lessons from the past and the way forward (mr. begendra raj sharma paudyal, nepal)

Company Registration a bird eye view of Nepal

Begendra Raj Sharma PaudyalJoint Secretary

Ministry of Industry

Government of NepalMay 10, 2011

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New features in company law, 2006:

InitiationSetup an organization in 1992 to facilitate companies and cope of business needs,

Guiding laws :• Company Act, 2006• Company Administration Directives, 2009

Company act, 1936Company act, 1964Company act, 1996

Before 1992

•Department of Industry

•Department of small and

cottage Industry

•Department of Commerce

•Any person may come directly without

lawyers and C.A.

•Provision of company secretary (at

least 10 mill. Paid up capital

•Independent directors

•Provision for penalties

•Provision for profit not distributing

•Branch and liaison office of foreign

company

Types of

company

•Private limited

•Public limited

•Profit not

distributing co.

To promote investment in industry, trade and

business sector

To be benefitted from economic liberalization

To carry out dynamism in economic

development of the country

To make company registration, operation and

administration more easy, transparent and

accessible

To facilitate & promote entrepreneur to start a

new business

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Functional Procedure

Any person desirous of undertaking any enterprises through a company is required to incorporate it with the company registrar.

Documents to be submitted for new registration:

•Memorandum of Association (MOA) and Articles of Association (AOA) with signature affixed of each share holder• Certified copy of citizenship for Nepalese citizen, •Registration certificate if the promoter is body corporate

For foreign person/ company/body•Passport and visa•Approval of Department of Industry•Certified copy of the incorporation and other major documents relating to such incorporation, if the promoter is a foreign companyor body

Prior approval of designated agency if so required

( NRB - financial institutions)

(A) Company Registration

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• Registration of the records of the shareholders

• Registration of the record of the Board of Directors(BOD)

• Registration of the amendments to MOA and AOA

(B) Company administration

It includes;

Approval to the change of the name of the company

Capital increase

Changes and addition in objectives

Changes in address of the company and address for

service

Register in different institution,

Department of Industry,

Department of Cottage & Small Industries

Department of Commerce etc.

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To cope with economic liberalization, Office

of the Company Registrar setup in 1992

ICT was introduced as partial process of

business registration system.

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Integration of ICT in business registration

sector,

Business data - archive in digital format

Start of registration of Profit Not distributing

Companies (Social Goals Company).

Start to register foreign companies branch

and liaison office .

Starting doing business from service delivery

unit

10

ICT is :

Necessary tool for simplification and enhance performance of the administration and business process .

To achieve company data properly for the effective service delivery.

Required:

Registration process should be delegated in different unit or branches.

Simplify the legal system for business registration.

Main features / Substantial part should be in the primary legislation (Act).

Procedural part should be in secondary legislation (regulation).

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Record Keeping System

Digital

Manual

Capacity Building

Human Resources

Physical Resources

Decentralization

Service Unit

Devolution

Standardization

Documents (MOA, AOA)

Awareness Building

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Centralized Database Repository System of

business registration

Flexibility

A number of details such as procedural part of

company might be dealt in secondary legislation

(Regulation)

Unique Identifier

For the purpose of common use among public

authorities

Compliance

Digital Main Streaming

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52315461

6377

8550

9979 9956

1 47 26 53 65 8334 48312

57 79 75

52665556

6715

8660

10123 10114

0

2000

4000

6000

8000

10000

12000

2005 2006 2007 2008 2009 2010

Nuber

of

Com

panie

s

Highlights

Private Profit Not Distributing Public Total

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Year

Private

Limited

Profit Not

Distributing Public Limited Total

2000 2733 0 39 2772

2001 2833 0 41 2874

2002 4546 0 18 4564

2003 4256 1 38 4295

2004 5550 0 50 5600

2005 5231 1 34 5266

2006 5461 47 48 5556

2007 6377 26 312 6715

2008 8550 53 57 8660

2009 9979 65 79 10123

2010 9956 83 75 10114

Policy Reform

Legal Reform

Institutional Reform

Structural Reform

Procedural Reform

Behavioral Reform

Resource Allocation

Institutional Capacity Building

Individual Capacity Building

Modernization in Process

Cooperation and collaboration with

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