Introduction to HR Company Registration in Nepal
Human Resource (HR) companies play a crucial role in Nepal’s growing business landscape by providing essential workforce management services to organizations across various sectors. The registration of HR companies in Nepal falls under the regulatory framework established by the Company Act 2063 (2006) and subsequent amendments, along with specific provisions outlined in the Foreign Employment Act 2064 (2007) for companies involved in overseas employment services.
Nepal’s economic liberalization has created significant opportunities for HR service providers, particularly with the increasing focus on FDI in Nepal and manufacturing investment Nepal. The government actively encourages the establishment of professional service companies, including HR firms, to support the country’s industrial growth and employment generation objectives.
HR companies in Nepal typically provide services such as recruitment, staffing solutions, payroll management, training and development, performance management, and compliance advisory services. These companies must comply with Nepal investment laws and obtain proper registration through the Office of Company Registrar (OCR) under the Department of Industry.
The registration process ensures that HR companies operate within the legal framework while contributing to Nepal’s human resource development goals. Companies engaged in foreign employment services must additionally register with the Department of Foreign Employment under the Ministry of Labour, Employment and Social Security.
Legal Requirements for HR Company Registration
Minimum Capital Requirements
HR companies in Nepal must meet specific capital requirements as mandated by the Company Act 2063. For private limited companies, the minimum authorized capital requirement is NPR 100,000, while the minimum paid-up capital is NPR 25,000. However, companies planning to engage in foreign employment services must maintain a minimum paid-up capital of NPR 5,000,000 as per the Foreign Employment Act 2064.
Shareholding Structure and Foreign Investment
The Foreign Investment and Technology Transfer Act 2075 (2019) governs foreign investment in HR companies. Foreign investors can hold up to 100% equity in HR service companies, making it attractive for international firms seeking to establish operations in Nepal. The act promotes FDI in Nepal by providing various incentives and simplified procedures for foreign investors.
Licensing and Regulatory Compliance
HR companies must obtain relevant licenses depending on their service offerings. Companies providing general HR services require registration under the Company Act, while those involved in overseas employment must obtain licenses from the Department of Foreign Employment. Additionally, companies must register for Value Added Tax (VAT) if their annual turnover exceeds NPR 2,000,000.
Professional Qualifications
The company must employ qualified professionals with relevant educational backgrounds and experience in human resource management. Directors and key personnel should possess appropriate qualifications as specified in the company’s memorandum and articles of association.
Detailed Registration Process for HR Companies
Step 1: Name Reservation and Approval
The first step involves reserving and obtaining approval for the company name from the Office of Company Registrar. Applicants must submit Form 1 along with three alternative names for the proposed HR company. The name should not conflict with existing registered companies and must comply with naming conventions specified in the Company Regulation 2064. The OCR conducts a thorough search to ensure name availability and appropriateness. Upon approval, the reserved name remains valid for 35 days, during which the applicant must complete the registration process.
Step 2: Preparation of Constitutional Documents
After name approval, prepare the Memorandum of Association (MOA) and Articles of Association (AOA) according to the formats prescribed in the Company Act 2063. The MOA must clearly define the company’s objectives, authorized capital, and shareholding structure. For HR companies, the objectives should specifically mention human resource services, recruitment, training, and related activities. The AOA outlines the internal management structure and operational procedures. Both documents require notarization and must be signed by all subscribers in the presence of a notary public.
Step 3: Capital Verification and Bank Account Opening
Open a bank account in the proposed company’s name and deposit the required paid-up capital. Obtain a capital verification certificate from a chartered accountant confirming the deposit of minimum paid-up capital as required by law. For HR companies engaged in foreign employment, ensure the deposit meets the NPR 5,000,000 requirement. The bank will issue a certificate confirming the capital deposit, which serves as proof of financial capability during the registration process.
Step 4: Application Submission and Document Verification
Submit the complete application package to the Office of Company Registrar along with all required documents and prescribed fees. The application includes Form 1 (name reservation), constitutional documents, capital verification certificate, and other supporting documents. OCR officials verify all submitted documents for completeness and compliance with legal requirements. Any deficiencies or discrepancies must be rectified before proceeding to the final registration stage.
Step 5: Certificate Issuance and Post-Registration Compliance
Upon successful verification, the OCR issues the Certificate of Company Registration, officially establishing the HR company as a legal entity. The certificate contains the company registration number, registration date, and other essential details. Immediately after registration, complete post-registration requirements including PAN registration, VAT registration (if applicable), and obtaining necessary operational licenses. For foreign employment services, apply for the license from the Department of Foreign Employment within the stipulated timeframe.
Essential Documents Required for Registration
Primary Registration Documents
The registration process requires several mandatory documents that must be properly prepared and authenticated. The Memorandum of Association and Articles of Association form the foundation of the company’s legal structure and must comply with the prescribed formats under the Company Regulation 2064.
Key documents include:
- Completed Form 1 for name reservation
- Notarized Memorandum of Association
- Notarized Articles of Association
- Capital verification certificate from chartered accountant
- Bank certificate confirming capital deposit
- Citizenship certificates of all directors and shareholders
- Passport-size photographs of directors
- Office lease agreement or ownership documents
Additional Documents for Foreign Investment
Companies with foreign investment must submit additional documentation as required under the Foreign Investment and Technology Transfer Act 2075. These documents ensure compliance with Nepal investment laws and facilitate the approval process for foreign investors.
