To close a company in Nepal, a special shareholder resolution (75% majority) must be passed, a licensed liquidator must be appointed for active businesses, tax clearance must be obtained from the Inland Revenue Department (IRD), a public notice must be published in two national daily newspapers (one Nepali, one English), and a Certificate of Dissolution must be secured from the Office of the Company Registrar (OCR). For dormant companies with zero transactions, Section 136 deregistration (Darta Khareji) offers a simplified route. As of 2026, the government has waived accumulated penalties, allowing closure by paying only 0.05% of paid-up capital until Asar end 2082.
Legal Framework: Companies Act 2063, Insolvency Act 2063, Income Tax Act 2058, Labor Act 2074
Shutting down a business is rarely the dream when incorporation papers are signed at the Office of the Company Registrar (OCR) in Tripureshwor. But whether a venture ran its course, pivoted overseas, or simply never launched, leaving a dead company registered in Nepal is one of the most dangerous administrative mistakes a founder or director can make.
Furthermore, many entrepreneurs assume that if annual returns are simply stopped, the company quietly dissolves. It does not. Instead, late fees under Section 81 of the Companies Act 2063 accumulate every single year. Eventually, directors find themselves blacklisted by the OCR, unable to register new entities, open business bank accounts, or process foreign direct investments.
Consequently, closing a Nepali private limited company (Pvt. Ltd.) cleanly requires navigating two distinct state bodies: the OCR (for corporate existence) and the Inland Revenue Department (IRD) (for tax liabilities). Below is the exact, battle-tested framework for how to close a company in Nepal without falling into long-term legal traps.
Companies in Nepal must choose between Voluntary Deregistration (Darta Khareji) under Section 136 for dormant or non-started entities, Voluntary Liquidation under Chapter 10 for solvent active businesses, and Compulsory Liquidation under the Insolvency Act 2063 for insolvent entities. Selecting the wrong path early will waste months in back-and-forth rejections at the OCR counter.
Nepal’s corporate legal framework separates company closures based on operational history and solvency. Moreover, the 2026 government policy has introduced significant cost relief for businesses seeking exit.
July 25, 2026 - BY Admin
[ How to Close a Company in Nepal ]
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+----------------------+----------------------+
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[ Solvent Entity ] [ Insolvent Entity ]
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+---------+---------+ [ Compulsory Liquidation ]
| | (Insolvency Act 2063)
[ Never Started / [ Active Trading /
Zero Operations ] Has Assets/Liabilities ]
| |
[ Section 136 [ Voluntary Liquidation ]
Deregistration ] (Chapter 10, Sec 126)If a company was incorporated but never commenced business operations, or if it has been completely inactive with zero balance sheet assets and liabilities, it qualifies for Darta Khareji (Cancellation of Registration) under Section 136 of the Companies Act 2063.
If a company actively traded, held bank balances, owned fixed assets, or employed staff—and can comfortably pay off all outstanding liabilities within 12 months—a formal Voluntary Liquidation must be executed.
If company liabilities exceed total asset values and the business cannot pay its debts as they mature, voluntary mechanisms cannot be used. Creditors or directors must petition the Commercial Bench of the High Court under the Insolvency Act 2063.
| Feature | Section 136 Deregistration | Voluntary Liquidation | Compulsory Liquidation |
|---|---|---|---|
| Primary Governing Law | Companies Act 2063 (Sec 136) | Companies Act 2063 (Chap 10) | Insolvency Act 2063 |
| Operational History | No business commenced / Defunct | Active trading, fully solvent | Insolvent (Liabilities > Assets) |
| Liquidator Required? | No | Yes (CA or legal practitioner) | Court-appointed Administrator |
| Newspaper Notice? | Yes (two national dailies) | Yes (two national dailies, 30–35 days) | Yes (Court directions) |
| Estimated Cost Range | NPR 25,000 – 80,000 | NPR 150,000 – 550,000+ | High (Court & insolvency fees) |
| Timeline | 1–3 months | 4–8 months | 6–12+ months |
| 2026 Penalty Waiver | 0.05% of paid-up capital | 0.05% of paid-up capital | N/A |
Voluntary liquidation follows six sequential legal phases: passing a shareholder special resolution (75%+ vote), appointing a liquidator, notifying the OCR within 15 days, publishing a 35-day national daily newspaper notice in two papers, securing IRD tax clearance, and submitting the final liquidator report for registration cancellation.
