Authorized capital increase process in Nepal is governed by Section 56 of the Companies Act, 2063 (2006). This procedure enables companies to expand their financial capacity, attract new investments, and support business growth. Understanding the legal requirements, documentation, and regulatory steps becomes essential for smooth compliance and operational continuity.
The Companies Act, 2063 (2006) serves as the principal statute regulating capital structure changes in Nepal. Section 56 specifically addresses alteration of share capital, including authorized capital increases. The Act distinguishes between:
Additionally, the Company Registration Regulations, 2078 (2021) and Electronic Transactions Act, 2063 (2006) govern procedural aspects and digital filing requirements.
The Office of the Company Registrar (OCR) operates under the Ministry of Industry, Commerce, and Supplies as the primary authority for capital increase approvals in Nepal. The OCR reviews applications, verifies compliance, and maintains updated company records.
Authorized capital (also termed authorized share capital) represents the maximum capital amount a company is legally permitted to raise through share issuance. This figure is declared in the Memorandum of Association (MOA) at registration and establishes the upper limit for issued capital and paid-up capital.
| Capital Type | Definition | Relationship |
|---|---|---|
| Authorized Capital | Maximum capital limit stated in MOA | Ceiling for all capital raises |
| Issued Capital | Portion of authorized capital offered to shareholders | Cannot exceed authorized capital |
| Subscribed Capital | Portion of issued capital shareholders agree to purchase | Subset of issued capital |
| Paid-Up Capital | Actual amount paid by shareholders | Portion of subscribed capital |
| Called-Up Capital | Amount demanded by company from shareholders | May be less than subscribed capital |
Critical constraint: Companies cannot issue shares exceeding their authorized capital. Consequently, expansion beyond this limit necessitates formal capital increase procedures.
Companies pursue authorized capital increases in Nepal for various strategic reasons:
Certain regulatory requirements may mandate capital increases:
Step 1: Board Resolution
The company's Board of Directors must convene a meeting and pass a resolution proposing the authorized capital increase. The resolution should specify:
Step 2: Extraordinary General Meeting (EGM)
Notice for an EGM must be issued to all shareholders at least 21 days before the meeting date. The notice must include:
Step 3: Shareholder Approval
A special resolution must be passed at the EGM with:
Step 4: Amend MOA and AOA
The Memorandum of Association must be amended to reflect the new authorized capital figure. The Articles of Association may require corresponding amendments if capital-related provisions exist.
Step 5: Prepare Comparative Documentation
A comparative chart showing existing clauses versus proposed changes assists OCR review and demonstrates compliance transparency.
Step 6: OCR Application Submission
Application must be submitted to OCR within 30 days of passing the special resolution. Required documents include:
| Document | Purpose |
|---|---|
| Application letter for capital increase | Formal request to OCR |
| Certified copy of board resolution | Evidence of director approval |
| EGM notice and minutes | Proof of shareholder approval |
| Special resolution copy | Legal authorization for amendment |
| Amended MOA | Updated constitutional document |
| Amended AOA (if applicable) | Updated governance rules |
| Comparative chart of changes | Clarity on modifications |
| Tax clearance certificate | Compliance verification |
| Original company registration certificate | Identity verification |
| Bank statements (if paid capital increased) | Proof of capital deposit |
| Prescribed filing fees | Regulatory payment |
Step 7: OCR Review and Approval
The OCR conducts examination of submitted documents for:
Upon satisfaction, the OCR records the alteration and issues an acknowledgment letter confirming the change. This acknowledgment typically issues within 7 days of compliant submission.
Step 8: Updated Certificate Issuance
The OCR amends the company registration records and may issue updated certification reflecting the new authorized capital.
Step 9: Regulatory Notifications
Companies must notify:
| Phase | Activity | Duration |
|---|---|---|
| Internal Decision | Board resolution and EGM preparation | 1-2 weeks |
| Shareholder Approval | EGM convening and resolution passage | 1 week |
| Documentation | MOA/AOA amendment and document preparation | 1-2 weeks |
| OCR Filing | Application submission and review | 2-3 weeks |
| Approval | OCR acknowledgment and recordal | 1 week |
| Total Estimated Time | 4-8 weeks |
Note: Timeline varies based on OCR workload, document completeness, and company responsiveness to queries.
