How to Convert a Public Company into a Private Company in Nepal

Are you looking to convert your public company into a private company in Nepal? Whether you want more control over your business or reduce regulatory compliance, this guide will walk you through the process in simple terms.

What is the Difference Between a Public and Private Company?

• Public Company: Shares are offered to the general public and listed on the stock exchange.
• Private Company: Shares are held privately by a limited number of shareholders and not listed publicly.

Legal Framework in Nepal

The conversion process is governed by the Companies Act, 2063 (2006) and related regulations issued by the Office of the Company Registrar, Nepal.

Step-by-Step Process to Convert a Public Company into a Private Company in Nepal

1. Board Meeting and Shareholder Approval

• Convene a Board of Directors meeting to propose the conversion.
• Prepare a detailed resolution explaining the reasons for conversion.
• Call an Extraordinary General Meeting (EGM) of shareholders.
• Obtain approval from at least 75% of shareholders present, as required by law.

2. Amend the Company’s Articles of Association (AoA)

• Revise the company’s AoA to reflect the status change from public to private.
• Include clauses that restrict the transferability of shares and limit the maximum number of shareholders to 50.

3. File Necessary Documents with the Office of the Company Registrar

• Submit the special resolution passed by shareholders.
• File amended AoA and Memorandum of Association (MoA).
• Submit Form 7 or other relevant forms as prescribed by the Office of the Company Registrar.

4. Obtain Approval from Regulatory Authorities

• Get approval from the Securities Board of Nepal (SEBON) if the company was previously listed.
• Inform the Nepal Stock Exchange (NEPSE) about the conversion.

5. Update Tax and Other Registrations

• Notify the Inland Revenue Department (IRD) about the change.
• Update any licenses or registrations as per the new status.