[Step 1: Board Meeting & Shareholder Special Resolution]
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[Step 2: Formal Appointment of Qualified Liquidator]
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[Step 3: OCR Notification + Two Newspaper Public Notices (35 Days)]
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[Step 4: Tax Audit, PAN/VAT Cancellation & IRD Tax Clearance Certificate]
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[Step 5: Liquidation Accounts, Asset Sale & Debt Settlement]
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[Step 6: Submission of Final Report to OCR & De-registration Certificate]The company closure process in Nepal starts internally. The Board of Directors must convene a meeting to pass a resolution proposing dissolution and declaring that the company can discharge all outstanding liabilities in full.
Subsequently, an Extra-Ordinary General Meeting (EGM) or Annual General Meeting (AGM) must be called to pass a Special Resolution. Under Nepalese corporate law, a special resolution requires an affirmative vote from shareholders holding at least 75% of total paid-up share capital.
Upon passing the closure resolution, shareholders must appoint an independent, qualified Liquidator.
Within 15 days of passing the special resolution, the liquidator or board must file notice of the liquidation decision and liquidator appointment with the OCR.
Simultaneously, a public notice must be published in two national daily newspapers—one in Nepali (such as Gorkhapatra or Kantipur) and one in English (such as The Kathmandu Post).
This is where 80% of company closures in Nepal get delayed. Before the OCR will erase a company, the local Inland Revenue Office (IRO) where the company PAN/VAT is registered must conduct a thorough audit.
Pro Tip on IRD Audits: Do not attempt tax clearance with un-reconciled TDS or mismatched VAT ledgers. The tax office will freeze the process until every rupee matches the Integrated Tax System (ITS) portal records.
Before remaining cash can be returned to investors, the liquidator must follow Nepal’s statutory payment priority:
The liquidator prepares a Final Liquidation Audit Report detailing how assets were sold, how debts were discharged, and how funds were distributed.
The following dossier must be submitted to the OCR:
The Registrar reviews the dossier and publishes the final corporate strike-off. The OCR then issues the Certificate of Dissolution (Kompany Khareji Praman Patra). At this exact moment, the corporate entity ceases to exist.
Section 136 deregistration allows companies that never started operations or have been completely dormant to close without full liquidation. The process requires a shareholder resolution, auditor confirmation of zero activity, IRD tax clearance, two newspaper notices, and OCR submission. Under the 2026 penalty waiver policy, accumulated fines are eliminated by paying 0.05% of paid-up capital.
A company qualifies for simplified deregistration under Section 136 if:
| Document | Purpose | Source |
|---|---|---|
| Board Resolution | Formal intent to deregister | Company records |
| Shareholder Resolution | 75% approval for deregistration | EGM minutes |
| Auditor Confirmation Letter | Certifies zero economic activity | Registered CA firm |
| IRD Tax Clearance | Confirms no tax liabilities | Inland Revenue Office |
| Newspaper Notices (2) | Public creditor notice | National dailies |
| Application Form | Official OCR deregistration request | OCR/CAMIS portal |
| Original Company Certificate | Surrender of corporate identity | OCR original issue |
Phase 1: Internal Resolution (Week 1)
Phase 2: Auditor and Tax Clearance (Weeks 2–4)
Phase 3: Public Notice (Weeks 3–5)
Phase 4: OCR Submission (Weeks 5–8)
The total cost to close a company in Nepal ranges from NPR 25,000–80,000 for Section 136 deregistration and NPR 150,000–550,000+ for voluntary liquidation. The 2026 government policy waives accumulated penalties, requiring only 0.05% of paid-up capital for closure fees until Asar end 2082.
| Cost Component | Estimated Range (NPR) | Notes |
|---|---|---|
| Liquidator Professional Fees | 50,000 – 200,000 | Varies by company complexity |
| Auditor/Accountant Fees | 40,000 – 150,000 | Final audit and tax reconciliation |
| Newspaper Publication (×2) | 10,000 – 25,000 | One Nepali + one English daily |
| Legal Documentation | 25,000 – 75,000 | Resolution drafting, compliance review |
| OCR Filing Fees | 5,000 – 15,000 | Official government charges |
| IRD Clearance Costs | 10,000 – 30,000 | Penalties, if any, plus processing |
| Employee Settlements | Variable | Gratuity, SSF, leave encashment |
| Total Estimated Range | 150,000 – 550,000+ | Depends on size and liabilities |
| Cost Component | Estimated Range (NPR) | Notes |
|---|---|---|
| Government Closure Fee (2026 Policy) | 0.05% of paid-up capital | Waives all accumulated penalties |
| Auditor Confirmation | 15,000 – 30,000 | Zero-activity certification |
| Newspaper Publication (×2) | 8,000 – 15,000 | Mandatory public notice |
| Legal/Professional Assistance | 15,000 – 25,000 | Document preparation |
| IRD Nil Clearance | 5,000 – 10,000 | Processing and verification |
| Total Estimated Range | 25,000 – 80,000 | Significantly reduced under new policy |
Additionally, several hidden costs can arise during company dissolution in Nepal:
Company closure in Nepal takes 1–3 months for Section 136 deregistration of dormant entities and 4–8 months for voluntary liquidation of active businesses. The IRD tax audit accounts for the majority of delays.
