How to Add or Remove a Shareholder in Nepal: Process and Documents

A shareholder in Nepal is added or removed in 4 steps under the Companies Act 2063:

Step 1: Decide the change and pass the board or general-meeting decision.
Step 2: Execute the transfer or allotment and update the share register.
Step 3: Update the shareholder list.
Step 4: File the change with the Office of the Company Registrar (OCR) on CAMIS, its online portal.

The shareholder change process in Nepal adds a member through a new share allotment or a share transfer. It removes one through a transfer, a buyback or the forfeiture of shares with unpaid calls.

The OCR file carries 7 documents, led by the sale deed or allotment record and the certified board minutes. A foreign shareholder adds Department of Industry (DOI) or Investment Board Nepal (IBN) approval and Nepal Rastra Bank (NRB) compliance under the Foreign Investment and Technology Transfer Act 2019 (FITTA). The share register opened at company registration in Nepal records every change.

How Are Shareholders Added in Nepal?

To add a shareholder in Nepal, a company uses 2 routes: it issues and allots new shares by board resolution, or an existing shareholder transfers shares to the new member. Both routes end with the new name in the share register.

Diagram of the 2 routes to add a shareholder in Nepal: allotment of new shares and share transfer, both ending in the share register — A new shareholder joins by allotment of new shares or by transfer; the allotment return reaches the OCR within 30 days (s31).

A share allotment, or share issue, gives new shares to the incoming shareholder and raises the company's issued capital. Under section 31 of the Companies Act 2063, the company files a return of allotments within 30 days with the Office of the Company Registrar (OCR). The return names each allottee and states the amount paid or due on each share.

New shares fit inside the authorized capital that the memorandum of association (MOA) sets. A company short of authorized capital follows the capital increase process, where a special resolution of the general meeting amends the MOA before allotment.

A share transfer moves existing shares from a current holder to the new member, so the company's capital stays unchanged.

The sale follows the Act, the MOA and the articles of association (AOA), which set the rules to add or remove shareholder names by transfer. A private company adds members only up to its limit of 101 shareholders. The buyer's application to the registered office starts the share transfer process, which ends with the register entry.

How Are Shareholders Removed in Nepal?

To remove a shareholder in Nepal, a company uses 3 routes: a share transfer or sale, a buyback that cancels the shares, or forfeiture of shares with unpaid calls. Each route deletes the leaving member's name from the share register.

A share transfer removes the seller once the buyer's name replaces it. Under section 43 of the Companies Act 2063, the company crosses off the seller and enters the buyer within 15 days of the buyer's application. Section 44 lets the company refuse a transfer that breaks the AOA or a shareholder agreement, leaves a call unpaid or lacks the transfer fee.

A buyback, or share repurchase, is a company purchasing its own shares, which section 61 bars except from free reserves under 7 conditions. The conditions include fully paid shares, AOA permission and a special resolution of the general meeting. A public company buys back only shares listed on the securities market.

The debt-to-capital ratio stays within 2:1 after the buyback, which is capped at 20% of paid-up capital and reserves. The company files a return with the OCR within 30 days and cancels the bought-back shares within 120 days.

Forfeiture removes a shareholder who leaves a call on the shares unpaid. Under section 53, the company gives at least 30 days' notice of a call and 3 more months after a default before forfeiture. The board of directors sells or disposes of forfeited shares as the AOA allows, or the general meeting cancels them by special resolution.

All 3 routes update share register entries at the registered office and pass through the same decision and filing steps.

What Is the Shareholder Change Process?

The shareholder change process in Nepal runs in 4 steps: the decision, the transfer or allotment, the revised shareholder list and the OCR filing. A private company makes each member change through the same 4 steps, with its AOA setting any extra approval.

Flowchart of the 4-step shareholder change process in Nepal, from board or general meeting decision to OCR filing on CAMIS — Every shareholder change ends with an OCR filing on CAMIS and an updated share register.

