Free Registration of Non-Profit Organization in Nepal: Complete Guide 2025

A Non-Profit Organization (NPO) in Nepal is designed for individuals or entities aiming to pursue social, academic, scientific, professional, or public welfare objectives—without any intention of sharing profits among its members. Companies Act termed it as a Company Not Distributing Profits.

In this guide, we outline the legal framework, registration process, regulatory compliance, and tax benefits associated with such companies under Nepalese law.

What is a Non-Profit Organization?

ANon-Profit Organizations is defined under Section 166 of the Companies Act, 2063 (2006). Unlike traditional companies, it is prohibited from distributing dividends, bonuses, or profits to its members. All income must be reinvested to support the company’s stated social or professional objectives.

Typical purposes include:

• Promotion of professional sectors or occupations

• Advocacy for collective rights of professionals

• Support of scientific, academic, social, and charitable causes

Registration Authority

• Office of the Company Registrar (OCR)
  Under the Ministry of Industry, Commerce, and Supplies, the OCR is the sole body responsible for registering such companies in Nepal.

Step-by-Step Registration Process

1. Reserve company name online via OCR portal

2. Submit incorporation documents including MOA and AOA

3. Register the company officially with OCR

4. Register for PAN at the Inland Revenue Office

5. Obtain local-level registration at the Ward Office

6. Enlist with the Social Welfare Council (only if receiving foreign grants or support)

Key Legal Provisions Under Section 167 of Companies Act

Here are the special legal conditions that apply to non profit organizations:

1. No Share Capital Requirement

The company can be established without share capital, though it may collect membership fees, donations, or gifts as permitted by law.

2. Limited Liability of Members

Members are not personally liable for company debts, unless they voluntarily accept such liability in writing.

3. Applicability of Company Law

All provisions applicable to public (listed) companies also apply, except those specifically linked to share capital.

4. Restriction on Profit Distribution

No profits, dividends, or bonuses can be distributed. All earnings must be used to meet the company’s stated objectives.

5. Change of Objectives Requires OCR Approval

Any amendment to the company’s objectives must receive prior approval from the OCR.

6. Prohibition on Mergers with For-Profit Companies

Mergers are restricted solely to non-profit companies—merging with a profit-distributing entity is not allowed.

7. Board of Directors

The Articles of Association (AOA) shall specify the number of directors. They are elected on a one member, one vote basis.

8. Limits on Remuneration and Expenses

Salaries, meeting allowances, and other expenses shall not exceed thresholds prescribed by the OCR, taking into account the company’s financial situation.

9. Asset Distribution Upon Dissolution

In case of liquidation or cancellation, the remaining assets are transferred to the Government of Nepal unless otherwise provided in the AOA—and never to promoters or their close relatives.

Penalty for Non-Compliance

• The OCR may cancel registration if the company violates any legal provision, but must provide a chance for defense.

• Aggrieved parties may file an appeal to the Court within 35 days of such cancellation.

• Upon cancellation, the OCR will appoint a liquidator and auditor to conclude proceedings.

Minimum Promoters and Membership

• Minimum of five promoters is required

• No maximum limit

• Membership is non-transferable and ceases upon death, resignation, merger, or cancellation

Documents Required for Registration

• Application for registration

• MOA and AOA

• Copies of National ID Cards of promoters and witnesses

• Corporate registration documents (if promoter is a company)

• Power of Attorney

Government Fee and Processing Time

• Registration Fee: NPR 15,000

• Timeline: Approximately 5–10 working days

Tax Exemption Eligibility

A non-profit organizations may apply for income tax exemption on its operational income by obtaining a “Tax Exempted Entity” certificate under the Income Tax Act, 2058 (2002).

Annual Compliance Requirements

Such companies are subject to:

• Annual audit and financial reporting

• Filing with the OCR, excluding share capital disclosures

Failure to meet compliance may result in penalties.

NGO vs. Non-Profit Organization

Here is a simplified comparison:

Registering a Non-Profit Organization in Nepal is ideal for those seeking a structured, transparent, and government-compliant platform for social or professional activities. It offers clear legal protections and access to domestic and international funding—but comes with strict limitations on profit distribution and governance standards.

For legal consultation or assistance with incorporation, contact our legal experts at Onesphere Law Associates.