Non-Profit Company Registration Nepal procedures are frequently questioned by social entrepreneurs and development professionals seeking structured legal entities. Are you uncertain whether to register as an NGO under the Associations Registration Act or as a company not distributing profits under the Companies Act? This decision significantly impacts your operational flexibility, funding access, and compliance obligations.
The Non-Profit Company Registration Nepal framework offers distinct advantages over traditional NGO structures. Under Chapter 19 of the Companies Act, 2063, companies not distributing profits provide corporate governance benefits while serving social, scientific, academic, or public welfare objectives. Consequently, this hybrid structure is increasingly preferred by professional social enterprises and international development organizations.
Furthermore, the Supreme Court of Nepal has established that companies not distributing profits enjoy equal tax exemption status as traditional NGOs. Therefore, understanding the complete registration process and compliance requirements is essential for making informed decisions. This comprehensive tutorial is presented to clarify every aspect of Non-Profit Company Registration Nepal.
Non-Profit Company Registration Nepal refers to incorporation under Section 166 of the Companies Act, 2063 (2006). These entities, also called "companies not distributing profits," are established to develop professions, protect collective rights, or carry on enterprises for scientific, academic, social, benevolent, or public utility objectives. The defining characteristic is the prohibition against distributing dividends or profits to members.
Moreover, Non-Profit Company Registration Nepal creates a separate legal personality distinct from its members. This separation provides limited liability protection and perpetual succession. As a result, professional credibility is enhanced, and contractual capacity is strengthened compared to traditional association structures.
In addition, the Income Tax Act, 2058, provides exemption eligibility for income applied toward stated objectives. Therefore, proper registration and compliance ensure both legal operation and tax efficiency.
| Legislation | Key Provisions | Enforcing Authority |
|---|---|---|
| Companies Act, 2063 | Chapter 19: Company not distributing profits (Sections 166-167) | OCR |
| Income Tax Act, 2058 | Tax exemption for income applied to objectives | IRD |
| Labor Act, 2074 | Employment compliance for staff | DoL |
| Social Welfare Act, 2049 | SWC affiliation for foreign funding | SWC |
| FITTA, 2019 | Foreign investment provisions | DOI |
Understanding structural differences is essential before initiating Non-Profit Company Registration Nepal. Therefore, the following comparison is provided:
| Feature | Company Not Distributing Profit | NGO (Association) |
|---|---|---|
| Governing Law | Companies Act, 2063 | Association Registration Act, 2034 |
| Registration Authority | Office of Company Registrar (OCR) | District Administration Office (DAO) |
| Minimum Members | 5 promoters | 7 founding members |
| Gender Requirement | No specific quota | 33% female representation mandatory |
| Legal Personality | Separate corporate entity | Corporate body with perpetual succession |
| Liability | Limited (members not liable for debts) | Generally limited |
| Membership Transfer | Non-transferable (ceases on death/resignation) | Transferable per constitution |
| Renewal Requirement | Annual compliance filings only | Mandatory annual renewal at DAO |
| Administrative Expense Limit | 25% of total expenses (20% if SWC affiliated) | 20% of project cost |
| Foreign Funding | Permitted with SWC affiliation | Standard vehicle for foreign grants |
| Winding Up | Assets transfer to similar company or Government | Assets devolve on Government |
Consequently, companies not distributing profits offer operational autonomy and corporate governance advantages. However, traditional NGOs remain preferred for community-driven, membership-based organizations seeking foreign grants.
The registration process is structured sequentially. Therefore, following these steps ensures compliance with Non-Profit Company Registration Nepal requirements:
At least five individuals or corporate entities must serve as promoters. All promoters must be capable of entering into contracts. Foreign promoters are permitted subject to FITTA compliance and Department of Industry approval.
A unique name is proposed through the OCR portal. The name must:
Name reservation typically requires 1-2 working days.
The MOA and AOA are drafted with specific non-profit provisions:
Legal professional assistance is strongly recommended for compliant drafting.
Required documents include:
The registration application is submitted through the CAMIS portal or physically at OCR. Documents are verified for compliance with Chapter 19 requirements.
The government fee of NPR 15,000 is paid. Upon satisfactory verification, OCR issues the Certificate of Incorporation, legally establishing the non-profit company.
