Share Transfer in a Nepalese Company — Procedure, Documents & OCR/CAMIS

Shareholder Register

and complete the relevant OCR/CAMIS record process.

Sections 42 and 43 govern transfer of shares/securities, while Section 46 requires every company to maintain the shareholder register.

Check Whether the Shares Can Be Transferred

Before signing the transfer, review:

• Articles of Association;

• unanimous agreement;

• shareholder agreement;

• founder-share restrictions;

• regulator restrictions;

• foreign-investment conditions.

A private company's shares may be subject to significant contractual/statutory restrictions.

Do not assume that shares of a private company are freely transferable in the same way as listed securities.

Founder Share Restrictions

Section 42(2) restricts a founder’s sale or pledge before the first general meeting and full payment of called-up amounts. It expressly excepts a private company that has not borrowed from another company.

Establish the company’s borrowing facts before relying on that exception. The articles, a valid unanimous agreement, sector rules and any foreign-investment conditions still need review.

Share Purchase / Transfer Instrument

For an ordinary private-company transfer, the parties should document:

• seller;

• buyer;

• number of shares;

• class of shares;

• consideration;

• payment terms;

• transfer date;

• representations/conditions.

OCR's current company-administration guidance lists the prescribed Schedule 18 share/debenture purchase-sale instrument among the documents used to record a share transfer.

Board Approval / Company Recording

For the ordinary section 43 procedure, the purchaser applies to the company in the prescribed form, with the required fee, transfer instrument and share or debenture certificate. Section 43(2) requires the company to update the register within 15 days after the application, subject to the statutory process and any applicable securities-law arrangements.

OCR’s administration guidance lists the updated shareholder register, certified board decision, Schedule 18 instrument, new-holder identification and applicable regulator consent for the OCR record. Check the company’s articles and retain both company-record and OCR completion evidence.

Shareholder Register

Section 46 requires the company to maintain a shareholder register at its registered office.

The register should show the correct:

• shareholder name;

• address/identification;

• number/class of shares;

• acquisition/transfer details;

• amount paid/unpaid.

In a dispute, the person whose name is recorded in the company's shareholder register is generally treated as the holder of the shares unless otherwise established.

That is why merely signing a private sale agreement is not enough.

CAMIS

OCR currently provides a specific CAMIS post-registration event for: Share Purchase/Sale / Reserve Share Sale / Share Transmission after Death

and separate share-allotment functions.

The company should ensure that its CAMIS record agrees with:

• Board decision;

• share register;

• financial records;

• tax records.

New Shareholder Documents

For a new natural-person shareholder, OCR currently lists a certified citizenship copy among the required supporting documents.

For a corporate shareholder, additional documents can include:

• incorporation certificate;

• board resolution;

• representative authority;

• ownership information.

Foreign shareholders require additional foreign-investment/regulatory compliance.

Regulated Companies

Share transfer can require approval from the applicable regulator.

OCR's current guidance identifies sector approvals for cases involving authorities such as:

• Nepal Rastra Bank;

• Department of Industry;

• insurance regulator;

• labour/foreign-employment authority;

• tourism/other relevant regulator.

A regulated-company share transfer should not be completed solely on the basis of OCR requirements.

Foreign Investor

Where the buyer or seller is a foreign investor, separately review:

• FITTA;

• Department of Industry approval/record;

• NRB foreign-exchange rules;

• source of investment;

• repatriation rights;

• tax.

The OCR share-transfer recording is only one part of the transaction.

Tax Consequences

A share sale can create:

• capital gains tax;

• advance tax collection;

• Income Tax Act reporting;

• foreign-investment tax implications.

The applicable tax depends on matters such as:

• listed/unlisted status;

• seller type;

• resident/non-resident status;

• cost basis;

• consideration.

Tax should therefore be calculated before executing the transfer, particularly where consideration is material.

Share Certificate

After the shareholder register is updated, the company should update/issue share certificates as required by law and company records.

The certificate should agree with:

• shareholder register;

• allotment/transfer history;

• paid-up capital.

Death / Transmission

Transfer by inheritance or succession is not the same as an ordinary sale.

For a single-shareholder company, Section 153 specifically provides that the successor must notify OCR with evidence within: one month after acquiring the right to the shares.

CAMIS separately supports share transmission after death.

For inherited shares, review the separate succession guide and retain the legal-entitlement evidence before updating the company record.

Share Transmission on Death

Example

Existing shareholder A: 800 shares

Existing shareholder B: 200 shares

A sells: 300 shares to C.

After lawful completion and recording: A = 500 shares
B = 200 shares
C = 300 shares

Total issued shares remain:

1,000 shares

This is a share transfer.

The company's issued capital does not increase.

Share Transfer vs Share Allotment

Share Transfer

Existing shareholder transfers existing shares.

Company receives no new share capital merely from the sale.

Share Allotment

Company issues/allots shares to a shareholder.

Company's issued/paid-up capital can increase.

These should never be treated as the same corporate event.

Share Transfer Checklist

• Review MOA/AOA

• Review shareholder/unanimous agreement

• Check founder-share restriction

• Check sector approval

• Check foreign-investment approval

• Agree valuation/consideration

• Calculate tax

• Prepare transfer agreement/instrument

• Obtain buyer/seller identification

• Pass required Board resolution

• Update shareholder register

• Complete CAMIS/OCR event

• Update share certificates

• Update beneficial-owner record

• Update bank/regulator where needed

• Preserve tax/payment evidence

Common Errors

Signing a share-sale agreement but not updating the shareholder register

Confusing transfer with new share allotment

Ignoring Articles/shareholder restrictions

Ignoring capital gains tax

Transferring regulated-company shares without approval

Updating CAMIS without proper underlying corporate documentation

Further guidance and practical checks

A legally effective share transfer should align the agreement, tax, Board decision, shareholder register, share certificate and CAMIS/OCR record. A mismatch between these records can create significant future ownership disputes.