Closing a Company in Nepal

There Are Four Ways Out, and You Do Not Get to Pick

“Closing a company” in Nepal covers four legally distinct procedures. Which one applies to you is decided by facts, not preference — principally by whether your company ever actually traded.

The Test That Decides It — and Almost Nobody Publishes It

The proviso to Rule 66(1) of the कम्पनी निर्देशिका 2072:

This is the single most consequential sentence in the area. If your company ever traded — one invoice, one bank transaction — the cheap promoter-application route is closed to you. You are in Chapter 10 liquidation or insolvency, which means a licensed liquidator, six-monthly reports and a timeline measured in months to over a year.

The distinction people assume exists — between a company that is “dormant now” and one that “never started” — is exactly the distinction the law draws, and it is drawn against the majority of people who want out.

Route A — Special Deregistration Under Section 136A

Section 136A was inserted by the First Amendment 2074 and then substituted in full by the 2081 ordinance on improving the economic and business environment. The current text, in substance:

An ordinary general-meeting decision is enough — “साधारण सभाबाट निर्णय गरी”. The 75% special resolution that several guides demand belongs to liquidation, not to deregistration.

The 0.5% figure, and the error that has it ten times too low

Since the s.81 fine for a small company more than a year in default runs at NPR 5,000 a year, the cap starts to bite almost immediately — which is the point of it.

There is no deadline on Section 136A

The “two-year window” in circulation was in the 2074 version of the section. The 2081 ordinance substituted the section entirely, and the replacement contains no time limit at all. OCR’s implementing directive — the विशेष दर्ता खारेजी सम्बन्धी निर्देशिका 2082, issued 9 Ashoj 2082 — likewise contains no sunset date.

The two-year figure survives because several widely-read legal databases still serve the superseded 2074 text.

What you file, and what you are signing

The form is अनुसूची–२८क, a schedule to the Act itself, headed “relating to Section 136A(1) — format of the application for cancellation of a company’s registration”.

Attachments: the board and general-meeting decisions; all general-meeting reports and audit reports since registration; the s.51 particulars; a copy of the tax clearance certificate; and any sector regulator’s operating permission.

OCR’s 2082 directive adds that the general meeting must ascertain the company’s liabilities and divide movable and immovable property among shareholders in proportion to shareholding, and that the directors or shareholders present must declare in writing that they bear the liabilities arising at the time of cancellation. Any surplus goes into the Investor Protection Fund under s.183, refundable on demand.

The Waiver You Will Be Told About Has Expired. The One That Matters Closes This Month.

The “Asar end 2082” date that appears alongside the 0.05% figure in published guidance belongs to a different provision entirely — the s.81(7) discount, which is both expired and was judicially suspended. The two have been welded together into a single claim that is wrong on the figure, wrong on the deadline and wrong on the mechanism.

Combined, s.48 and s.136A are the cheapest lawful exit currently available in Nepal — and the OCR half closes at the end of Ashoj. See our guide to bringing a company up to date for what the filing itself involves.

Route B — Ordinary Deregistration for a Company That Never Started

Section 136(1)(a) lets the promoters apply, showing why the business was never commenced. Rule 66 sets the conditions:

• All promoters, or promoters who agreed to subscribe at least 67% of total shares.
• सनाखत — identity attestation — in person at OCR, or before the chief, deputy chief, chair or vice-chair of any convenient local level; abroad, before the Nepali embassy or consulate. Since OCR’s notice of 2082/12/26 this may also be done before the relevant ward chair and uploaded, and services delivered through CAMIS no longer require physical presence at all.
• A written declaration by the promoters that the company owes nothing to anyone and has not traded — and the fact of non-operation must be certified by a registered auditor.
• OCR publishes notice in a national daily within 15 days, then allows 35 days for written claims or objections.

The Office can also act on its own motion under s.136(1)(b) — s.80 returns or s.81 fines unpaid for three consecutive financial years — or s.136(1)(c), where it has reasonable ground to believe the company is not operating. Rule 67 then gives the company 2 months to show cause. Note Rule 67(7): a company in or under insolvency proceedings will not be deregistered.

Government fee, from OCR’s published revenue schedule: NPR 1,000 where paid-up capital is up to NPR 10,00,000, and NPR 5,000 above that.

