Closing a company in Nepal involves a set of legal procedures that need to be followed. Whether you have submitted any records to the OCR (Office of the Company Registrar) dashboard or not, the process varies. This will be a valuable resource if you are wondering how to close a company in Nepal. In this article, we will discuss the step-by-step process of closing a company in Nepal, highlighting two different cases.
Process to Close a Company in Nepal
Case 1: You Have Submitted Records to OCR Dashboard
If you have submitted any records to the OCR dashboard, here’s what you need to do for winding up of a company in Nepal:
Appoint a Liquidator: The first step is to appoint a liquidator who will oversee the closure process. The liquidator will prepare the papers, on which all shareholders need to sign and apply their thumb impressions.
Appoint an Auditor: The company also needs to appoint an auditor who will review the financial statements and ensure compliance with the applicable laws and regulations.
Publish a Notice: The company is required to publish a notice about the closure of the company in a national newspaper in Nepal. This notice should provide information about the intended closure and invite any objections from stakeholders.
Submit Documents to OCR: The liquidator will then submit the necessary documents, including the signed papers and the auditor’s report, to the OCR.
Payment of Fines and Penalties: If there are any fines or penalties due to non-compliance or any outstanding obligations, the company needs to settle them before proceeding further.
Letter from OCR to IRD: Once the documents are submitted, the OCR writes a letter to the Inland Revenue Department (IRD) in Nepal, informing them about the company’s intention to close.
Tax Clearance Certificate: The IRD reviews the company’s tax records and issues a tax clearance certificate. They will then write back to the OCR, confirming the clearance.
Letter of Closure: Finally, the OCR provides a letter of closure of the company, officially acknowledging its dissolution.
Case 2: You Haven’t Submitted Records to OCR Dashboard
If you haven’t submitted any records to the OCR dashboard, the process to close the company in Nepal is slightly different. Here’s what you need to do to wind up your company:
Shareholders’ Presence at OCR: All shareholders need to physically present themselves at the OCR in Nepal and testify in writing that they want to close the company. This ensures that all stakeholders are in agreement with the decision.
Publish a Notice: Similar to Case 1, you need to publish a notice in a national-level newspaper in Nepal, informing about the closure of the company and inviting objections, if any.
Payment of Government Fees: The company is required to pay certain government fees associated with the closure process. These fees vary depending on the size and nature of the company.
Letter from OCR to IRD: The OCR writes a letter to the IRD in Nepal, notifying them about the closure process.
Letter of No Objection: The IRD reviews the company’s records and financial statements to ensure compliance. If everything is found to be in order, they provide a letter of no objection, indicating that they have no objection to the closure.
Certificate of Closure: Once the IRD issues the letter of no objection, the OCR issues a certificate of closure, officially confirming the dissolution of the company.
Frequently Asked Questions (FAQs)
Q: Is it necessary to appoint a liquidator to close a company in Nepal?
Yes, appointing a liquidator is a mandatory step in the closure process. The liquidator oversees the legal formalities and ensures that the shareholders’ interests are protected during the dissolution process.
Q: What is the role of the auditor in closing a company?
The auditor plays a crucial role in closing a company by reviewing the financial statements and ensuring compliance with the applicable laws and regulations. Their report is submitted to the OCR as part of the closure documentation.
Q: Are there any fines or penalties involved in the closure process?
If there are any outstanding fines or penalties due to non-compliance or other obligations, the company is required to settle them before obtaining the letter of closure from the OCR.
Q: How long does the closure process usually take?
The duration of the closure process can vary depending on various factors, including the complexity of the company’s affairs and the efficiency of the involved authorities. Generally, it can take several weeks to a few months to complete the process.
Q: Can a company close without publishing a notice in a national newspaper?
No, publishing a notice in a national-level newspaper is a mandatory requirement for closing a company in Nepal. It serves as a public notification and invites any objections from stakeholders.
Q: What is the role of the Inland Revenue Department (IRD) in the closure process?
The IRD reviews the company’s tax records and issues a tax clearance certificate, confirming that the company has fulfilled its tax obligations. They also provide a letter of no objection if everything is in order.
Q: What legal framework governs the liquidation process of a company in Nepal?
In Nepal, the liquidation of a company is governed by the Company Act of 2063 (2006) and the Insolvency Act of 2063 (2007). These regulatory frameworks outline the procedures for winding up a company’s affairs, selling its assets, and distributing the proceeds to settle outstanding debts and liabilities during the liquidation process.
Closing a company in Nepal involves a series of steps that need to be followed carefully. Whether you have submitted records to the OCR dashboard or not, the process includes appointing a liquidator, publishing a notice, submitting documents, paying fees, and obtaining clearances from the IRD. By understanding the process and adhering to the legal requirements, you can ensure a smooth and compliant closure of your company in Nepal.