Company Not Distributing Profit (गैर नाफामुलक कम्पनी)

A Company Not Distributing Profit (गैर नाफामुलक कम्पनी) is a specialized corporate entity registered under the Companies Act, 2063, for public welfare or professional promotion. It prohibits the distribution of dividends to its members, reinvesting all surpluses into its primary social, educational, or charitable objectives.

Category Business Registration

Introduction: Company Not Distributing Profit

In the legal framework of Nepal, a Company Not Distributing Profit offers a modern and structured alternative to traditional NGOs and foundations. Established under the Companies Act, 2063, this entity allows a group of individuals to work toward social, scientific, or charitable goals with the benefits of corporate governance and a separate legal identity.

The primary distinction of this model is its non-profit nature; any income generated must be utilized solely for the company’s objectives rather than being shared among members. This structure is highly favored by educational institutions, research bodies, and community-based organizations that seek professional management under the Office of the Company Registrar (OCR) while maintaining a focus on public service and social impact.

Legal Requirements: Compliance Under the Companies Act, 2063

Registration as a Company Not Distributing Profit is governed strictly by Chapter 19 (Sections 166 and 167) of the Companies Act, 2063. Under Section 166, such a company can be incorporated for the development and promotion of any profession, or for various public welfare, social, or philanthropic purposes. Formal registration is a mandatory statutory requirement to gain legal recognition as a “juridical person” in Nepal.

Compliance with these specific legal provisions ensures the entity remains eligible for potential tax exemptions and remains distinct from commercial profit-oriented companies.

Membership Requirement: In accordance with Section 166 (1), a minimum of five members is required for incorporation, with no maximum limit on membership.
Prohibition of Dividends: Under Section 166 (4), the company is strictly prohibited from distributing any dividends, bonuses, or profits to its members or employees; all income must be applied to the company’s objectives.
Capital Independence: Unlike private or public companies, these entities are not required to have a share capital, and the liability of members is limited to the amount they have agreed to contribute to the company’s assets.
Management Structure: The company is managed by a Board of Directors as per its Articles of Association, and all members must be of sound mind and meet the eligibility criteria of the Act.
Statutory Suffix: While the company is “Private Limited” by nature of liability, its name must clearly reflect its non-profit status as approved by the Registrar.

Process: Company not Distributing Profit

1. Name Reservation

The process begins by submitting a unique name for approval to the OCR online portal. We ensure your proposed name accurately represents your social mission while complying with the naming guidelines set forth in the Companies Act.

2. MOA and AOA Drafting

Our legal experts draft the Memorandum of Association (प्रबन्ध पत्र ) and Articles of Association (नियमावली). This includes finalizing the registered office address, defining the non-profit objectives, and detailing the list of founding members and their committed contributions.

3. Document Signing and Upload

All founding members must sign the drafted charter documents. We then handle the digital submission by uploading the signed MOA, AOA, and the citizenship or identification documents of all members to the OCR’s CAMIS system.

4. Approval, Fee Payment, and Certification

After the OCR verifies the application against the specific requirements of Section 166, the registration fee is settled. Upon final approval, the Certificate of Incorporation is issued, officially granting the organization the legal authority to operate as a non-profit corporate entity.

Ready to Register your Company Not Distributing Profit

Formalize Your Social Impact with Professional Excellence. Navigating the specific requirements of Chapter 19 of the Companies Act requires precise legal handling. Let Present Consultants Private Limited manage your registration process with the OCR, ensuring your non-profit venture is built on a compliant and transparent foundation from day one.