This article will help you to know all about the registration of a company not distributing profits in Nepal.
Profit not Distributing Company is a form of business structure/ company that is incorporated on the condition that it is not permitted to distribute dividends, bonuses, or any other amount to its members or employees from the profits earned or savings made by a company. Such companies are incorporated for the non-commercial purposes of social well-being.
Company Act 2063 is the governing law that regulates the registration of a company not distributing profits in Nepal.
Objectives of a Company not Distributing Profits
Such companies are incorporated with the following objectives:
• To develop and promote any profession or occupation.
• To protect the collective rights and interests of the person engaged in any specific profession or occupation.
• To carry on any enterprise for the attainment of any scientific, academic, social, benevolent, or public utility or welfare objective on the condition of not distributing dividends.
Documents required for the registration of a Company not Distributing Profits in Nepal
- Application for the registration
- Memorandum of Association (MOA) of a proposed company (2 copies)
- Articles of Association (AOA) of a proposed company (2 copies)
- Citizenship Certificates of all the promoters
- Power of Attorney
Procedure for the registration of a Company not distributing profit in Nepal
- Step: 1- Reservation of a company name at the Office of Company Registrar.
- Step: 2- After the verification of the name by the OCR, submission of MOA and AOA to the OCR along with the application for registration.
- Step: 3- After the tests of all the submitted documents, if found suitable, issuance of Company Registration Certificate by OCR. (OCR has the power to refuse to register, if not found appropriate by examining documents).
- Step: 4- PAN registration at Inland Revenue Office.
- Step: 5- Business registration at the local level ward office.
- Step: 6- Registration at Social Welfare Council (if needed). These are the procedures that are required for the Registration of a Company not Distributing Profits in Nepal.
Essential Questions and Answers covering the Legal provisions relating to the Registration of a Company not Distributing Profits in Nepal
What shall be the number of promoters promoting profit not distributing company?
The number of promoters promoting such a company shall be at least five and maximum unlimited.
What is the provision relating to the membership of such a company?
The membership of such a company is not transferrable and shall ipso facto be terminated in the event of death, cancellation of registration or dissolution of such member, or amalgamation of such member with another body or company.
What is the required government revenue for registering such a company?
The government revenue required for registering such a company is Rs. 15,000 and there is no renewal charge.
There shall not be required share capital to incorporate a company not distributing profits.
Is such a company permitted to distribute any dividend, bonus, or any amount to its members?
Such a company is not permitted to distribute any dividend, bonus, or any other amount to its members.
However, the company may receive membership fees from its members and can receive donations, and gifts pursuant to law for the accomplishment of its objectives.
Shall the members of the company be liable for the debts and liabilities of the company?
The members of the company shall not be liable for the debts and liabilities of the company except in the case where any member accepts such liability in writing the liability of the company.
What shall not be done by a company not distributing profit?
Such a company shall not add words such as ‘company’, ‘limited’ or ‘private limited’ at the end of its name except with the prior approval of the Office.
Shall such a company be merged with any company distributing profits?
Such a company shall not be merged with any company distributing profits.
Who shall the Office appoint while canceling the registration of such a company?
While canceling the registration of such a company, the Office shall appoint a liquidator and an auditor to complete the liquidation proceedings of such company, specifying the period for completion of such liquidation proceedings.