly, as applicable
Delays in these timelines may attract penalties.
Estimated Cost for Compliance Procedures
Estimated costs vary depending on the size and complexity of the company:
- Auditor fees: NPR 10,000 to NPR 100,000
- Legal consultant fees: NPR 15,000 to NPR 50,000
- Government filing charges: NPR 1,000 to NPR 30,000
- Document notarization: NPR 500 to NPR 2,000
These are average figures and subject to change based on services used.
Government Fees for Corporate Filings
Common government fees include:
- Annual return filing fee: NPR 1,000 to NPR 15,000 (based on capital)
- Company renewal fee: NPR 1,000 to NPR 10,000
- Stamp duty: As per the prevailing rate on resolutions
- Tax clearance fees: Subject to tax structure
These are mandatory government charges and must be paid annually.
Laws Governing Corporate Compliance in Nepal
The primary and supporting laws are:
- Companies Act, 2063 (2006)
- Income Tax Act, 2058 (2002)
- Labor Act, 2074 (2017)
- Foreign Investment and Technology Transfer Act, 2075 (2019)
- Industry and Investment Promotion Act, 2075
- Securities Act, 2063 (for listed companies)
These laws form the legal framework for corporate compliance.
Regulatory Authorities for Corporate Compliance
The key authorities are:
- Office of the Company Registrar (OCR)
- Inland Revenue Department (IRD)
- Department of Industry (DOI)
- Nepal Rastra Bank (NRB)
- Securities Board of Nepal (SEBON) for listed companies
These institutions govern registration, taxation, investment, and regulatory compliance.
Types of Companies Requiring Compliance
All registered entities must comply, including:
- Private limited companies
- Public limited companies
- Non-profit organizations (companies not distributing profit)
- Foreign company branches or liaison offices
- Joint ventures
Each entity must meet compliance requirements per its legal structure.
Mandatory Disclosures and Annual Reporting
Companies must disclose:
- Shareholder details and changes
- Director appointments or removals
- Financial performance via audited reports
- Tax liabilities and payments
- Related-party transactions and share transfers
- Amendments in corporate documents
Disclosure maintains transparency and legal consistency.
Role of Company Secretary in Compliance
The Company Secretary is responsible for:
- Ensuring AGM and board meeting minutes are recorded
- Coordinating compliance filings
- Updating statutory registers
- Advising directors on compliance matters
- Liaising with government authorities
A Company Secretary is mandatory for public companies and beneficial for private companies.
Legal Services for Corporate Compliance
Law firms like Medha Law and Partners provide:
- Preparation and filing of compliance documents
- Legal audit and corporate governance support
- Due diligence and risk assessments
- Representation before OCR and other bodies
- Advice on statutory and regulatory changes
Legal expertise ensures timely and accurate compliance.
Penalties for Non-Compliance in Nepal
Penalties under the Companies Act and other laws include:
- Fines from NPR 5,000 to NPR 100,000
- Suspension or cancellation of company registration
- Additional charges for late filings
- Legal liability on directors and officers
- Restrictions on foreign exchange operations (NRB)
Timely compliance helps avoid regulatory action.
FAQs
What is corporate compliance in Nepal?
Corporate compliance involves fulfilling legal, tax, and reporting obligations by a company registered in Nepal.
Who needs to follow compliance rules?
All types of companies, including foreign branches and non-profits, must follow corporate compliance rules.
What filings are done every year?
Annual financial report, tax filings, shareholder updates, and business renewal are filed every year.
When are compliance deadlines in Nepal?
AGM within 6 months of fiscal year-end, audit and tax filings shortly after.
What happens if compliance is delayed?
Delays may result in financial penalties, regulatory warnings, or suspension of company operations.
How much does compliance filing cost?
Filing and consultancy may cost between NPR 15,000 to NPR 100,000 depending on company size.
Which laws cover corporate compliance?
Companies Act 2063, Income Tax Act 2058, and related sectoral laws cover corporate compliance.
Who regulates corporate compliance matters?
OCR, IRD, NRB, and DOI regulate corporate compliance in Nepal.
Can foreign companies comply in Nepal?
Yes, foreign branches or liaison offices must also fulfill compliance requirements.
Is online filing of compliance allowed?
Yes, many filings like tax returns and annual reports can be submitted online through government portals.