Articles of Association: A Guide to Drafting AoA in Nepali

What is the Articles of Association (AoA)?

The Articles of Association is a legal document that outlines the internal rules, responsibilities, and processes of a company. It defines how the company will be managed, how decisions will be made, and how the directors and shareholders will interact.

In Nepali, it is called ‘नियमावली‘

It is mandatory under Nepal’s Companies Act, 2063 and must be submitted during company registration.

Read More: How to Register a Company in Nepal

Why is AoA Important?

• Legal Requirement: You can’t register a company without it.
• Clarity in Roles: Sets clear roles for directors, shareholders, and management.
• Conflict Resolution: Helps solve disputes by referring to agreed rules.
• Smooth Operation: Ensures the business runs efficiently and according to law.

Key Contents of Articles of Association in Nepal

Here are some important sections your AoA should include:

1. Company Name and Address:
   • Clearly mention your registered company name and office address.
2. Objectives of the Company:
   • Define the primary business activities (e.g., trading, consultancy, manufacturing).
3. Share Capital:
   • Details about authorized and issued capital, types of shares, and share value.
4. Shareholder Rights and Responsibilities:
   • Rules about how shares can be transferred, rights to dividends, voting rights, etc.
5. Board of Directors:
   • Number of directors, their powers, roles, and how meetings will be conducted.
6. General Meetings:
   • Process for calling Annual General Meetings (AGMs), quorum, and voting procedures.
7. Dividend Policy:
   • How and when profits will be distributed among shareholders.
8. Dispute Resolution Mechanism:
   • How internal disputes will be handled (e.g., arbitration, legal procedures).
9. Company Closure Procedure:
   • Steps to be taken if the company is to be closed voluntarily or legally.

Sample Format of Articles of Association in the Nepali Language

The Company Registrar’s office has provided sample formats of Articles of Association for various types of companies. Here they are:

Articles of Association	Sample Format
AoA for Private Limited Company	Download PDF
AoA for Public Limited Company	Download PDF

Choose and download a sample format relevant to the type of company you are establishing. Replace the placeholders with specific details such as the company name, registered office address, and objectives.

How to Draft Articles of Association in Nepal

Once you have a clear understanding of the legal requirements, you can start drafting the Articles of Association.

Here are the 8 important steps to follow while drafting Articles of Association in Nepal:

1. Start with the name and objectives of the company
2. Define the types of shares and share capital
3. Outline the rights and obligations of shareholders
4. Establish the procedure for calling and conducting meetings
5. Define the appointment and removal of directors
6. Define the powers and duties of directors
7. Establish the procedure for the distribution of dividends
8. Define the procedure for amending AoA

Step 1: Start with the name and objectives of the company

When naming a company, it is important to choose a unique name. The company’s goals should be clear and in line with its vision.

Step 2: Define the types of shares and share capital

When you write the AoA, make sure to include the type of shares the company will offer. This includes ordinary shares and preference shares.

Step 3: Outline the rights and obligations of shareholders

The AoA should specify the responsibilities and privileges of the shareholders.

They have the right to vote and receive dividends. They are also responsible for the company’s debts.

Step 4: Establish the procedure for calling and conducting meetings

The AoA should have guidelines for meetings, such as attendance, notice, and voting.

Step 5: Define the appointment and removal of directors

The AoA should specify how to choose and fire directors, including their requirements, term, and pay.

Step 6: Define the powers and duties of directors

The AoA should outline the powers and duties of the directors, including their role in managing the affairs of the company and their responsibility to the shareholders.

Step 7: Establish the procedure for the distribution of dividends

The AoA should explain how dividends will be paid, including when and how often.

Step 8: Define the procedure for amending AoA

The AoA should state how to change the articles of association, including the needed majority and notice period.

Review and approval

After drafting an AoA, it is important to review and revise it. This ensures it meets legal requirements and reflects the company’s goals and policies.

Note: It is recommended to consult with legal experts or a professional company registration agency to ensure that your Articles of Association comply with Nepal’s Company Act 2063 (2006). Seeking legal advice will help customize the document to meet your company’s specific requirements and ensure its enforceability.

Frequently Asked Questions (FAQs)

Is AoA mandatory for company registration in Nepal?

Yes, the AoA is a mandatory document required for registering a private, public, or non-profit company in Nepal.

Can I use a sample AoA template for my company?

Yes, but it should be customized according to your company type, structure, objectives, and specific legal needs.

What is the difference between AoA and Memorandum of Association (MoA)?

• MoA defines the company’s external objectives and scope.
• AoA governs the company’s internal rules and operations.

Can I change the AoA after company registration?

Yes, the AoA can be amended through a special resolution passed in a general meeting and approval from the Office of the Company Registrar.

Can a company operate without an AoA?

No. A company cannot be legally registered or operate without a valid AoA approved by the Registrar.

How many directors should be mentioned in the AoA?

A private company in Nepal must have at least one director, while a public company must have three or more.

Can foreign investors use an AoA in English?

Yes, foreign-invested companies often use AoA in English, but it’s best to also submit a verified Nepali version.

How long does it take to prepare an AoA?

If all details are ready, AoA preparation can take 1–2 days. Company Sewa can help you prepare and file it quickly.

Can I download AoA format online in Nepal?

Yes, sample AoA formats are available on the OCR website, but these should be tailored to your specific company needs.

Where can I get help drafting a legal AoA in Nepali?

You can contact Company Sewa. We offer expert assistance in drafting, translating, and filing AoA for all types of companies in Nepal.