Route C — Voluntary Liquidation of a Solvent Company

Chapter 10, Sections 126 to 135. This is where a company that did trade has to go.

Section 126(2) sets four cumulative gates, and all four must be satisfied:

The resolution is a special resolution — and the 75% in the proviso to s.74(3) is measured against shares present at the meeting, not issued capital.

The liquidator has to be licensed

Section 127(2): “a practitioner licensed under the prevailing law on insolvency shall be appointed as liquidator”, with remuneration fixed at appointment. Under the Insolvency Act, s.63(2) makes an unlicensed appointment ipso facto void. You cannot appoint your accountant.

On appointment, the directors and officers are relieved of office and the liquidator takes over (s.127(4)), and employees’ service terminates by operation of law, though the liquidator may retain or appoint staff (s.127(5)). An auditor is appointed at the same time (s.127(7)).

Two provisions to keep in view: s.129 requires the liquidator to apply for insolvency review if he concludes the company is in fact insolvent — the route can flip under you; and s.133 lets a creditor or shareholder alleging irregularity complain to the court within 15 days of learning of it.

Route D — Insolvency

Under the दामासाही सम्बन्धी ऐन 2063 (Insolvency Act 2063). A few points that matter for anyone assessing exposure:

The payment waterfall, and two things it does not say

Section 57(1) ranks claims: the interim administrator’s costs; other Chapter 2 amounts; the inquiry officer; the restructuring manager; debts borrowed during the inquiry; debts borrowed during restructuring; the liquidator; workers’ and employees’ wages; employees’ leave, gratuity and provident fund; then all other accepted debt claims. Within each rank, pari passu.

The Insolvency Act contains no director disqualification provision — no wrongful-trading regime and no disqualification order. What it has is offences: deliberately concealing insolvency attracts a fine up to NPR 200,000 payable personally; fraud or forgery attracts one to two years’ imprisonment plus NPR 100,000–500,000 and recovery of the amount involved. Disqualification itself lives in Companies Act s.89(1)(c): a person declared insolvent cannot be appointed a director until five years have elapsed.

Voidable preferences run in 6-month, 1-year and 2-year windows before the order — so paying a favoured creditor on the way down can be unwound.

The Tax Side Comes First, Not in Parallel

Both OCR routes require the tax clearance certificate as a document of the application, and Rule 9A of the firm rules requires proof of tax paid before a firm may be cancelled. These cannot be run simultaneously.

What Happens If You Just Stop Filing

This is what most owners actually do, on the assumption that an unused company costs nothing. It is the most expensive option available.

The fine is the director’s personal debt

Section 81(2) opens by saying the Registrar fines the director or officer of the defaulting company — not the company. The paid-up-capital bands size the fine; they do not move who owes it. s.81(4): the director pays the fine and then files the outstanding return.

Limited liability is pierced — and abandonment is itself the fault

And it follows you to your other companies

Section 89(1)(ta): a person who is a director of a company that has not filed for three consecutive financial years is disqualified from being appointed a director — of any company, including a new one. s.89(1)(ta-1): so is anyone with an unpaid s.81(2) fine. See our guide to changing directors.

There is also a name consequence: s.6(1)(c) blocks anyone — the same promoters included — from registering a company under that name, or a confusingly similar one, for five years after cancellation.

The blacklist question, answered properly

Failing to file your returns at the OCR does not put anyone on the credit blacklist. There is no Companies Act trigger for it and no mechanism for OCR to recommend a listing — only banks and financial institutions can. Information flows from the blacklist to OCR, never the other way.

What is true is that when a company borrower is blacklisted, its directors and any shareholder holding 15% or more are caught with it.

Restoration is possible

Section 137: the company, a shareholder or a creditor may petition the court within five years of the cancellation notice — extended by the 2081 ordinance to cover s.136A cancellations too. But s.137(4) allows restoration only after the s.81 fines are paid.

Closing a Firm Is a Different Statute and a Different Office

A sole proprietorship or Partnership Firm is not a company. It does not go near the OCR.

The deregistration provisions are s.7B of the Private Firm Registration Act 2014 and s.11B of the Partnership Act 2020, and they are architecturally identical. Both list several grounds for cancellation, of which one — clause (b) — is the owner’s own application to close.