OCR fees are structured based on capital increase amount:
| Increased Capital Amount | Fee Structure |
|---|---|
| Up to NPR 1 lakh | NPR 1,000 |
| NPR 1 lakh to 5 lakhs | NPR 2,000 |
| NPR 5 lakhs to 25 lakhs | NPR 5,000 |
| NPR 25 lakhs to 50 lakhs | NPR 10,000 |
| NPR 50 lakhs to 1 crore | NPR 15,000 |
| NPR 1 crore to 5 crores | NPR 20,000 |
| NPR 5 crores to 10 crores | NPR 30,000 |
| Above NPR 10 crores | NPR 40,000 |
Private companies benefit from streamlined capital increase procedures:
Public companies face additional requirements:
Companies with foreign investment must ensure:
Banks and financial institutions require:
Authorized capital increase differs significantly from issued capital increase:
| Aspect | Authorized Capital Increase | Issued Capital Increase |
|---|---|---|
| Legal basis | Section 56(1)(Ka) of Companies Act | Section 56(1)(Kha) of Companies Act |
| Approval required | Special resolution (75% majority) | Ordinary resolution (simple majority) |
| Limitation | No upper limit on increase | Cannot exceed authorized capital |
| MOA amendment | Required | Not required if within authorized limit |
| Timeline | 4-8 weeks | 2-4 weeks |
Companies often increase authorized capital substantially beyond immediate needs to:
Within 30 days of OCR acknowledgment:
Authorized capital represents the maximum capital a company is permitted to raise as stated in its MOA. Paid-up capital is the actual amount shareholders have paid for shares issued. Authorized capital serves as the ceiling; paid-up capital represents the realized portion.
No, the Companies Act, 2063 does not provide for reduction of authorized capital. While issued capital can be reduced through complex procedures, authorized capital can only be increased or remain static. Any unused authorized capital can be canceled but not reduced below issued capital levels.
The authorized capital increase process Nepal typically requires 4 to 8 weeks. This includes 1-2 weeks for internal approvals, 1-2 weeks for documentation, and 2-3 weeks for OCR review and approval. Delays occur if documents are incomplete or OCR queries arise.
Yes, shareholder approval is mandatory for authorized capital increases through a special resolution (75% majority). However, issued capital increases within existing authorized limits require only an ordinary resolution (simple majority).
Essential documents for capital increase Nepal include: board resolution, EGM notice and minutes, special resolution, amended MOA, comparative change chart, tax clearance certificate, original registration certificate, and prescribed fees. Bank statements are required if paid capital is simultaneously increased.
No, the capital increase effect only occurs after OCR acknowledgment. Operating or issuing shares based on unapproved capital increases constitutes legal non-compliance and may invalidate share issuances. The effective date is the OCR acknowledgment date, not the shareholder resolution date.
No statutory limits exist on authorized capital increases in Nepal. Companies may increase authorized capital to any amount deemed appropriate by shareholders. However, practical considerations include future capital needs, regulatory capital requirements for specific industries, and associated filing costs.
Late filing beyond 30 days may result in OCR penalties, requirement for fresh shareholder resolutions, potential invalidation of the increase, and complications in subsequent capital activities. Companies should prioritize timely compliance to avoid regulatory complications.
Foreign companies operating through subsidiaries or branch offices in Nepal follow identical capital increase procedures as domestic companies. Additional requirements include FITTA compliance for foreign investment changes and potential home country regulatory notifications.
Yes, companies frequently increase authorized capital without immediate issued capital increases. This creates capacity for future financing without requiring repeated shareholder approvals. The authorized capital increase is standalone; issued capital increases occur separately when actual financing is arranged.
Attorney Nepal Pvt. Ltd. provides comprehensive legal services for authorized capital increase process in Nepal, including:
Contact Attorney Nepal Pvt. Ltd. to ensure seamless, compliant, and efficient capital increases for your Nepalese company.
Disclaimer: This blog provides general legal information about authorized capital increase process in Nepal and does not constitute legal advice. Laws and regulations change frequently, and individual circumstances vary significantly. Consult qualified legal counsel for specific guidance regarding your company's capital structure needs. Attorney Nepal Pvt. Ltd. assumes no liability for actions taken based on this information.
Last Updated: March 3, 2026
March 03, 2026 - BY Admin