Required additional documents include:
- Foreign investor’s passport and visa copies
- Company registration certificate from investor’s home country
- Board resolution authorizing investment in Nepal
- Power of attorney (if applicable)
- Investment approval from Department of Industry
- Technology transfer agreement (if applicable)
Specialized Documents for Employment Services
HR companies planning to provide overseas employment services must prepare additional documents for licensing under the Foreign Employment Act 2064. These documents demonstrate the company’s capability to provide ethical and professional employment services.
Specialized documents include:
- Detailed business plan for employment services
- Qualification certificates of key personnel
- Office infrastructure compliance certificate
- Insurance policy documents
- Guarantee or security deposit arrangements
- Ethical code of conduct agreement
Time Frame and Cost Structure
Registration Timeline
The HR company registration process typically takes 15-30 working days from the submission of complete documentation. The Office of Company Registrar processes applications within 7-15 working days for standard registrations, while companies with foreign investment may require additional time for Department of Industry approval.
Timeline breakdown:
- Name reservation: 1-3 working days
- Document preparation: 5-10 working days
- Application processing: 7-15 working days
- Certificate issuance: 1-2 working days
- Post-registration compliance: 5-10 working days
Cost Components and Fee Structure
The total cost for HR company registration varies depending on the authorized capital, foreign investment involvement, and additional services required. The Company Act 2063 and related regulations specify the fee structure for different registration components.
Basic Registration Costs:
- Name reservation fee: NPR 500
- Registration fee: 0.7% of authorized capital (minimum NPR 1,000)
- Publication fee: NPR 1,000
- Certificate fee: NPR 500
Additional Costs:
- Legal documentation: NPR 15,000-25,000
- Chartered accountant fees: NPR 5,000-10,000
- Government fees and stamps: NPR 2,000-5,000
- Professional consultation: NPR 10,000-20,000
Foreign Investment Additional Costs
Companies with foreign investment incur additional costs related to Department of Industry approval and compliance with the Foreign Investment and Technology Transfer Act 2075. These costs support the facilitation of FDI in Nepal and ensure proper regulatory oversight.
Post-Registration Obligations and Compliance
Mandatory Annual Compliance
Registered HR companies must fulfill various annual compliance requirements to maintain their legal status and operational licenses. The Company Act 2063 mandates the filing of annual returns and financial statements with the Office of Company Registrar within specified deadlines.
Annual compliance requirements include:
- Filing annual returns by Shrawan 15 (July 31)
- Submitting audited financial statements
- Conducting annual general meetings
- Maintaining statutory registers and records
- Paying annual renewal fees
Tax Registration and Obligations
HR companies must register for various taxes and comply with the Income Tax Act 2058 and Value Added Tax Act 2052. The Inland Revenue Department oversees tax compliance and collection from registered companies.
Tax obligations include:
- Permanent Account Number (PAN) registration
- Value Added Tax (VAT) registration if turnover exceeds NPR 2,000,000
- Monthly VAT return filing
- Annual income tax return submission
- Withholding tax compliance for employee salaries
Employment Service Licensing
Companies providing overseas employment services must obtain and maintain licenses from the Department of Foreign Employment. The Foreign Employment Act 2064 requires annual license renewal and compliance with ethical employment practices.
Licensing requirements:
- Annual license renewal by Chaitra 31 (April 13)
- Maintenance of minimum capital requirements
- Submission of annual activity reports
- Compliance with worker welfare fund contributions
- Adherence to bilateral agreements with destination countries
Record Keeping and Documentation
The Company Regulation 2064 requires HR companies to maintain comprehensive records and documentation for regulatory inspection and compliance verification. Proper record keeping ensures transparency and facilitates smooth business operations.
Essential records include:
- Minutes of board meetings and general meetings
- Register of members and directors
- Financial records and accounting books
- Employment contracts and service agreements
- Client database and service records
- Compliance certificates and licenses
Frequently Asked Questions
What is the minimum capital requirement for HR company registration in Nepal? The minimum paid-up capital is NPR 25,000 for general HR services, but companies providing overseas employment services require NPR 5,000,000 as mandated by the Foreign Employment Act 2064.
How long does the HR company registration process take in Nepal? The complete registration process typically takes 15-30 working days from document submission, including name reservation, application processing, and certificate issuance through the Office of Company Registrar.
Where should I submit the HR company registration application in Nepal? Submit the registration application to the Office of Company Registrar under the Department of Industry, located in Kathmandu, along with all required documents and prescribed fees.
What are the main requirements for establishing an HR company in Nepal? Key requirements include minimum capital deposit, qualified directors, registered office address, constitutional documents, relevant licenses, and compliance with the Company Act 2063 and employment regulations.
What is the total cost for registering an HR company in Nepal? The total registration cost ranges from NPR 35,000-65,000, including government fees, legal documentation, professional services, and additional costs depending on authorized capital and services.
