Incorporation of Company

Incorporation of Company

(1) Any person desirous of undertaking any enterprise with profit motive may, either singly or jointly with others, incorporate a company for the attainment of one or more objectives set forth in the memorandum of association.

(2) There shall be a minimum of seven promoters for the incorporation of a public company.

        Provided, however, that seven promoters shall not be required for the incorporation of another public company by any public company.

(3) Notwithstanding anything contained elsewhere in this Section, a company not distributing profits may, subject to the provisions contained in Chapter-19, be incorporated for the attainment of one or more objectives.

Application to be made for incorporation of company

(1) Any person desirous of incorporating a company pursuant to Section 3 shall make an application to the Office, in such format and accompanied by such fees as prescribed, and along with the following documents, as well:

• (a) The memorandum of association of the proposed company,

• (b) The articles of association of the proposed company,

• (c) In the case of a public company, a copy of the agreement, if any, entered into between the promoters prior to the incorporation of the company,

• (d) In the case of a private company, a copy of the consensus agreement, if any, entered into,

• (e) Where prior approval or license has to be obtained from anybody under the prevailing law prior to the registration of a company carrying on any particular type of business or transaction pursuant to the prevailing law, such approval or license,

• (f) Where the promoter is a Nepalese citizen, a certified copy of the citizenship certificate and where a corporate body is a promoter, a certificate of registration of incorporation, decision of the Board of directors, regulating The incorporation of the company and major documents regarding incorporation.

• (g) Where the promoter is a foreign person or company or body, permission obtained under the prevailing law to make investment or carry on business or transaction in Nepal,

• (h) Where a promoter is a foreign person, a document proving the country of his citizenship,

• (i) Where the promoter is a foreign company or body, a certified copy of the incorporation of such company or body and major documents relating to such incorporation.

(2) Notwithstanding anything contained in Sub-section(1), if the promoter agrees to accept the articles of association in the format prescribed for the incorporation of a company with a single promoter of the single shareholder, it shall not be required to submit the articles of association of the proposed company.

Registration of company

(1) Where an application is made for the incorporation of a company pursuant to Section 4, the Office shall, after making necessary inquiries, register such company within 15 days after the date of the making of the application and grant the company registration certificate to the applicant, in the format as prescribed.

(2) After a company has been registered pursuant to Sub-section (1), the company shall be deemed incorporated.

(3) The office shall maintain a company register in the format as prescribed, for purpose of Sub-section (1).

(4) After the incorporation of a company under this Section, subject to this Act, the matters contained in the memorandum of association and the articles of association shall be binding on the company and its shareholders as if these where the provisions contained in separate agreements between the company and every shareholder and amongst its shareholders.

(5) Without registering a company under this Act, no person shall use the name company and carry on any kind of transaction by the name of any firm or institution.

Power to refuse to register company

(1) The Office may refuse to register a company in any of the following circumstances:

• (a) If the name of the proposed company is identical with the name by which a company in existence has been previously registered or so resembles the name of that company as it might cause misleading,

• (b) If the name or objective of the proposed company is contrary to the prevailing law or appears to be improper or undesirable in view of public interest, morality, decency, etiquette etc. or reflects criminal motive,

• (c) If the name of the proposed company is identical with the name of a company of which registration has been cancelled pursuant to this Act or that of a company which has been insolvent under the prevailing law or so resembles such name as it might cause misleading and a period of five years shall not expire after such cancellation of registration or insolvency,

• (d) If the requirements for the incorporation of a company under this Act are not fulfilled.

(2) If the officer refuses to register the company in any of the circumstances as referred to in Sub-section (1) it shall give a notice thereof, accompanied by the reasons, therefore, to the applicant no later than 15 days after the date of the application made for the incorporation of the company pursuant to Section 4.

(3) If the officer refuses to register any company pursuant to Subsection (1) or fails to give a notice pursuant to Sub-section (2), a person who is not satisfied may file a complaint in the court within fifteen days.