The Office of the Company Registrar published a notice, by its decision dated 2080/5/10 (27 August 2023), setting out a new work procedure for share allocation, certification of the share register or logbook (शेयर लगत), and transfer of shares by gift deed.
The thrust of the notice is that payment for shares must be traceable through the banking system, and the Registrar will not certify a share logbook without proof of it. All twelve requirements are set out below.
Key Thresholds at a Glance
| Item | Detail |
|---|---|
| Notice decision date | 2080/5/10 (27 August 2023) |
| Threshold below which bank proof may be waived | NPR 1,000,000, for share sales between two natural persons |
| Withdrawal that triggers scrutiny | More than NPR 1,000,000 withdrawn shortly after deposit |
| New incorporation rule applies to companies incorporated after | 2080/05/18 (4 September 2023) |
| Audited statements from which paid-up capital is checked | Fiscal year 2073/74 (2016/17) onwards |
| Grace period for transactions approved before the notice | 45 days from issuance |
| Liquidation provision | Section 126, Companies Act, 2063 (2006) |
What the Notice Requires
| No. | Requirement |
|---|---|
| 1 | A shareholder must deposit the amount in lieu for purchase of shares from the company through the banking channel. |
| 2 | Except in share transactions involving a company, a share purchase and sale between two natural persons involving a transaction of less than NPR 1,000,000 can be validated and certified even if a banking record or statement is not submitted as proof of payment, considering the prevalent provisions in law. |
| 3 | Update processes and other work for companies incorporated after 2080/05/18 (4 September 2023) can be carried out only after the company allocates shares, payment for subscribed shares is partially or fully realised, and it accordingly certifies the share logbook, prior to its first annual general meeting. |
| 4 | For companies whose audited financial statements after fiscal year 2073/74 (2016/17) depict paid-up capital but whose share register or logbook remains unissued or uncertified, documents and other records will be accepted by the Office only after it records its share register or capital with a proof of payment. |
| 5 | Where a provision requires a shareholder to deposit a share amount in the company’s bank account within a specified date, only the bank statement within that period will be accepted as proof of payment. |
| 6 | During certification of the share register or logbook, a certified bank statement must be submitted to the Office bearing the seal of the relevant bank, as proof of payment for the amount committed during incorporation, purchase of reserved shares, or payment for purchase of shares. However, for purchase and sale of shares between family members verifiable through a certificate of relationship, the system-generated proof of payment from the relevant bank can also be accepted. |
| 7 | The shareholder must deposit the amount in lieu of shares into the company’s bank account in their own name. If the amount is deposited by a family member of the shareholder, then at the time of certification there must be produced: a document revealing the relationship, a self-declaration from the depositor stating the purpose of the deposit, and a self-declaration from the shareholder regarding the transaction. |
| 8 | Where share capital is deposited into the company’s bank account but an amount exceeding NPR 1,000,000 is withdrawn a short time after the deposit, officers at the Office will analyse the following before certifying the share register: (i) the nature of the company; (ii) the period for which the amount was deposited and withdrawn; (iii) the capital committed by the shareholders; and (iv) the purpose for which the amount was withdrawn, such as land purchase, building construction, equipment purchase, licence purchase or investment in another company. The authority may then request documents such as registration documents, an engineering invoice, the auditor’s report, an additional response from the board of directors, or a self-declaration. |
| 9 | If the amount is deposited into the company’s overdraft account for a share transaction, evidence of payment can be accepted only if a bank statement or voucher showing the deposit for the shares from the concerned shareholder, or the transaction certified by the related bank, is presented. |
| 10 | When transferring ownership of shares through a gift deed (bakas patra), the following apply:
a. It is mandatory to present a proof of relationship certificate issued by the relevant body, or the recommendation of the relevant local level as a member of the same household, for the referred transaction. b. Only an elder member of a household in a joint family is eligible to gift (bakas) shares to a junior member of the family. c. The name of the issuing company, the number of shares and the price per share shall be disclosed on the gift deed. d. This clause shall not apply to a partitioned family. e. For transactions approved by the company before issuance of this directive but not yet recorded, if an application is received within 45 days of issuance of this notice, certification shall be processed under the previous provisions. |
| 11 | In case of doubt or suspicion in relation to the paid-up amount, the decision-making authority at the Office can demand additional details from the concerned person, the bank or the company. |
| 12 | While liquidating a company under Section 126 of the Companies Act, 2063 (2006), the liquidator must compulsorily adopt the banking system to return amounts to shareholders, after deducting the total expenses and other liabilities of the company. |
What This Means in Practice
- Cash subscription is effectively no longer viable. Anything above the NPR 1,000,000 natural-person threshold needs a bank trail, sealed by the bank.
- Companies carrying paid-up capital in their accounts without a certified share logbook are blocked from filing anything else at the Office until the position is regularised, and that reaches back to fiscal year 2073/74.
- New companies must get the share logbook certified before their first AGM, not at leisure afterwards.
- Money moving out of the company shortly after subscription will attract questions, and the burden of explaining it sits with the company.
- Gift transfers are confined to an elder gifting to a junior within a joint family, with the deed itself required to state company, share count and price.
Speak to Our Team
If your share logbook is uncertified, or you need to regularise historic paid-up capital before filing at the Office, get in touch, or read more about our regulatory and transactional advisory and mergers, acquisitions and corporate restructuring services.
Our note on the Company Directive Second Amendment, 2072 covers the Office’s wider procedural reforms, including share transfer after death, and our guide to company registration in Nepal sets out the incorporation process.
This summary is general information, not legal advice. It reflects the notice as issued, and its application depends on your circumstances, so take advice on the facts before acting.
Read the Original Notice
The full notice is reproduced below and available to download.