Incorporation of joint stock company in Nepal

Following things are to be observed for incorporation of Joint Stock Company in Nepal:

1. File an application
It is the first step. In any company registration, promoters have to file application in company registrar office. The application has to be signed by at least 1 promoter in case of private company and at least 7 in case of public company. Along with application, following document should be submitted,

• Memorandum of association
• Article of association
• Copy of agreement (public company)
• Copy of consensus agreement (private company)
• License
• Promoters certified copy of citizenship (Nepalese)
• Permission letter obtained under law to make investment or run business in Nepal (foreigner)
• Citizenship of concerned country

2. Submitting registration fee
Registration fee should be deposited in the Nepal Rastra Bank. Voucher is needed for the deposit of registration fee. It should be enclosed in application form

3. Certificate of incorporation:
After submitting the application form along with necessary document and registration fee, the office of the registration examines all these documents submitted by the promoters and it will register company name within 15 days the receipt of the application. After registering the office, the registrar issues the certificate of incorporation to the company. Now a private company can run its business.

4. Certificate of commencement of business
A report of proof about the full payment of shares by the promoters with signature by at least 1 director and 7 promoters must be filled. The registrar examines all the documents. If it gets satisfied then it issues certificate of commencement of business. Then only public company is legally able to run business and it can issue prospectus also.

5. Allotment of shares
After receiving certificate of commencement of business, public company can issue prospectus. It helps to attract investors for investing the money in the company. Then they send application with application money. Generally application form is attached with prospectus. The time of subscription must be kept open for at least 7 days. After receiving application shares are allotted. The BOD makes the allotment. There can be full allotment or pro-rata allotment. Shares must be allotted within 3 months after application is called. There must be more than 50% o share allotment. If allotment couldn’t be made within 3 months then promoters must apply application for extending time with reasons. The time is again extended for 3 months. If company couldn’t allot the share for extended period then the company must return all the money with interest.