| Phase | Duration | Bottleneck Risk |
|---|---|---|
| Board/Shareholder Resolutions | 1–2 weeks | Low |
| Liquidator Appointment | 1 week | Low |
| OCR Notification & Newspaper Notice | 35 days (mandatory) | None |
| IRD Tax Clearance & Audit | 6–12 weeks | High |
| Debt Settlement & Asset Distribution | 2–6 weeks | Medium |
| Final OCR Review & Dissolution | 2–4 weeks | Medium |
| Total Estimated Timeline | 4–8 months | Tax audit dependent |
| Phase | Duration | Bottleneck Risk |
|---|---|---|
| Internal Resolutions | 3–5 days | Low |
| Auditor Confirmation | 1–2 weeks | Low |
| IRD Nil Clearance | 1–3 weeks | Medium |
| Newspaper Publication | 30–35 days | None |
| OCR Processing | 2–4 weeks | Medium |
| Total Estimated Timeline | 1–3 months | Faster than liquidation |
Moreover, the following factors frequently extend the company dissolution timeline:
Abandoning an inactive company without formal closure causes annual fines under Section 81 of the Companies Act 2063 to accumulate indefinitely. Furthermore, Section 136(7) and Section 136(9) preserve director personal liability for unsettled debts, while the OCR blacklists directors from future corporate endeavors.
A common misconception among local and foreign founders is: "If I stop filing annual OCR compliance documents and leave the bank account empty, the state will close the company for me."
While Section 136(1)(b) gives the OCR authority to strike off companies that default on annual returns for three consecutive years, this is not a clean or safe exit. It is an administrative default proceeding that leaves heavy legal baggage.
When the OCR involuntarily cancels a non-compliant company, the names and passport/citizenship numbers of all listed directors are tagged in the central digital system. These directors will be barred from registering new companies, acquiring shares in existing companies, or serving as directors/officers in Nepali entities.
Every year a company misses filing its annual AGM minutes, auditor reports, and share structure updates (Poush Manta compliance), fines compound exponentially under Section 81. By year five, administrative fines can easily exceed NPR 100,000—money that must be paid before any clear administrative status can ever be restored.
However, the 2026 government policy has waived these accumulated penalties. Until Asar end 2082, companies can close by paying only 0.05% of their paid-up capital, making this the most favorable window for cleaning up dormant entities.
Under Section 136(7) of the Companies Act 2063, the cancellation of a company's registration does not extinguish the outstanding liabilities of its officers and shareholders. If unpaid tax dues, bank loans, or trade creditors remain, creditors can file claims against directors personally under Section 136(9).
Foreign-owned companies in Nepal follow the same core closure process as domestic entities but require additional clearances from the Department of Industry (DOI) or Investment Board Nepal (IBN) and Nepal Rastra Bank (NRB) for capital repatriation after all taxes and local obligations are settled.
FDI companies must obtain a formal no-objection certificate from the Department of Industry (for investments up to NPR 6 billion) or Investment Board Nepal (for investments above NPR 6 billion). This clearance confirms that all foreign investment obligations have been met.
After securing IRD tax clearance, foreign investors must apply to Nepal Rastra Bank through their commercial bank for capital repatriation. The application must include:
NRB approval for repatriation typically takes 2–4 weeks after complete documentation.
| Document | Issuing Authority | Purpose |
|---|---|---|
| DOI/IBN Closure NOC | DOI or IBN | Confirms FDI compliance |
| NRB Repatriation Approval | Nepal Rastra Bank | Authorizes foreign currency transfer |
| Final Audit Report | Registered Auditor | Validates asset/liability position |
| Tax Clearance | IRD | Confirms no outstanding tax liability |
| Liquidator Report | Licensed Liquidator | Documents winding-up process |
Before initiating the digital portal filing at the CAMIS system or submitting physical documents at the OCR counter, the following items must be prepared:
Yes. Companies that never commenced operations or have been completely dormant with no assets or liabilities can be closed through Section 136 deregistration (Darta Khareji) without appointing a liquidator or undergoing full liquidation.
