Incorporation and Winding Up Of Joint Stock Company

Incorporation of Joint Stock company


Incorporation of the joint-stock company means recognition. The joint stock company must be registered in the office of the Company Registar under the provision of the company Act, 2063 B.S. for its legal recognition.The interested people must gather and prepare a plan and concept of the business and apply to Company Registar. The people who prepare framework and who carry the responsibility of the business is known as promoters. They decide about the activities of the business. The following things are to be observed for incorporation of joint-stock company:

  1. File an Application:

It is the first step of incorporation. The promoters have to file an application in company Registar with the application form. The application must be signed by at least 1 promoter in the case of a private company and at least 7 promoters in the case of public company. The following documents and detail must be attached with the application:

  • Name and address of the proposed company
  • Name and address of the promoters
  • Description of the company's share
  • Copies of Memorandum and Articles of Association (2 copies)
  • Copy of the citizenship certificate of the promoters
  • Copy of agreement if any among promoters
  • Copy of unanimous agreement if any
  • Deposit voucher of registration fee
  • other particulars
  1. Payment of registration fee:

The promoters of the proposed company must pay prescribed registration fee. The prescribed registration fee should be deposited in Nepal Rastra Bank or paid in cash or should provide the deposit voucher to the office of Company Registar. The amount of registration fee depends on the amount of authorized capital. The current amount of registration fee is presented below:

For Private Limited Company


Authorized Capital

Registration fee















Up to Rs.1,00,000

Rs.1,00,001 to Rs.5,00,000

Rs.5,00,001 to Rs.25,00,000

Rs.25,00,001 to Rs.1,00,00,000

Rs.1,00,00,001 to Rs.2,00,00,000

Rs.2,00,00,001 to Rs.3,00,00,000

Rs.3,00,00,001 to Rs.4,00,00,000

Rs.4,00,00,001 to Rs.5,00,00,000

Rs.5,00,00,001 to Rs.6,00,00,000

Rs.6,00,00,001 to Rs.7,00,00,000

Rs.7,00,00,001 to Rs.8,00,00,000

Rs.8,00,00,001 to Rs.9,00,00,000

Rs.9,00,00,001 to Rs.10,00,00,000

Above Rs.10,00,00,000














Rs.30 per 1 lakh

For Public Limited Company


Authorized Capital

Registration fee








Up to Rs.1,00,00,000

Rs.1,00,00,001 to Rs.10,00,00,000

Rs.10,00,00,001 to Rs.20,00,00,000

Rs.20,00,00,001 to Rs.30,00,00,000

Rs.30,00,00,001 to Rs.40,00.00,000

Rs.40,00,00,001 to Rs.50,00,00,000

Above Rs.50,00,00,000







Rs.3000 per 1 crore

  1. Receiving certificate of incorporation:

After submitting the application form along with necessary documents and registration fee, the office of Registrar examine all these documents submitted by the promoters. If the office is satisfied by the documents then the office will Registrar the company name within 15 days of the receipt of the application. After registering the office, the Registrar will issue the certificate of incorporation to the company and the company becomes legal.

  1. Certificate of Commencement of Business:

After receiving the certificate of incorporation, the private limited company can run its business. But in the case of a public limited company, it can run business only after receiving the certificate of commencement of business. To obtain a certificate of commencement of business, the company need to submit the report of at least 25% of issued capital already paid by the promoters with duly signed by at least one director must be filled with the Registrar. Then, the office of Registrar will examine the report. If the report satisfies the office of Registrar then, it will issue a certificate of Commencement of Business. After receiving the certificate of Commencement of Business, the public limited company can legally run its transaction and can issue prospectus also.

Winding up of a Joint Stock Company in Nepal

The process of bringing the existence of the company to the end is known as winding up of a company. It is also called liquidation. It collects all the assets to pay the total liabilities in order to close the company permanently. If the assets of the company exceed the liabilities the shareholders share the surplus amount in the ratio of their shareholding and if the assets are not insufficient to meet the liabilities, the creditors will get in proportion to their dues in order of priority.

According to the Company Act, 2053, the joint stock company can be wind up by the following way:

Voluntary Liquidation:

The agreement of all the shareholders at a special general meeting to wind up the company is known as voluntary liquidation. A public company can liquidate itself by a special resolution under the following conditions:

  • If the time-frame prescribed in the Article of association for the operation of the company has expired.
  • If the company has excess liabilities to fulfill and it becomes impossible to continue the business.

A private limited company can be liquidated according to the provisions of the Memorandum and Articles of Association. The company must publish the decision of liquidation of the company in the national newspaper twice within a week from the date of such resolution. It must send its effect to the office of the Registrar. This meeting appoints the liquidator and the auditor to complete the liquidation process and to audit the accounts of the company.

Compulsory liquidation:

The liquidation of the company made by the office of the Registrar is known as compulsory liquidation. Under this , two-third part of the creditors can apply to the office of the Registrar for the liquidation of the company to recover the credit amount. When the application is received, the Registrar can place an order for the liquidation of the company. The Registrar appoints liquidate and auditor to complete the process of liquidation. Under the following conditions, the compulsory liquidation is made:

  • If an application is submitted to the Company Registrar to liquidate the company as passed by a special resolution.
  • If the company does not submit the required reports and documents to the Office of the Company Registrar in time.
  • If the company is in default in submitting office return notice, information and facts to pay fine as required by the act.
  • If the promoters of the company make application showing the reason for failure to commence the business of a company.


Khanal, Soma Raj, Surendra Thapa Aslami and Sitaram Dhakal.Business Studies.Kathmandu: Taleju Prakashan, 2067.

Pant, Prem R., et al.Business Studies.Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd., 2010.

  1. Incorporation of joint stock company means recognition.
  2. The process of bringing the existence of the company to the end is known as winding up of a company. It is also called liquidation. 
  3. The agreement of all the shareholders at a special general meeting to wind up the company is known as voluntary liquidation.
  4. The liquidation of the company is made by the office of the Registar is known as compulsory liquidation. 
  • A company established by a special act passed by the parliament of the nation is called______.

    Statutory Company
    Charactered Company
    Registered Company
    Limited Company
  • ________is the examples of Registered company.

    Nepal oil corporation
    Hudson Bay Company
    Pulp limited
    Dutch East India Company
  • A company established by incorporating it with the office of the company Registerunder the company act is known as__________.

    Registered Company
    Public Company
    Charactered Company
    Limited Company
  • Who is known as the constitution or character of a company ?

    Company Meeting
    Articles of Association
    Memorandum of Association
  • Memorandum of Association includes all important aspects of a company such as___________

  • Domicile clause is also called ________.

    Objective Clause
    Capital Clause
    Situation clause
    Liability Clause
  • _______defines the modes and methods for performing the activities which are to be carried out to achieve the goals.

    Articles of association
    Company Meeting
    Memorandum of Association
  • According to Nepal CompanyAct,2063 B.S,a prospectus should contain _______.

    Bokerage on shares and debentures
    Net worth of the company
    Salaries and allowances of the directors.
    Provision relating to bonus shares
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