Companies Act, 2063 (2006)

Any person wishing to carry on business through a company must incorporate it under this Act. A private company may have one to one hundred and one shareholders; a public company needs at least seven promoters.

An application for incorporation is submitted to the Office of the Company Registrar together with the memorandum, articles, consent of directors and the prescribed fee. The application may be filed electronically.

Where the Registrar is satisfied that the documents are in order, a certificate of incorporation is issued within fifteen days. The company becomes a separate legal person from the date on the certificate.

A company may not be registered under a name that is identical or confusingly similar to an existing company, or that is misleading or contrary to public decency. A private company must end its name with 'Private Limited'.

A company may issue ordinary shares and, if its articles permit, preference shares. The rights attached to each class must be stated in the articles.

Every company must keep a register of its shareholders showing names, addresses, number of shares held and dates of transfer. The register is open to inspection by shareholders.

Shares in a private company may be transferred only in the manner set out in its articles, which may include a right of first refusal for existing shareholders. A transfer takes effect when recorded in the share register.

A company may reduce its share capital only by special resolution and with approval of the court where creditors may be affected. Notice of the reduction must be filed with the Registrar.

A private company must have at least one director and a public company at least three. Directors are appointed by the shareholders in general meeting unless the articles provide otherwise.

A person who is a minor, an undischarged bankrupt, or has been convicted of an offence involving dishonesty within the last five years may not serve as a director.

Directors must act honestly, in good faith and in the best interests of the company. A director must disclose any personal interest in a transaction with the company and must not vote on it.

A director who acts beyond their authority or in breach of duty is personally liable to compensate the company for any resulting loss. Directors may also face penalties for filing false information.

A public company must hold its first annual general meeting within one year of incorporation and thereafter within six months of the end of each financial year. A private company follows the rules in its articles.

At least twenty-one days' written notice of a general meeting must be given to every shareholder. A meeting may proceed only if the quorum stated in the articles is present.

Every company must file an annual return with the Registrar within six months of the end of its financial year. The return includes audited accounts, the shareholder list and details of directors.

A company that fails to file its annual return on time is liable to a fine that increases with the length of the delay. Directors may be held responsible where the default continues.