A Share Transfer Is a Board Matter, Not a Shareholders’ Vote
Transferring shares in a Nepali Pvt. Ltd. does not need a general meeting, a special resolution or a 75% majority. It needs two board decisions and an application.
The Act calls the recording step दाखिल खारेज — striking out the old holder and entering the new one. Section 43(1):
“…the person who purchases such share or debenture shall make an application, in the prescribed format and with the fee prescribed in the articles of association, to the registered office of the company for the transfer of that share or debenture.”
And s.43(2): the company shall, within fifteen days of the application, strike the former shareholder’s name from the register and enter the new holder’s.
Note the split that runs through this whole topic: the format is prescribed by the government; the fee is prescribed by your own articles. There is no OCR fee for an ordinary share transfer at all.
The Form Is Annex 22 — and OCR’s Own Website Says Otherwise
The Gazette notification of 2064.02.14 assigns अनुसूची २२ to Section 43(1), and the form’s own header reads “Annex (relating to Section 43, sub-section (1))”. Its title is “Format of the application for transfer of share or debenture”.
OCR’s own company-administration page cites Annex 18. Annex 18 is the share allotment notice under Section 28(1) — a different form for a different event. The same page has a second stale citation, pointing to Annex 11 for the Section 19(4) error correction, which is actually Annex 13. The annex numbering has never been renumbered: when a new form was needed it was inserted as “28क” precisely so the existing numbers would not move.
What is not prescribed is the लिखत, the transfer deed itself. Section 43(1) simply requires a copy of the deed to be attached; no annex governs its form.
Published guidance offers “Form 7” cited to a non-existent Section 47, “Form SH-6” and “Form No. 20”. SH-4 and SH-6 are Indian forms under the Indian Companies Act. None of these cites any Nepali instrument, because there isn’t one behind them.
What OCR Asks For
From the Citizen Charter, the record-of-share-purchase-and-sale service:
- The buyer’s application to the chairman
- The seller’s application
- The board decision approving the purchase and sale
- The board decision on the दाखिल खारेज — a second, separate decision
- The new buyer’s citizenship copy
- The seller’s deed, with a witness’s clear address and signature
- An application to record the resulting shareholding
The deed must be the original, and notarised. Directive §4(4) proviso: “in the case of a share sale deed, the original sale deed certified by a Notary Public shall be submitted.” A photocopy will not be recorded, which is the single most common cause of a rejected transfer file.
Timeline: 3 days under the Citizen Charter.
Who You Can and Cannot Transfer To
Transfers to an outsider are restricted
Section 10(d): a private company may not transfer its securities to anyone other than an existing shareholder without following the procedure in its memorandum, articles or consensus agreement. Transfers between existing shareholders are not caught by this — whether pre-emption bites among them depends on what your articles say, and no source addresses that, so read your own document.
Shares cannot go into a firm’s name
Directive §6: “a company’s shares may not be purchased or transferred in the name of a private firm or partnership firm.” A sole proprietorship or partnership firm is not a separate legal person in Nepal and cannot hold shares. The transfer has to be to the individual, or to a company.
The promoter lock-in usually does not apply to you
Section 42(2) stops a promoter selling shares until the first general meeting is held and the full amount of calls is paid. But it does not apply to a private company that has not borrowed from another company. In a typical owner-managed Pvt. Ltd. with no inter-company borrowing, promoters may transfer from day one — which is the opposite of what most guidance implies.
When the company may refuse
Section 44(1): the company may decline to record a transfer where calls on the shares are unpaid, where the transfer would be contrary to the articles or a shareholders’ agreement, or where the transfer fee set by the articles has not been paid.
Beneficial Ownership Is Now Mandatory on Every Transfer
Under the Registrar’s directive of 2082/01/23, issued under Section 47 of the Companies Act and Section 7(c) of the Asset (Money) Laundering Prevention Act 2064, the purchaser must self-declare at every share transfer whether any other person holds beneficial ownership of the shares and, if so, file that person’s details.
This is new enough that it appears in almost no published guidance, and it is not optional. It also applies with every annual return.
Two Powers the Registrar Holds Over Your Transfer
| Provision | Effect |
|---|---|
| Directive §95(cha) | OCR may place a Remarks (कैफियत) freeze refusing to record any share transfer where a director or shareholder dispute has been notified, a complaint has been filed, or an OCR directive has been breached. It is released only by the Registrar’s order. |
| Directive §95(jha) | The Registrar may annul a transfer already recorded, at any time, if the authenticity of the documents is disproved. |
The practical implication: in a company where shareholders are in dispute, the transfer register can be frozen by the other side simply filing a complaint. Buying into such a company on the assumption that the transfer will be recorded is a real risk.
Capital Gains Tax — and Who Actually Pays It In
Section 95A(2)(b) of the Income Tax Act 2058 sets the rate for disposal of an interest in an entity not listed with SEBON:
| Seller | Rate on the gain |
|---|---|
| Resident natural person | 10% |
| Resident entity | 15% |
| Others | 25% |
Two points that matter and are routinely got wrong:
- There is no holding-period split for unlisted shares. The 5% / 7.5% short-and-long-term distinction belongs to listed securities. Guidance offering “5% long-term, 10% short-term” on a private company transfer is applying the wrong regime.
- The company is the withholding agent. The tax is collected “by the entity whose interest is disposed of” — that is, by your own company, not by the buyer and not by the seller directly.
