The Government of Nepal, through amendments to the Companies Act, 2063, introduced via the Ordinance to Amend Certain Nepal Acts Relating to Economic and Business Environment Improvement and Investment Promotion, has streamlined processes to facilitate businesses and investors. Published in the Nepal Gazette (Part 2, Section 74, Supplementary Issue 48), these amendments include provisions for exemptions and simplified procedures under the Companies Act. One significant update is the introduction of Section 136A, which outlines the process for the cancellation of company registrations for entities that are no longer operational or have failed to comply with certain statutory requirements.
Following a decision dated 2081/12/13 (Nepali calendar), the Office of the Registrar of Companies has detailed the procedure and required documentation for companies seeking exemption from registration cancellation for company closure under this section. Below is a comprehensive guide to help concerned parties navigate this process effectively.
Eligibility for Special Registration Cancellation
Companies meeting the following criteria may apply for cancellation of their registration under Section 136A:
- Companies that have not conducted business or are not operational at the time Section 136A came into effect.
- Companies that have not submitted annual details as required under Section 80 of the Companies Act.
- Companies that have not paid fines imposed under Section 81.
This provision offers a pathway for dormant or non-compliant companies to formally dissolve their registration without facing prolonged legal or financial burdens.
Step-by-Step Procedure for Registration Cancellation
Application Submission
- Eligible companies must submit an application for cancellation through the Company Administration Management Information System (CAMIS), accessible at camis.ocr.gov.np.
- Companies are required to log in and update their basic details in the online system.
- Verification of Capital Structure
- Ensure the company’s capital structure, particularly the final paid-up capital, is accurately reflected in the online system. This step is mandatory before proceeding further.
- Accessing the Special Registration Cancellation Module
- Navigate to the Special Registration Cancellation (Section 136A) section within CAMIS.
- Fill in the required details and upload the following documents:Â
a. Annual Statements: Separate statements for each financial year as per Section 80.
b. Cancellation Application: A formal application requesting company cancellation.
c. General Meeting Decision: A resolution from the general meeting approving the cancellation.
d. Directors/Shareholders’ Decision: If a general meeting cannot be held due to lack of quorum, upload a decision from the directors or shareholders present. e. Auditor’s Report: A report detailing the company’s cancellation process and its liabilities.
f. Tax Compliance Proof: Either proof of tax payment or a letter from the Internal Revenue Department if the company is not registered under the Permanent Account Number (PAN).
Initial Approval and Public Notice
- Once the cancellation process begins, the company will receive initial approval for liquidation.
- A notice must be published in a national daily newspaper, allowing a 30-day period for creditors or stakeholders to raise objections. This notice, along with other required documents, must be uploaded to CAMIS.
Payment of Fine
- Companies must deposit either the fine imposed under Section 81 or 0.5% of the final paid-up capital, whichever is less.
In-Person Verification
- All founders involved in the cancellation decision must appear in person with their original identity cards at one of the following locations:
- The Office of the Registrar of Companies.
- In the presence of the local level chief, deputy chief, chairman, or vice-chairman of a district convenient to them.
- If abroad, before a Nepali embassy, consulate general, or honorary consulate general.
- This step ensures the authenticity of the cancellation request.
Final Decision
- If no complaints are filed within the 30-day notice period and all legal requirements are met, the company will be dissolved via the online system.
- The company will be formally notified of the dissolution.
Transfer of Assets and Liabilities
- Upon cancellation, any property, rights, facilities, or liabilities in the company’s name will be transferred to the shareholders, directors, or officers as per Section 136 of the Companies Act.
- The details of the directors, officers, and shareholders of the dissolved company will be made public for transparency.
Key Takeaways
The introduction of Section 136A reflects Nepal’s commitment to improving its economic and business environment by offering a clear and structured exit mechanism for inactive or non-compliant companies. This process not only simplifies dissolution but also ensures transparency and compliance with legal standards. Companies opting for this route must diligently follow the outlined steps, including updating records, submitting required documents, and fulfilling financial obligations.
For further assistance, companies can contact the Office of the Registrar of Companies or refer to the CAMIS portal. This initiative is a significant step toward fostering a more flexible and investor-friendly business landscape in Nepal.
