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How to Close a Company in Nepal

“Opening a company is easy, but maintaining and closing is tough.”

A comprehensive step-by-step guide to legally closing your business in Nepal. Understand voluntary liquidation, compulsory liquidation, and dissolution procedures.

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Why Close a Company in Nepal?

Understanding the common reasons businesses decide to wind up operations

Business Not Profitable

If your company is not generating enough profit to cover operational expenses and debts, closure becomes necessary to prevent further financial losses.

Personal Circumstances Change

Life changes such as relocation, family responsibilities, or health issues may require you to prioritize personal matters over business operations.

Business Retirement

After years of successful operation, business owners often choose to retire and close the company to enjoy their earned rest.

Strategic Business Shift

Changes in business strategy or market conditions may necessitate closing the current operation to focus on new opportunities.

Legal & Compliance Issues

Facing lawsuits, bankruptcy, or regulatory violations may require closure to avoid accumulating further legal complications.

Market & Economic Changes

Significant market downturns or industry disruption may make business continuity unfeasible or unprofitable.

Administrative Burden

Increasing regulatory requirements and tax obligations may outweigh business benefits, making closure a practical decision.

Structural Changes

Mergers, acquisitions, or restructuring may result in the need to close certain business entities or operations.

Company Closure Methods in Nepal

Three legal procedures to close your company

Closure Method Process Type When to Use Duration
Voluntary Liquidation Company-initiated wind-up with legal oversight When company chooses to wind up and has debts to settle 3-6 months
Compulsory Liquidation Court-ordered liquidation for insolvent companies When company cannot pay debts or creditors petition court 6-12 months
Dissolution (Darta Khareji) Simple dissolution without liquidation process When company is solvent with no outstanding documents 1-2 months
Key Difference: Liquidation involves selling company assets to pay off debts, while dissolution is a simpler process for solvent companies with no pending liabilities.

Step-by-Step Closure Process

Follow these detailed steps to legally close your company

1
Obtain Board Resolution
Conduct a Board of Directors meeting and pass a resolution approving the decision to close the company. Document this decision formally with proper minutes.
2
Shareholder Approval
Call a General Meeting of shareholders to vote on the company closure. The resolution must be passed with a majority vote as per company bylaws.
3
Settle All Liabilities
Pay off all outstanding debts, employee salaries, and any other financial obligations. Obtain written confirmation from all creditors.
4
Prepare Liquidation Statement
Prepare a detailed statement showing the company’s assets, liabilities, and the distribution plan for remaining assets.
5
File Dissolution Application
Submit the dissolution application to the Office of the Registrar of Companies with all supporting documents.
6
Publication & Notice Period
Publish a notice of dissolution in a national newspaper. Allow the statutory notice period for creditors to raise objections.
7
Government Approval & Certification
Once the notice period expires, the Registrar issues a Certificate of Dissolution, officially terminating the company.
8
Tax & Compliance Closure
File final tax returns and close all tax accounts. Obtain clearance certificates from all tax authorities.
⚠️ Important: Failure to follow proper legal procedures can result in director liability, penalties, and legal action. We strongly recommend consulting with legal professionals throughout the closure process.

Required Documents Checklist

Ensure you have all necessary documents prepared before initiating closure

Documents Required for Company Dissolution
✓
Board Resolution – Formal approval from the Board of Directors
✓
Shareholder Resolution – Minutes from General Meeting with majority vote
✓
Darta Khareji Form – Official dissolution application from ROC
✓
Liquidation Statement – Financial statement showing all assets and liabilities
✓
Debt Clearance Certificates – Confirmation from all creditors that debts are paid
✓
Tax Clearance – Certificates from Nepal Revenue Office
✓
Employee Final Settlement – Proof of final salary and benefits payment
✓
Bank Closure Certificate – Document showing company account closure
✓
Newspaper Advertisement – Copy of published dissolution notice
✓
Identity Verification – Director’s citizenship certificate and passport
✓
Company Certificate – Original certificate of incorporation
✓
Auditor’s Report – Signed auditor’s report on final accounts

Frequently Asked Questions

Common questions about company closure in Nepal

How long does it take to close a company in Nepal?
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The timeline depends on the closure method. Simple dissolution (Darta Khareji) typically takes 1-2 months, while voluntary liquidation takes 3-6 months, and compulsory liquidation can take 6-12 months or longer.
Can I close a company with outstanding debts?
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No, you cannot simply dissolve a company with outstanding debts. You must either settle all debts through voluntary liquidation, or the company will be liquidated compulsorily by court order.
What are the costs involved in closing a company?
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Costs typically include ROC filing fees, newspaper publication costs, professional legal and accounting fees, and employee dues. Total costs generally range from NPR 50,000 to NPR 200,000 depending on company complexity.
What happens if I don’t officially close my company?
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If you don’t officially close your company, you remain liable for all company obligations including taxes and creditor claims. Directors can face legal action, and the company may face compulsory liquidation.
Can I reactivate a closed company?
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Once a company is dissolved and the Certificate of Dissolution is issued, it cannot be reactivated. You would need to register a new company if you want to restart business operations.
What is the difference between liquidation and dissolution?
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Liquidation is the process of selling company assets and using proceeds to pay off debts. Dissolution is the legal termination of the company’s existence. Liquidation is a process, while dissolution is the final result.
Do I need a lawyer to close my company?
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While not legally mandatory, hiring a lawyer is highly recommended. The closure process involves complex legal and financial requirements. A lawyer can ensure all procedures are followed correctly.
What happens to employee benefits after company closure?
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All employees must receive their final salaries, accumulated leave encashment, and gratuity as per Nepal’s labor laws. This must be settled before the company is officially dissolved.

Ready to Close Your Company?

Don’t navigate the complex closure process alone. Our legal experts are here to guide you through every step, ensuring full compliance with Nepal’s regulations.

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