The gain is computed on the weighted average cost of the investment (s.95A(2A)).
Is a tax receipt a precondition at OCR? Not in the system. In CAMIS the capital gains field group is labelled “Add Capital Gain Tax / Dividend Gain Tax (Optional)” — so OCR does not hard-gate the transfer on it. Several consultancies nevertheless sequence the Inland Revenue Office before OCR. That is sound practice, and we follow it, but it is practice rather than law.
On stamp duty we publish nothing. Published claims split irreconcilably between a flat slab and an ad valorem 0.5–1.5%, and the percentage version follows the Indian pattern. We could not source a Nepali instrument for either, so we would rather say so than print a number.
When the Transfer Reaches OCR
There is no separate statutory deadline for filing a share transfer with OCR. The company updates its own register within 15 days under s.43(2); the shareholder list then reaches the Office through Section 51 — within 30 days of the annual general meeting, or, for a company that holds no AGM (which a private company may do under s.148), within six months of the end of the financial year.
CAMIS nonetheless computes a late fine on the shareholder filing with a grace window, so a system-level deadline exists even where the Act sets none. File promptly rather than waiting for the annual cycle.
The single-shareholder exception, and it is expensive. Where a one-shareholder company’s shares pass to a successor, Section 153(3) requires the recording at OCR to be made on payment of “an amount equal to the fee payable on registration” — the full incorporation fee, not a nominal transfer charge. And s.153(2) gives the successor one month from acquiring title to inform the Office. See our single-shareholder Pvt. Ltd. guide.
Agreements That Have Their Own Clocks
- Section 187(2) — a shareholders’ agreement goes to the company within 15 days, and the company files it with OCR within 15 days of receipt.
- Directive §4(3) — a consensus agreement, or an amendment to one, goes to OCR as a certified copy within 15 days.
If your transfer is being done under or alongside a shareholders’ agreement, those filings are part of the job.
If the Buyer Is Foreign
Directive §5(2) requires proof of investment in foreign currency in Nepal Rastra Bank’s format, and the Citizen Charter adds the consents of the Department of Industry and Nepal Rastra Bank. A transfer to a foreign buyer is a foreign investment approval question first and a share transfer second.
Frequently Asked
Does a share transfer in a Nepali private company need a special resolution?
No. It is a board matter. OCR’s Citizen Charter asks for two board decisions — one approving the purchase and sale, and one on the दाखिल खारेज recording — together with applications from buyer and seller and the notarised original deed. No general meeting or 75% majority is involved. What may restrict the transfer is Section 10(d), which requires a private company to follow its own memorandum, articles or consensus agreement before transferring to anyone who is not already a shareholder.
Which form is used for a share transfer in Nepal?
अनुसूची २२ (Annex 22), the format of the application for transfer of a share or debenture, assigned to Section 43(1) by the Nepal Gazette notification of 2064.02.14. OCR’s own website cites Annex 18, which is the share allotment notice under Section 28(1) and is the wrong form. “Form 7”, “Form 20” and “SH-6” appear in published guidance but correspond to no Nepali instrument; SH-4 and SH-6 are Indian forms.
What is the capital gains tax on selling private company shares in Nepal?
Under Section 95A(2)(b) of the Income Tax Act 2058, disposal of an interest in an entity not listed with SEBON is taxed at 10% for a resident natural person, 15% for a resident entity and 25% for others, computed on the gain over the weighted average cost of the investment. There is no short-term or long-term split for unlisted shares — that distinction applies to listed securities. The tax is collected by the entity whose interest is disposed of, meaning the company itself acts as withholding agent.
Can a partnership firm hold shares in a Nepali company?
No. Section 6 of the Registrar Directive 2072 provides that a company’s shares may not be purchased or transferred into the name of a private firm or a partnership firm. Neither is a separate legal person under Nepali law. Shares must be held by a natural person or by a company. This is a distinct point from the Companies Act rule in Section 10(d) restricting transfers by a private company to persons who are not already shareholders.
How long does the company have to update its share register in Nepal?
Fifteen days from the application, under Section 43(2) of the Companies Act 2063. The Act sets no separate deadline for filing the transfer with OCR; the updated shareholder list reaches the Office through the Section 51 return, which is due within thirty days of the annual general meeting or, for a private company that holds no AGM, within six months of the financial year end.
About this guide. Sections 10, 42, 43, 44, 46, 47, 51, 148, 153 and 187 are from the Companies Act 2063 as consolidated to the 2081 amendment and published by the Office of the Company Registrar; Section 95A from the Income Tax Act 2058. Sections §4, §5, §6 and §95 are from the कम्पनी निर्देशिका 2072; the beneficial-ownership requirement from the Registrar’s directive of 2082/01/23; form numbers from the Nepal Gazette notification of 2064.02.14. Where OCR’s published web page conflicts with the Gazette on the annex number, we have followed the Gazette and said so. We have deliberately published no stamp-duty figure, because the claims in circulation conflict and none is traceable to a Nepali instrument. Capital gains rates should be re-checked against the current Finance Act before you rely on them.
Transferring Shares in Your Company?
We prepare the deed for notarisation, both board decisions and the Annex 22 application, handle the beneficial-ownership declaration, compute the capital gains position and file the updated shareholder record — without the rejections that come from a photocopied deed.
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