Proper documentation ensures legal validity. Therefore, the following documents are required:
| Document | Purpose | Prepared By |
|---|---|---|
| MOA with Non-Distribution Clause | Constitutional framework and objectives | Legal counsel/Promoters |
| AOA with Special Provisions | Governance rules and membership terms | Legal counsel/Promoters |
| Promoter Identification | Citizenship verification | Promoters |
| Name Reservation Approval | OCR confirmation of unique name | OCR |
| Registered Office Proof | Address verification for legal notices | Promoters/Landlord |
| Consent Letters | Formal agreement to form company | Promoters |
| PAN Application | Tax identification number request | Company/Representative |
| Photographs | Visual identification of promoters | Promoters |
Understanding financial obligations is essential. Therefore, the following costs and timelines apply:
| Fee Type | Amount (NPR) | Payable To |
|---|---|---|
| Name Reservation Fee | 100 - 500 | OCR |
| Registration Fee | 15,000 | OCR |
| PAN Registration | Free | IRD |
| VAT Registration (if applicable) | Free | IRD |
| SWC Affiliation (if applicable) | 3,000 - 3,500 | SWC |
| Municipal Registration | 2,000 - 10,000 | Local Municipality |
| Professional Service Fees | 15,000 - 50,000+ | Legal/Consultancy services |
| Annual Audit (estimated) | 25,000 - 100,000+ | ICAN-registered auditor |
| Activity | Duration | Notes |
|---|---|---|
| Name Reservation | 1-2 days | Subject to OCR workload |
| Document Preparation | 3-7 days | Depends on complexity |
| OCR Processing | 5-10 days | For complete applications |
| PAN/VAT Registration | 2-3 days | Parallel processing possible |
| Total Formation Time | 7-14 days | With professional assistance |
Non-Profit Company Registration Nepal entities enjoy specific tax treatments. Therefore, understanding these provisions is essential:
Following the Supreme Court decision in Corporate Social Consortium v. Ministry of Finance, companies not distributing profits are entitled to tax exemptions equivalent to traditional NGOs. Requirements include:
| Compliance | Frequency | Due Date | Authority |
|---|---|---|---|
| Annual Return Filing | Annual | Within 6 months of fiscal year-end | OCR |
| AGM Conduct | Annual | Within 6 months of fiscal year-end | Company |
| Audit Report Submission | Annual | With annual return | OCR |
| Income Tax Return | Annual | As prescribed by IRD | IRD |
| SWC Reporting (if affiliated) | Annual/Project-based | Per agreement terms | SWC |
Several benefits make this structure attractive for social enterprises:
Statutory director duties and fiduciary responsibilities provide professional management standards. Consequently, governance transparency is enhanced.
Members' personal assets are shielded from company liabilities. Therefore, risk exposure is minimized for social entrepreneurs.
The company continues despite member changes. As a result, long-term projects and institutional partnerships are facilitated.
Corporate legal status enables complex commercial contracts, property ownership, and banking relationships. Furthermore, credibility with international donors is strengthened.
Compared to NGO structures, less intrusive regulatory oversight is experienced. However, this does not compromise accountability standards.
Income tax exemption is available for objective-aligned activities. Additionally, VAT exemptions apply to specified welfare activities.
Despite advantages, Non-Profit Company Registration Nepal has constraints:
SWC affiliation is mandatory for receiving foreign grants. Therefore, dual compliance with Companies Act and Social Welfare Act is required.
Membership is non-transferable and terminates on death or resignation. Consequently, exit planning requires careful constitutional drafting.
Strict caps on administrative costs (20-25%) apply. Therefore, operational efficiency is essential for sustainability.
All surplus must be reinvested in objectives. As a result, traditional investment returns are not available to founders or members.
Mandatory annual audits by ICAN-registered auditors impose compliance costs. However, this ensures financial transparency.
Non-profit companies seeking international grants must obtain Social Welfare Council affiliation:
NGOs are registered under the Association Registration Act, 2034 at District Administration Office with minimum 7 members. Non-profit companies are registered under Companies Act, 2063 at OCR with minimum 5 members. Companies offer corporate governance advantages while NGOs are preferred for community-based foreign grant projects.
No. Section 166 explicitly prohibits distribution of dividends, bonuses, or any other amounts from profits to members or employees. All surplus must be applied to stated objectives or capital increase.
No. Tax exempt entity status must be applied for at Inland Revenue Department. The Supreme Court has confirmed eligibility, but formal approval and annual compliance are required.
Yes, subject to FITTA compliance and Department of Industry approval. Foreign promoters must obtain NRB registration for capital contributions and comply with sectoral investment restrictions.
Excessive administrative spending violates Section 167. OCR may impose penalties, require corrective action, or ultimately cancel registration after providing defense opportunity.
No. Companies not distributing profits cannot merge with or convert to profit-distributing companies. Winding up is the only exit route, with assets transferred to similar entities or Government.
Yes. Annual audits by ICAN-registered auditors are mandatory. Audit reports must be filed with OCR within prescribed timelines.
Yes, provided income is applied to stated objectives and no profit distribution occurs. However, unrelated business income may affect tax exemption eligibility.
With complete documentation, registration is typically completed within 7-14 working days. SWC affiliation (if required) adds additional 1-2 weeks.
OCR may impose fines ranging from NPR 1,000 to 20,000 for late filings. Serious violations, including profit distribution or objective deviation, may result in registration cancellation and liquidation.
Non-Profit Company Registration Nepal offers social entrepreneurs a robust legal structure combining corporate benefits with welfare objectives. Therefore, careful consideration of organizational goals, funding sources, and compliance capacity is essential before selecting this form.
Consequently, engagement of qualified legal professionals for MOA/AOA drafting and OCR registration is strongly recommended. The framework established by Chapter 19 of the Companies Act provides operational autonomy while ensuring accountability through statutory compliance.
For professional assistance with Non-Profit Company Registration Nepal, Attorney Nepal provides comprehensive legal support. Their team of corporate and non-profit law experts handles documentation, OCR filing, SWC affiliation, and ongoing compliance to ensure your social enterprise operates with full legal validity.
Contact Attorney Nepal today to establish your non-profit company and maximize your social impact.
February 15, 2026 - BY Admin