Agency Registration in Nepal
Complete guide to agency registration procedures, legal requirements, and compliance under the Nepal Agency Act 2014. Learn the entire process from application to renewal and termination with expert guidance.
Why Registration Matters
Operating an agency without registration is illegal and exposes you to fines up to Rs. 1,000 and work prohibition up to 5 years. Get properly registered to protect your business legally.
Overview of Agency Registration
Agency registration in Nepal is mandatory for anyone conducting agency business. The Nepal Agency Act, 2014 was introduced to protect the principal from unfair advantages and regulate agent conduct. The Agency Rule, 2019 outlines the detailed procedures and requirements for registration.
An agency is a contractual relationship where one party (the agent) is appointed to act on behalf of another party (the principal). Proper registration ensures legal compliance, protects all parties involved, and establishes clear terms of service including commission rates and transaction descriptions.
Agency Registration Procedure in Nepal
Step-by-step process for registering your agency business
Application Submission
Submit application to the Director General, Department of Commerce with principal’s details and commission rates
Authority Review
Department of Commerce reviews application and verifies eligibility of the applicant
Registration Approval
Upon approval, deposit payment and agency agreement are executed
License Issuance
Receive agency registration certificate from Department of Commerce
Detailed Registration Process
Step 1: Application Submission
The person wishing to operate as an agent must submit an application to the Director General of the Department of Commerce, Government of Nepal. The application must include:
- Complete name and address of the principal (the party being represented)
- Description of the transaction the agent will undertake
- Proposed commission rate
- Commitment to submit transaction descriptions every three months
- Personal and business details of the applicant
Step 2: Authority Review and Verification
The Department of Commerce examines the application to verify the applicant’s eligibility. They assess:
- Applicant’s qualifications and business history
- Appropriateness of commission rates
- Compliance with agency regulations
- Principal’s authorization and consent
Step 3: Approval and Payment
If the applicant is found eligible, the Department of Commerce grants permission after:
- Collection of required registration deposit
- Execution of agency agreement outlining rights and responsibilities
- Agreement on commission rates and transaction terms
Step 4: Restrictions After Registration
Once registered, the agent is legally bound to:
- Strictly adhere to the agreed commission rate
- Cannot make any undue profit beyond the prescribed commission
- Submit detailed transaction accounts every three months
- Maintain professional conduct as per agency agreement
Ongoing Obligations & Requirements
Continuing duties after agency registration
Annual Renewal of Agency Registration
Agency registration in Nepal is not perpetual and must be renewed annually. Key points about renewal:
- Registration must be renewed before the expiry of Chaitra (the last month of the Nepali calendar year)
- Renewal process is quick and straightforward for compliant agents
- Non-renewal of registration results in automatic suspension of agency business
- Late renewals may incur additional fees and penalties
Required Documents for Renewal
- Current agency registration certificate
- Proof of account submission (last three months)
- Updated business information
- Renewal fee payment
Submission of Accounts
Every registered agent must submit detailed transaction accounts every three months to the Director cum Controller of the Department of Commerce. These accounts must include:
- Description of goods or services handled
- Fare or pricing details
- Profit earned during the period
- Sale rate and market conditions
- Complete transaction records and documentation
- Client details and transaction volume
Regular account submission is mandatory and failure to comply can result in penalties or registration suspension.
Transfer of Agency
A registered agent may transfer their agency to another qualified person. The transfer process requires:
- Written consent letter from the principal (original agent’s client)
- Written consent from the original registered agent
- Application from the new agent seeking to take over the agency
- Transfer fee of Rs. 25 submitted to the Department of Commerce
- The new agent must meet all eligibility requirements
Important: The transfer fee is refundable if the transfer is not approved by the Director cum Controller.
Consequences of Non-Registration
Legal penalties and issues from operating without registration
Why Registration is Mandatory
Operating an agency business without registration is not only illegal but also exposes the agent to significant legal and financial consequences. The Nepal Agency Act, 2014 and Agency Rule, 2019 impose strict penalties for non-compliance.
Legal Penalties for Non-Registration
According to the Nepal Agency Act, 2014 and Rule, 2019, the following penalties apply:
Operating Without Registration
- Fine up to Rs. 1,000: Government of Nepal can fine any person operating as an agent without registration
Violation of Legal Provisions
- Fine of Rs. 200 OR Prohibition from working as an agent for up to 2 years
- Applies to agents and persons working contrary to Act provisions
Breach of Contract Terms
- Fine up to Rs. 500 OR Prohibition from agent work for up to 5 years
- Applies when agent violates contract terms made during registration
- Particularly applies to violations involving essential terms of the agreement
Cumulative Effects
- Financial penalties can accumulate quickly with multiple violations
- Work prohibitions damage professional reputation and income opportunities
- Non-registration makes all transactions illegal and unenforceable
- Clients may refuse to work with unregistered agents
Business Impact of Non-Registration
- Transactions without registration are legally invalid
- No legal recourse for disputes or payment issues
- Clients may avoid unregistered agents due to legal uncertainty
- Difficulty accessing financing or business loans
- Damaged credibility with business partners
- Inability to enforce contracts or collect commissions legally
Termination of Agency
Understanding how and when agency relationships end
What is Agency Termination?
Termination of agency refers to the end of the contractual relationship between the principal and the agent. The Nepal Contract Act, 2056 provides specific provisions under Sections 61, 62, and 64 regarding termination modes. An agency can be terminated through various methods:
Methods of Termination
By Acts of the Parties
By Mutual Agreement
The principal and agent can terminate the agency at any time through mutual agreement. This is the most amicable way to end an agency relationship without complications.
By Revocation
The principal may revoke the agent’s authority at any time by giving notice before the agent exercises authority to bind the principal. Failure to serve notice binds the principal for compensation. Revocation must be based on reasonable grounds.
Note: If a third party contracts with the agent in good faith without knowledge of revocation, the principal remains bound by that contract.
By Renunciation
An agent is not bound to continue agency against their will. The agent can renounce agency by giving reasonable notice to the principal. Lack of notice obligates the agent to compensate the principal. Renunciation must be based on reasonable grounds. The renouncing agent forfeits remuneration for completed work.
By Completion of Work
When the parties complete their respective duties, the agency ends. Unless otherwise stated in the contract, an agency for a specific work terminates upon work completion.
By Operation of Law
By Expiry of Time
Where an agent is appointed for a fixed term, expiration of that term ends the agency, regardless of whether the agency’s purpose is accomplished.
By Death or Insanity
Unless otherwise mentioned in the contract, agency terminates upon the death or insanity of either the principal or the agent.
By Insolvency of Principal
If the principal is declared insolvent, the agency terminates from the date of insolvency declaration. Insolvency of the agent also terminates the agency relationship.
By Destruction of Subject Matter
An agency created to deal with specific property terminates if that property is destroyed. For example, an agency to sell a house ends if the house is destroyed by fire.
By Dissolution of Company
When a company (legal person) is dissolved or liquidated, any agency relationship is automatically terminated unless otherwise specified in the contract.
By Principal or Agent Becoming Alien Enemy
If a war breaks out between the principal’s and agent’s countries, the agency is terminated. The principal and agent relationship becomes unlawful.
By Change of Law
If new laws make the agency work impossible to perform, the agency terminates. Changed legal circumstances that render contract performance impossible automatically end the agency.
Need Help with Agency Registration?
BizSewa’s expert team can guide you through the entire agency registration process, from application to renewal and beyond. We ensure full compliance with the Nepal Agency Act, 2014 and handle all legal documentation professionally.