Step 1: Decide the change (allotment, transfer or buyback) and pass the board/general-meeting decision. The board of directors decides an allotment or approves a transfer. A buyback or a rise in authorized capital needs a special resolution of the general meeting.
Step 2: Execute the transfer or allotment and update the share register. The seller and buyer sign the share sale deed, or the company issues the allotted shares. The company enters a transferee in its members register within 15 days of the transfer application.
Step 3: Update the shareholder list. The revised list shows each shareholder's name, address, share numbers and amount paid, in the format section 46 of the Companies Act 2063 prescribes.
Step 4: File the change with OCR (CAMIS) after the register entry. The OCR takes the application, the revised register and the certified board decision through CAMIS, its online system for company administration.

The shareholder change process Nepal companies follow ends when the OCR records the revised register. The Company Registrar's record then matches the company's own members register.

What Documents Are Required for a Shareholder Change?

The documents required for a shareholder change are 7 items, led by the share transfer deed or allotment record and the certified board minutes. The company sends them to the OCR with its application letter, and the list varies by route.

The 7 documents to file with OCR for a transfer, allotment or buyback are:

0 of 7 ready

Sale deed for the share transfer, or the allotment record: the signed deed in the OCR's prescribed format, or the return of allotments for new shares
Board minutes: a certified copy of the board decision on the sale, transfer or allotment, with general meeting minutes where a special resolution applies
Certificates of the shares that change hands
Identity documents: a certified citizenship certificate copy for each new Nepali shareholder, or a passport for a foreign national
Shareholder list after the change: the updated, revised share register in the section 46 format
Bank or transaction proof of the price paid, where the OCR asks for it
Tax clearance where applicable: proof that tax on the gain is paid

A company in a regulated sector adds its regulator's consent to the file. Nepal Rastra Bank (NRB) consents for a bank, and the Department of Industry (DOI) for a foreign-invested company.

What About Foreign Shareholders?

Foreign shareholders join or leave a Nepali company through the foreign investment route: DOI or IBN approval, NRB compliance and a recorded ownership change. The Foreign Investment and Technology Transfer Act 2019 (FITTA) governs both directions.

A new foreign shareholder obtains foreign investment approval before the company allots or transfers shares to that investor. The DOI approves investment up to NPR 6 billion, and Investment Board Nepal (IBN) approves larger amounts. The minimum is NPR 20 million per foreign investor, and the approving body decides within 7 days of a complete application under FITTA 2019.

After approval, the investor informs NRB in writing with a self-declaration that the funds come from a legitimate source. The money arrives through the banking system in convertible foreign currency. The company or investor then applies to NRB to record the investment within six months of the remittance.

A foreign shareholder's exit runs the other way. Under FITTA 2019, the company reports a sale, transfer or other ownership change of those shares to the approving body within 30 days. The body records the change after the tax on the deal is paid, and the OCR file carries the DOI consent to the share sale.

A foreign shareholder joining a Nepali company follows FDI and foreign company registration, with DOI or IBN approval before the shares are issued.

Frequently Asked Questions

How do I add a new shareholder in Nepal?

A company adds a new shareholder in Nepal by allotting new shares under a board resolution or by recording a transfer of existing shares. The company then updates its share register and files the change with the OCR.

How do I remove a shareholder in Nepal?

A shareholder leaves a Nepali company through a share transfer, a buyback or the forfeiture of shares with unpaid calls. The company then strikes the name from its share register and files the revised list with the OCR.

Do I need to notify OCR of a shareholder change?

Yes, a company in Nepal notifies the OCR by filing the updated shareholder register with the certified board decision on the change. The Companies Act 2063 fixes 15 days for entering a transfer in the company's register and 30 days for a return of allotments.

Can a foreign national become a shareholder in a Nepali company?

Yes, a foreign national becomes a shareholder in a Nepali company through the FDI route, with DOI or IBN approval under FITTA 2019 and NRB compliance. The investment is at least NPR 20 million per foreign investor, and the funds arrive through the banking system.