Public Limited Company

Step-by-Step Guide to Setting Up a Public Limited Company in Nepal

Table of Contents

1. Introduction
2. Understanding a Public Limited Company
3. Benefits of Setting Up a Public Limited Company
4. Pre-Registration Requirements
   4.1 Choose a Company Name
   4.2 Identify Shareholders and Directors
   4.3 Initial Capital Requirements
5. Required Documents
6. Registration Process
   6.1 Name Reservation
   6.2 Submitting the Application
   6.3 Verification and Approval
   6.4 Certificate of Incorporation
7. Post-Registration Requirements
   7.1 PAN Registration
   7.2 VAT Registration (if applicable)
   7.3 Opening a Bank Account
   7.4 Securities Board Approval
8. Compliance Requirements
   8.1 Regular Filings and Annual Returns
   8.2 Tax Compliance
   8.3 Corporate Governance and Reporting
9. Conclusion
10. Frequently Asked Questions

1. Introduction

Setting up a Public Limited Company in Nepal involves several detailed steps, from choosing a company name to obtaining necessary approvals and adhering to compliance requirements. This guide outlines the process comprehensively.

2. Understanding a Public Limited Company

A Public Limited Company (PLC) is a company whose shares can be publicly traded and is subject to more stringent regulatory requirements. It is governed by the Companies Act, 2006.

3. Benefits of Setting Up a Public Limited Company

• Ability to raise capital through public share offerings.
• Enhanced credibility and public trust.
• Limited liability protection for shareholders.
• Perpetual succession and greater ease in transferring ownership.

4. Pre-Registration Requirements

4.1 Choose a Company Name

• The name must be unique and not similar to any existing company names.
• Check the availability of the name with the Office of the Company Registrar (OCR).

4.2 Identify Shareholders and Directors

• Minimum of seven shareholders.
• Minimum of three directors, with at least one independent director.

4.3 Initial Capital Requirements

• Minimum paid-up capital requirement as specified by regulatory authorities.

5. Required Documents

• Memorandum of Association (MOA).
• Articles of Association (AOA).
• Consent letters from directors.
• Copies of citizenship certificates of shareholders and directors.
• Address proof of the registered office.
• Signed application form.
• Prospectus for public share offerings (if applicable).

6. Registration Process

6.1 Name Reservation

• Submit an application for name reservation to the Office of the Company Registrar (OCR).
• Once approved, the name will be reserved for a specified period.

6.2 Submitting the Application

• Prepare and submit the required documents to the OCR.
• Include the MOA, AOA, consent letters, and other necessary forms.

6.3 Verification and Approval

• The OCR will review the submitted documents.
• Any discrepancies or additional information required will be communicated.

6.4 Certificate of Incorporation

• Upon approval, the OCR issues the Certificate of Incorporation.
• This certificate confirms the legal existence of the company.

7. Post-Registration Requirements

7.1 PAN Registration

• Apply for a Permanent Account Number (PAN) with the Inland Revenue Department (IRD).

7.2 VAT Registration (if applicable)

• Register for VAT if the company’s annual turnover exceeds NPR 2 million.

7.3 Opening a Bank Account

• Open a corporate bank account in the company’s name.
• Deposit the initial share capital as per the MOA.

7.4 Securities Board Approval

• Obtain approval from the Securities Board of Nepal (SEBON) for public share offerings.
• Submit the prospectus and other required documents to SEBON.

8. Compliance Requirements

8.1 Regular Filings and Annual Returns

• File annual returns and other statutory documents with the OCR.
• Conduct annual general meetings (AGMs).

8.2 Tax Compliance

• Ensure timely filing of tax returns and payment of taxes.
• Comply with all tax regulations as prescribed by the IRD.

8.3 Corporate Governance and Reporting

• Adhere to corporate governance standards.
• Regularly report financial and operational performance to shareholders and regulatory bodies.

9. Conclusion

Establishing a Public Limited Company in Nepal involves careful planning and adherence to legal requirements. Following this step-by-step guide ensures that you cover all necessary steps to successfully register and operate your company.

10. Frequently Asked Questions

• What is the minimum capital requirement for a Public Limited Company in Nepal?
• The minimum capital requirement varies based on the industry and specific regulations set by the Securities Board of Nepal (SEBON).
• Can a foreigner be a director of a Public Limited Company in Nepal?
• Yes, foreigners can be directors, but they must comply with immigration and business regulations.
• How long does it take to register a Public Limited Company in Nepal?
• The process typically takes a few weeks to a couple of months, depending on the completeness of the documents and the efficiency of the OCR and SEBON.
• Is it mandatory to have a registered office for the company?
• Yes, having a registered office is mandatory for communication and legal purposes.
• Can a Private Limited Company be converted to a Public Limited Company later?
• Yes, a Private Limited Company can be converted to a Public Limited Company by following the procedures outlined in the Companies Act, 2006.