The Nepal government has waived accumulated penalties for company closure until Asar end 2082. Businesses can now close by paying only 0.05% of their paid-up capital, eliminating years of compounded Section 81 fines.
Yes. Tax clearance from the Inland Revenue Department is mandatory for all company closures in Nepal. The IRD conducts an audit of all returns, TDS, and VAT filings before issuing the Kar Chukta Praman Patra.
A voluntary liquidation or deregistration requires a 75% majority vote of shareholders. If minority shareholders holding under 25% oppose closure, the majority can still pass the resolution. If over 25% object, voluntary closure cannot proceed, and disputing parties must resolve conflicts or petition the High Court.
Under the Labor Act 2074, all employees must receive pending salaries, accumulated leave encashment, gratuity, and Social Security Fund contributions before any assets are distributed to shareholders. Employee settlement holds statutory priority over creditor payments.
For a non-traded company using Section 136 deregistration, 1 to 3 months is expected. For an active company undergoing full voluntary liquidation under Chapter 10, the process typically takes 4 to 8 months. The tax audit at the Inland Revenue Office accounts for most of this time.
Yes. However, foreign-invested Pvt. Ltd. entities require additional clearances from the Department of Industry (DOI) or Investment Board Nepal (IBN) and Nepal Rastra Bank (NRB) to repatriate remaining capital back to the home country after all taxes and local obligations are settled.
Total costs range between NPR 150,000 and NPR 550,000 for standard small-to-medium businesses undergoing voluntary liquidation. For dormant companies using Section 136 deregistration, costs range from NPR 25,000 to NPR 80,000 under the 2026 penalty waiver policy.
A voluntary liquidation requires a 75% majority vote of shareholders present at the General Meeting. If minority shareholders holding under 25% oppose the closure, the majority can still pass the resolution. If shareholders holding more than 25% object, voluntary closure cannot proceed, and disputing parties must resolve internal conflicts or petition the High Court under Section 136 or Section 138 for protection.
Yes, but only within 5 years of cancellation. Under Section 136(10) of the Companies Act 2063, a company, shareholder, or creditor may file a petition at the High Court for restoration if the registration was canceled while the company was actually carrying on business or if restoration is deemed necessary for proper management of assets and liabilities.
While not legally mandatory, hiring a corporate lawyer or company closure specialist is strongly recommended. The process involves complex tax reconciliation, creditor notice compliance, and OCR documentation standards. Professional assistance prevents costly rejections and delays.
Company closure is the general term for ending a company's legal existence. Liquidation is the specific process of selling assets and settling debts before closure. Deregistration under Section 136 is a closure method that does not require liquidation.
A company qualifies if it: (1) never started operations, OR (2) has been completely inactive with zero transactions, AND (3) has no assets, liabilities, or legal disputes, AND (4) can obtain an auditor's confirmation of zero economic activity.
Closing a company in Nepal is not merely an administrative checkbox—it is a structured legal process governed by the Companies Act 2063, the Insolvency Act 2063, and multiple regulatory bodies including the OCR, IRD, and NRB. Furthermore, the 2026 penalty waiver policy presents a time-sensitive opportunity for dormant companies to exit cleanly at minimal cost.
Consequently, attempting company dissolution without professional guidance often results in rejected applications, extended IRD audits, and preserved director liabilities. A licensed liquidator, experienced corporate lawyer, and registered auditor form the essential professional team for a clean, legally sound exit.
Need expert assistance to close your company in Nepal?
Attorney Nepal PVT LTD specializes in corporate dissolution, Section 136 deregistration, voluntary liquidation, and FDI company closure. Our team of licensed liquidators, tax experts, and corporate lawyers ensures your business exits the Nepali market without leaving legal loose ends.
📞 Contact Attorney Nepal PVT LTD today for a confidential consultation on how to close your company in Nepal efficiently and compliantly.
Disclaimer: This guide is provided for informational and educational purposes only and does not constitute legal advice. Company closure laws and government policies in Nepal are subject to change. For specific legal guidance tailored to your situation, please consult a licensed corporate lawyer or contact Attorney Nepal PVT LTD.
About the Author: This article was prepared by the corporate legal research team at Attorney Nepal PVT LTD, with expertise in Nepalese company law, tax compliance, and business dissolution procedures. Last updated Shrawan 10, 2082 (July 25, 2026).