The rule, in three lines:
- Section 110, Companies Act 2063 — every company shall appoint an auditor.
- Section 80(2) — every company files a financial statement certified by an auditor, with the audit report, within six months of year end.
- No size test. No turnover test. No exemption for a company that did not trade.
“We Never Started the Business”
This is the sentence that precedes almost every large penalty bill we see.
Someone registers a company for a plan that does not happen. No bank account is opened, or one is opened and never used. Nothing is bought, nothing is sold. The owner reasonably concludes there is nothing to file, because there is nothing to report.
But the obligation in Nepali law attaches to the existence of the company, not to its activity. The company continues to exist until it is formally closed, and each year it exists is a year that required an appointed auditor, audited accounts and an OCR filing. Each year those were missed, a penalty accrued — and under Section 81 that penalty falls on the director personally, not on the dormant company.
Nothing tells you this is happening. No letter arrives, no notice is served. The liability surfaces the day you need something from the OCR — a good-standing letter for a bank, a change of directors, or the closure of the company itself. By then it may represent several years of accumulated fines. That is why dormant companies are routinely the worst-affected, not the least.
What a Nil Audit Actually Is
A nil audit is a statutory audit of a company that had no business transactions in the year. The process is the same as any other audit, just much shorter:
- The auditor is validly appointed and the appointment notified to the OCR within fifteen days (s.111).
- The auditor examines the company’s records — including the bank statements, which is where “nil” usually turns out not to be nil.
- Financial statements are prepared showing the position, even if that position is close to zero.
- The auditor signs and issues an audit report.
- The signed statement and report go to the OCR under s.80(2), and the figures feed the income tax return to the IRD.
Genuinely nil is rarer than owners think
Before assuming a nil audit, check for things that are transactions even though they do not feel like business:
- Bank charges and account maintenance fees.
- A renewal or licence fee paid from the company account.
- Registration or professional costs paid at incorporation.
- Money the owner put in or took out — that is a director’s loan or capital movement, not nothing.
- Any asset the company holds, even unused.
None of these stop you filing; they just mean the accounts are small rather than empty, and the auditor has to account for them properly.
Who May Sign the Audit
The auditor must be licensed to carry out audit under the prevailing law — in practice a member of the Institute of Chartered Accountants of Nepal (ICAN) holding a certificate of practice. Holding the qualification is not enough on its own; the practising certificate is what permits signing.
Section 112 then disqualifies a list of people from being appointed, however qualified:
| Cannot be your auditor | Why it catches people |
|---|---|
| A director, or an advisor on regular remuneration | Founder-directors who are themselves CAs |
| Anyone involved in the management of the company, or their partner or employee | The firm that also does your bookkeeping |
| A close relative of a director or partner, or their employee | The cousin or brother-in-law who is a CA |
| A debtor of the company, or anyone owing it dues | Informal loans between company and adviser |
The third row is the common one. Small companies very often appoint a relative who happens to be a chartered accountant, and the appointment is disqualified on its face.
The Audit Is On the Critical Path
Both annual filings depend on signed accounts: the income tax return within three months of year end, and the OCR filing within six. Neither can be completed without the auditor.
And because every company in Nepal shares the same fiscal year, every company needs its auditor in the same months. Auditors are heavily booked through Ashwin. Starting in Shrawan or Bhadra, rather than in the week before a deadline, is in practice the whole difference between filing on time and not — especially for a company catching up on several missed years.
If you have missed years, there is a window open now. Section 48 of the Finance Act 2083 waives accumulated Companies Act penalties, fees and interest for companies that file for FY 2082/83 and pay current dues by Ashoj end 2083 — and it applies whether you want to keep the company or close it. The audit is the slow part, so this is a now decision, not a later one. See company adhyawadhik.
Revive or Close?
For a dormant company, the honest question is not “how do I file the minimum” but “do I want this company at all?”
- Keep it if the name, registration or history has value, or you will trade through it within a year or two. Then run it properly: appoint an auditor each year, do the nil audit, file. The annual cost of staying compliant is small compared with the annual penalty for not.
- Close it if the plan is genuinely dead. Closing requires bringing filings up to date first — which is exactly what the current waiver window makes cheap.
What does not work is the third option most people take by default: leaving it. That is the only choice that gets more expensive every year, and it attaches to you rather than to the company.
Need a nil audit, or not sure how many years you owe? Send us the company name. We will check the outstanding position at the OCR, arrange the audit through a practising ICAN auditor, and tell you honestly whether reviving or closing is the better answer.
Sort out my company’s audit“UdhamSathi helped me build my company.” — UdhamSathi client
Frequently Asked Questions
Does a company with no transactions need an audit?
Yes. No dormancy exemption and no turnover threshold exist. s.110 requires every company to appoint an auditor and s.80(2) requires every company to file auditor-certified accounts. A dormant company files a nil audit — cheaper and faster, but not optional.
What is a nil audit?
A statutory audit of a company that had no business transactions. The auditor is appointed, examines the records and bank statements, and signs accounts and a report showing nil or near-nil activity. Bank charges, renewal fees and owner drawings all count as transactions, so genuinely nil is rarer than assumed.
Who can audit my company?
A licensed auditor — in practice an ICAN member with a certificate of practice. s.112 disqualifies directors, anyone in management, their partners and employees, close relatives of a director or partner, and anyone who owes the company money.
When should the audit start?
Shrawan or Bhadra. Both filings depend on signed accounts, and every company in Nepal shares one fiscal year, so auditors are booked solid through Ashwin. Leaving it to the deadline is how companies miss it.
What if a dormant company never files?
Penalties accrue under s.81 against the director personally, repeating every year (NPR 5,000 / 10,000 / 20,000 by capital) once more than about a year overdue — and the company cannot be cleanly closed until it is brought up to date.
About this guide. Sections 80, 81, 110, 111 and 112 are quoted from the Companies Act 2063 English text published via the Nepal Law Commission. For the full annual calendar see annual compliance for a Pvt. Ltd.; for tax deadlines see company tax filing deadlines. Audit fees are set by the auditor and are not regulated, so we quote per company rather than publishing a rate.
Dormant Company, or Years of Audits Outstanding?
We arrange audits through practising ICAN auditors, handle the OCR and IRD filings around them, and tell you straight whether the company is worth reviving or better closed.
Call: 9765057249 WhatsApp: 9700533219