Two more points. Rule 9A of the Private Firm Registration Rules 2034 makes it mandatory — not discretionary — for the Department to collect the outstanding renewal fees and fines, and to require proof of tax paid up to the previous financial year, before cancelling. And s.8(4) of the 2014 Act allows the Government to bar an un-renewed firm, and any bank transacting with it, from all import and export.

For a Partnership Firm there is a further exposure: without public notice of dissolution, s.34 keeps all partners liable to third parties for acts done in the firm’s name after dissolution. That, and not any regulation, is why partnerships publish.

Which office: DoCSCP at Babarmahal handles firms with import/export objectives; capital under NPR 5 lakh generally goes to the local level; otherwise the provincial office, whose name differs by province — उद्योग, वाणिज्य तथा पर्यटन कार्यालय in Bagmati, घरेलु तथा साना उद्योग कार्यालय in Madhesh and Lumbini. Route yourself by your certificate’s letterhead, your objective and your capital.

Cost and Timeline, With the Unknowns Marked

Cost figures in circulation — “NPR 25,000–80,000 for deregistration, NPR 150,000–550,000 for liquidation” — trace back to the same article that carries the 0.05% error, and we will not repeat them as though they were sourced. Who bears the cost is settled: Rule 68 puts it on the company, failing which on the applicant promoter or director.

OCR’s Citizen Charter says 3 days and its 2083 service-standard notice says 5 working days for खारेजी. That is OCR’s processing time only — the end-to-end clock is dominated by the 30 or 35-day notice period and, before that, by the IRD.

Frequently Asked

How much does it cost to close a company in Nepal?

For a company that never traded and uses Section 136A, the statutory payment is the lower of the accrued Section 81 fine or 0.5% of paid-up capital — NPR 500 on NPR 1,00,000 of paid-up capital. The OCR application fee on the ordinary route is NPR 1,000 up to NPR 10,00,000 of paid-up capital and NPR 5,000 above. Add the newspaper notice and the auditor’s certificate, neither of which has a published price. The widely quoted figure of “0.05% of paid-up capital” is wrong by a factor of ten, and it is a cap rather than a flat fee.

Is the penalty waiver for closing a company in Nepal still available?

Two different waivers are being confused. The 90% discount on late-filing fines under Section 81(7) required filing by Asar end 2082, has expired, and its implementation was halted by a Supreme Court interim order. What is open is Finance Act 2083 Section 48, which waives all prior Companies Act tax, fees, charges, interest and fines for a company that files its FY 2082/83 details and pays that year’s dues by the end of Ashoj 2083, and which expressly applies whether the company continues or deregisters. It does not waive income tax or VAT; those have a separate window under Section 40, closing at the end of Poush 2083.

Can I use the cheap deregistration route if my company traded and then stopped?

No. The proviso to Rule 66(1) of the Registrar Directive 2072 provides that a company which once came into operation and later could not carry on business cannot apply under the promoter-application route, and must be taken through voluntary liquidation or insolvency instead. This is the test that decides which route is open to you, and it is the reason most owners who want a quick exit cannot have one.

Is there a deadline to use Section 136A deregistration in Nepal?

No. The two-year window in circulation comes from the 2074 version of Section 136A, which the 2081 ordinance substituted in full; the replacement text contains no time limit, and OCR’s implementing directive of 2082 has no sunset date either. The figure persists because several legal databases still serve the superseded text. What does have a deadline is the separate Finance Act 2083 penalty waiver.

Does not filing company returns put me on the blacklist in Nepal?

No. The credit blacklist is maintained by the Credit Information Bureau and is triggered only by credit events — a loan overdue a year, misuse of funds, absconding, insolvency or suit. The procurement blacklist is maintained by the PPMO for procurement misconduct. The Office of the Company Registrar maintains no blacklist at all, and there is no mechanism for it to recommend a listing. What does follow from three consecutive years of unfiled returns is disqualification from directorship under Section 89(1)(ta), and personal liability for the company’s remaining debts under Section 136(9).

What happens if I just abandon my company in Nepal?

The Section 81 fines accrue annually against the director personally, not the company. After three consecutive years of non-filing you are disqualified from being a director of any company under Section 89(1)(ta). Most seriously, Section 136(9) makes the shareholders, directors and officers involved in management personally liable for the company’s remaining debts where they were responsible for the circumstances in Section 136(1) — and those circumstances expressly include the three years of missed filings. Abandonment is itself the qualifying fault that removes limited liability.