NGO Registration in Nepal/ Registration of Non-Government Organization in Nepal/ Registration of Profit Not Distributing Company in Nepal

Non-Government Organization (NGO)

What is a non-government organization (NGO)?

A non-governmental organization (NGO) is a group that functions independently of any government, which is usually non-profit. NGOs, also called civil society organizations, are established on community, national, and international levels to serve a social or political goal such as a humanitarian cause or the protection of the environment.

What is the governing law for a non-government organization under the Nepalese Legal System?

The governing laws for NGOs are as follows:

Social Act,1992
Association Registration Act, 2034

What is the registration process for a non-government organization (NGO) in Nepal?

Step 1 – Apply for a recommendation letter from the local level ward office
Step 2 – submit an application to the relevant district Coordination Committee for a Certificate of Registration
Step 3- Obtain a Police Report from the Concern Police Station of all Executive Members
Step 4 – obtain a registration number from District Administration Office to advance the process
Step 5 – obtain an affiliation certificate from Social Welfare Council
Step 6 – Register for tax at the Inland Revenue Department for a PAN certificate
Step 7 – Registration at the local ward office.

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How many members are required for registration?

A minimum of 9 members holding Nepali citizenship are required for the registration process: 1 President, 1 Vice-President, 1 Secretary, 1 Treasurer, and 5+ members with 33 % of girl/women representation in the Executive Committee.

What are the documents required for registration?

Passport-sized photos and copies of a character report from Nepal Police of all members from the relevant districts
Proposed documents of your organizational goals and mission, and formulated bylaws (BIDHAN)
Copy of resolution by executive members resolving to establish the proposed NGO
Certified copy of citizenship certificate of all Executive Members
Rent agreement with the lessor of the location of the office of the NGO along with a copy of the citizenship certificate of the house owner
Receipt of 3 months rent paid in advance as per the agreement with the house owner.

What are the government fees applicable for registration?

The approximate governmental fee for registration is NPR. 6,000 which may vary depending on the district and local level.

What is the timeline for registration?

It takes around 1 month the completion of the registration process.

Is it compulsory to enlist NGOs at the social welfare council?

Enlistment with the Social Welfare Council is not mandatory. If the entity receives donations, the entity must register with the Social Welfare Council.

Are any tax exemptions available?

NGO is entitled to tax exemption on income tax for operational income if it obtains a certificate as a tax-exempted entity pursuant to Income Tax Act 2022.

The company not distributing profits

What is the company not distributing profits?

A company not distributing profit can be defined as one incorporated on conditions that it shall not be entitled to distribute or pay its members dividends. Any profit is reinvested in services or business growth rather than being distributed to shareholders.

What is the governing law for a company not distributing profits under the Nepalese Legal System?

Companies Act 2063 governs registering and establishing a company not distributing profits in Nepal.

What is the registration process for a company not distributing profits in Nepal?

Step – 1 Online reservation of company name from the OCR website
Step – 2 Drafting and submission of a physical copy of documents (AOA and MOA) to OCR
Step – 3 Registration of the company at OCR
Step- 4 PAN registration at Inland Revenue Office
Step – 5 Business registration at the local level ward office
Step – 6 Enlisting the company at Social Welfare Council (if required)

How many members/promoters are required for registration?

A company not distributing profit requires at least five promoters for registration. There is no limitation to the number of promoters as per the Companies Act 2063.
The membership is not transferable and expires only in case of death, cancellation of registration or dissolution, voluntary resignation, and merger with another company.
Any person, trustee of a public trust, or corporate body can incorporate a company not distributing profits.

What are the documents required for registration?

The following documents need to be submitted to the OCR for registration:

Application for registration
Memorandum of association (MOA) and Articles of Association (AOA) of the proposed company (2 copies of each)
Citizenship certificate of promoters and witnesses
Copy of certificate of registration, MOA, AOA, and board resolution of the promoter, if the promoter is a company
Power of attorney for registration.

What are the government fees applicable for registration?

Registration fees of NPR 15000 are applicable for registration.

What is the timeline for registration?

It takes around 10 to 15 days the completion of the registration process.

What are the share capital requirements and liabilities of the members?

Share capital is not required for establishing a company not distributing profits, and such a company is not permitted to distribute dividends to its members.
The company may receive membership fees from its members and can receive donations, and gifts pursuant to law, for the accomplishment of its objectives.
The liability of the members is limited to the extent of the limit s/he has accepted in writing only.The members are not liable for the debts and liabilities of the company.

Is it compulsory to enlist a company not distributing profits at the social welfare council?

Enlistment at the Social Welfare Council is not compulsory, Enlistment is only required if the company is receiving grants from foreign countries or entities.

Are any tax exemptions available?

A profit-not-distributing company is entitled to tax exemption on income tax for operational income if it obtains a certificate as a tax-exempted entity pursuant to Income Tax Act 2022.

Comparison between NGO and Company not Distributing Profit

S.N	Title	Non-Government Organization (NGO)	Company not Distributing Profit
1.	Relevant laws	An NGO is registered under theAssociation Registration Act, 2034.	A company not distributing profit is registered under the Companies Act, 2063.
2.	Incorporation	Submitting an application to the Chief District Officer (CDO).	Submitting an application to the CRO with the required documents.
3.	Registering entity	Office of Chief District Officer (CDO)	Office of Company Registrar (OCR)
4.	Minimum Members	At least 9 members	At least 5 members
5.	Foreign members	Foreign nationals are prohibitedfrom getting membership in NGOs. However, they can remain asAdvisors	Foreign nationals are allowed to get membership in companies not distributing profit
6.	Renewal	The certificate of incorporation has to be renewed annually	Renewal of the certificate of incorporation is not required. But certain documents should be submitted to OCR every year as annual compliance.
7.	Election of Board of Directors	Regular periodic election of the directors to be conducted.	Directors are to be elected by the members through an election procedure.
8.	Annual General Meeting	Annually as per its constitution	Annually as per its AOA
9.	Submission of annual audit report	NGO is required to submit theaudited annual financial report to the local officer	The Company is required to submit a copy of the audited annual financial statement to OCR.
10.	Winding up	Can be dissolved under the grounds of its constitution.	The company may go for voluntary dissolution by adopting a special resolution in the AGM of the company.
11.	Remuneration of directors, allowances, and prizes	The administrative expenses of the NGO cannot be more than 20% of the total project cost.	An entity registered with Social Welfare Council is required to meet the requirement of 20% of the total project cost. But if CNDP is not registered atSocial Welfare Council, it cannot exceed 25% of administrativeexpenses.
12.	The property after Cancellation of Registration	After adjusting all liabilities, the property of the NGO is transferred to the Government.	After adjusting, all liabilities are managed either as provided under the AOA (transfer to a similarnot-for-profit entity or NGO) or transferred to the Government.
13.	Distribution of Profit	Prohibited	Prohibited
14.	Sale and transfer of shares	Not applicable	Not applicable

To consult or get legal advice from our expert Registration of NGO in Nepal/ Registration of Non-Government Organization in Nepal/Registration of Profit Not Distribution Company in Nepal;Contact us at 977-01-4102849/977-9851059026, Prime Law Associates, Anamnagar, Kathmandu, info@primelawnepal.com, www. primelawnepal.com

This article is for informational purposes only and shall not be construed as legal advice, advertisement, personal communication, solicitation or inducement of any sort from the firm or any of its members. The law office shall not be liable for consequences arising out of any action undertaken by any person relying on the information provided herein.

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