Company Khareji / Closing in Nepal 2026

Company Khareji / Closing in Nepal 2026

Company closure in Nepal, commonly known as company khareji, is the legal process through which a registered company formally ends its existence and removes its name from the records maintained by the Office of Company Registrar. A company does not automatically cease to exist merely because it has stopped conducting business activities. Until the company is officially deregistered, it remains subject to legal, tax, and compliance obligations under Nepalese law.

The company closure process is primarily governed by the Companies Act, 2063 (2006), along with the Income Tax Act, 2058 (2002), Value Added Tax Act, 2052 (1996), Labor Act, 2074 (2017), and other applicable laws. The process generally requires shareholder approval, settlement of liabilities, completion of tax obligations, preparation of financial statements, and submission of closure applications to the relevant authorities.

Businesses may seek closure for various reasons including business losses, inactivity, completion of project objectives, restructuring, partnership disputes, or changes in investment priorities. Regardless of the reason, a company must follow the prescribed legal process before it can be removed from the official company register.

What Is Company Closing Process in Nepal

Company closing process in Nepal refers to the formal legal procedure by which a company terminates its corporate existence. Under the Companies Act, 2063, a company remains a separate legal entity until its registration is officially cancelled by the Office of Company Registrar. Therefore, closure requires compliance with statutory procedures rather than merely discontinuing business operations.

The process generally includes passing a shareholder resolution, settling company liabilities, completing tax compliance, preparing final financial statements, obtaining tax clearance, and submitting an application for deregistration. The purpose of the process is to protect creditors, employees, shareholders, and government authorities from potential losses or legal complications.

Company closure may occur voluntarily when shareholders decide to discontinue business activities, or through other legal mechanisms where circumstances require liquidation or winding up. Proper company closure eliminates future filing obligations and reduces exposure to penalties for non-compliance.

Who Can Apply for Company Deregistration

The application for company deregistration is generally initiated by the company’s authorized decision-making bodies. In most cases, shareholders approve the closure while directors implement the necessary legal and administrative procedures required for deregistration.

The following persons may participate in the closure process:

• Shareholders of the company
• Board of directors
• Managing director
• Authorized representatives
• Company secretary
• Liquidator where applicable
• Legal counsel acting under authority

In a private limited company, shareholders usually pass a special resolution approving closure. Directors then coordinate document preparation, tax compliance, and communication with government authorities. In companies involving foreign investment, foreign shareholders may also participate in closure decisions subject to applicable investment regulations.

The Office of Company Registrar generally requires evidence that the closure application has been duly authorized by the competent authority of the company before proceeding with deregistration.

What Requirements Must Be Met Before Closure

Before a company can be legally closed, several statutory and regulatory requirements must be satisfied. These requirements help ensure that all stakeholders are protected and that the company has fulfilled its legal obligations.

The primary requirements generally include:

• Shareholder approval for closure
• Settlement of outstanding liabilities
• Completion of statutory filings
• Updated financial statements
• Tax compliance
• Payment of government dues
• Employee settlement obligations
• Completion of audits where required

The Companies Act, 2063 requires companies to comply with ongoing filing obligations before seeking deregistration. Similarly, the Income Tax Act, 2058 requires taxpayers to settle tax liabilities and complete tax filings before obtaining tax clearance.

Companies that have outstanding litigation, regulatory investigations, or unresolved liabilities may experience delays in obtaining closure approval. Therefore, management should conduct a comprehensive compliance review before initiating closure proceedings.

Which Types of Companies Can Be Closed

Most companies registered under Nepalese law may be closed if they comply with applicable legal requirements. The closure process may vary depending on the type of company and its regulatory status.

Companies that may be closed include:

• Private limited companies
• Public limited companies
• Foreign investment companies
• Joint venture companies
• Family-owned businesses
• Consultancy companies
• Trading companies
• Manufacturing companies
• Service-oriented companies
• Dormant companies

Dormant companies that have ceased operations may also apply for closure. However, they remain subject to statutory compliance obligations until deregistration is completed. A dormant company cannot avoid legal responsibilities merely because it has not conducted business activities.

Companies operating in regulated sectors such as banking, insurance, telecommunications, and hydropower may require additional approvals from sector-specific regulators before closure can proceed.

What Documents Are Required for Company Closure

Proper documentation forms the foundation of the company closure process. Government authorities require documentary evidence demonstrating compliance with corporate, tax, and financial obligations.

Common documents required for company closure include:

• Company closure application
• Shareholders’ resolution approving closure
• Board resolution authorizing closure procedures
• Company registration certificate
• Memorandum of Association
• Articles of Association
• PAN registration certificate
• VAT registration documents
• Audited financial statements
• Latest balance sheet
• Tax clearance certificate
• Statement of assets and liabilities
• Proof of debt settlement
• Citizenship copies of directors
• Power of attorney where applicable

Additional documents may be requested depending upon the nature of the company and the circumstances of closure. Maintaining complete records facilitates efficient processing by government authorities and reduces the likelihood of requests for clarification.

Where to Submit Company Closure Application

Applications for company closure are generally submitted to the Office of Company Registrar. This authority maintains company records and is responsible for approving deregistration applications under the Companies Act, 2063.

The Office of Company Registrar reviews submitted documents and determines whether the company has satisfied legal requirements for closure. The authority may request additional information if the application is incomplete or if clarification is required.

Depending upon the company’s activities, additional interactions may be required with:

• Inland Revenue Department
• Department of Industry
• Investment Board Nepal
• Local government offices
• Sector-specific regulators

Tax clearance is typically obtained before the final deregistration application is processed. Consequently, the company often deals with multiple government authorities during the closure process.

How to Pass Company Closure Resolution

The decision to close a company generally begins with a formal resolution approved by shareholders. The resolution demonstrates that the closure decision has been made in accordance with applicable laws and the company’s constitutional documents.

The process generally includes the following steps:

1. Conduct a board meeting.
2. Discuss the proposal for closure.
3. Approve recommendation for shareholders.
4. Issue notice of general meeting.
5. Hold shareholders’ meeting.
6. Discuss closure proposal.
7. Pass special resolution.
8. Record voting results.
9. Prepare meeting minutes.
10. Authorize implementation of closure.

The resolution should clearly identify the reasons for closure and authorize designated individuals to complete the required procedures. Proper documentation of the resolution is necessary because government authorities require evidence that the company has validly approved the closure decision.

How to Obtain Tax Clearance Certificate

Obtaining a tax clearance certificate is one of the most significant aspects of company closure in Nepal. The Inland Revenue Department generally requires confirmation that all tax obligations have been satisfied before issuing clearance.

The process usually involves:

1. Review tax compliance status.
2. File outstanding tax returns.
3. File VAT returns where applicable.
4. File withholding tax returns.
5. Pay outstanding taxes.
6. Pay interest and penalties.
7. Submit supporting financial records.
8. Apply for tax clearance.
9. Respond to authority inquiries.
10. Obtain clearance certificate.

Tax authorities may examine financial records, accounting documents, invoices, contracts, and previous tax filings before issuing clearance. Companies with unresolved tax liabilities or incomplete filings may experience delays in obtaining approval.

The tax clearance certificate serves as evidence that the company has fulfilled its obligations under the Income Tax Act, 2058 and related tax laws. This document is generally required before the Office of Company Registrar approves company deregistration.