Public and Non-profit Company Registration in Nepal — Choosing the Legal Form

A public company has capital, governance and disclosure obligations that differ from an ordinary private company. It is not automatically listed on a stock exchange; incorporation does not approve a public offer. A new public company normally needs OCR commencement approval under section 63. The current proviso exempts an already operating private company converting to public from obtaining fresh approval. Sector licences and offering permissions remain separate.

A company not distributing profits has a different objective and distribution framework. OCR guidance states that share capital is not required for its establishment and that profits cannot be distributed to members; amounts earned are used for the company's objectives or capital development. This form is not interchangeable with every association, foundation or tax-exempt organisation. Tax-exempt status and any social-welfare or sector affiliation must be established separately.

First, OCR registers the corporate legal form. Second, IRD determines applicable tax registration and exemption treatment under tax law. Third, the relevant sector authority or SWC may impose affiliation, permission or project-reporting duties. Evidence from one authority does not replace the other two.

Do not solicit public investment merely because incorporation documents are being prepared. Securities offering and listing requirements need a separate SEBON analysis. Similarly, a non-profit company must comply with the restrictions of its form even if a surplus is generated from lawful activities.

Prepare membership criteria, governing-body powers, voting, authorised expenditure and the dissolution arrangement. Non-profit-company membership is not transferable under section 166(4). Section 167 restricts profit distribution and requires prior OCR approval for changing objectives. Its officer-remuneration and operating-expense limits also apply; administrative expenses cannot exceed 25% of total expenses.

Distinguish supported reimbursement or lawful remuneration from an impermissible distribution. Remaining assets cannot be diverted to founders, members or their specified related interests on dissolution. Record who may join, sign and replace an officer before opening the bank account.

For example, a group planning a professional training organisation should explain its educational purpose, membership model and use of surplus before choosing a form. If the intended arrangement includes investor dividends, a non-profit company's restriction conflicts with that objective. Resolve the business model at entry rather than relying on an informal promise to change the organisation later.

Keep the registration decision, constitutional documents, officer appointments, accounts, annual filings and evidence of any separate approval in a permanent organisational file.

A group wants to establish a training organisation funded by donations and course fees. If it chooses a non-distributing company, its documents must support that purpose and its governance must prevent private distribution. It then separately analyses whether the entity and its receipts qualify for income-tax exemption, whether training supplies have VAT consequences and whether project or sector approvals apply. Calling every course receipt a “donation” does not change its substance.

Reconcile the approved name, registered office, objects, members/directors and filed constitution. Establish bank authority, accounting records, audit appointments and reporting calendar. Maintain restrictions on grant use and conflict-of-interest controls from the start. Save the OCR acknowledgement and final registration evidence rather than treating a submitted application as approval.

Check the current CAMIS forms and statutory conditions for the proposed action. Keep the filing requirements with the decision and supporting documents.