REGISTRATION AND RENEWAL OF PARTNERSHIP FIRM IN NEPAL

Nepal Government has provided "Partnership Act, 2020" to establish and operate partnership in Nepal. The Partnership Act protects and controls the partnership business in Nepal. Registration of a partnership firm is legally compulsory in Nepal. According to the Act, every partnership firm should be registered in the books of concerned department within the six months from the date of its formation. If the partnership is not registered within the prescribed date the work and transactions do not have legality according to Act.

Registration Procedures

Registration of partnership firm in Nepal is compulsory according to Partnership Act. The procedure for the registration of a partnership firm is very simple. It can be registered at any time. According to Partnership Act, it can be registered within the six months from the date of its formation. A procedure for getting a firm registered is as follows :

(1) Filling an Application : For registration the partners have to submit an application with the prescribed fees to the concerned department. The application for registration should contain the following particulars:
1. Full name of Firm.
2. The principal place of business.
3. Statement of work or services to be carried on and objective of the firm.
4. The names in full and permanent address of the partners.
5. Type of partner and amount of capital each partner is to invest.
6. Name of partner representing the firm.
7. Method of sharing profit and loss.
8. Procedure of determining profit and loss.
9. Restriction imposed upon the authority of the partner, if any.
10. Duration of the firm.
11. Other particulars as prescribed by the concerned department.

While submitting the application to the concerned department, it should be duly signed by all the partners. The application form also should be attested by one gazetted Government. The name of the firm should not be similar to the other firms, which had already been registered.

(2) Necessary Documents and Registration Fee : With the application, partnership deed must be enclosed . Attested copy of citizenship certificate of each partner should also be enclosed in the application. Registration fee should be deposited in Nepal Rastra Bank and the voucher of if should also be enclosed. For commercial business a recommended letter from Nepal Chamber of Commerce should also be enclosed in the application.

(3) Certificate of Registration : When the concerned department received the application for registration, authorized officer of the concerned department will examine and scrutinize the particulars of the application and all the documents attached with the application form. If the concerned department is satisfied with the application the firm will be registered. Department will issue the ‘Certificate of Registration’.

Registration Fees

The amount of registration fees depends upon the amount of capital invested in the business. The registration fees according to capital invested are as follows:
a. Capital up to Rs.20, 000 -Rs.50
b. Capital from Rs.20, 001 up to Rs.50, 000 -Rs.100
c. Capital from Rs.50, 001 up to Rs.1, 00, 000 -Rs.250
d. Capital from Rs.1, 00, 001 up to Rs.3, 00, 000 -Rs.850
e. Capital from Rs.3, 00, 001 up to Rs.5, 00, 000 -Rs.1,400
f. Capital from Rs.5, 00, 001 up to Rs.10, 00, 000 -Rs.3, 000
g. Capital from Rs.10, 00, 001 up to Rs.50, 00, 000 -Rs.4, 500
h. Capital more than Rs.50, 00, 001 -Rs.6,800

Renewal of the Partnership

According to the Partnership Act, once a partnership firm is registered, it should be renewed each year within 35 days after the completion of fiscal year. For the renewal of the firm, partners must fill the prescribed form for renewal and submit in the concerned department with the necessary renewal fee. The amount of renewal fees also depends upon the capital invested. The renewal fees are as follows:
a. For the firm with the capital up to Rs.50,000 - Rs.30
b. Capital from Rs.50, 001 up to Rs.1,00,000 -Rs.45
c. Capital from Rs.1,00, 001 up to Rs.3,00,000 -Rs.60
d. Capital from Rs.3,00, 001 up to Rs.5,00,000 -Rs.85
e. For the firm with the capital up to Rs.50,00,001 -Rs.150

Effects of False Statement

The statement mentioned in the application form submitted for registration should be true. If the statement given in the form is false, each partner of the firm is fined up to Rs.100.

Alternation in the Particulars

After the partnership firm is registered, the particulars mentioned in the application form and partnership deed can be changed only after the approval of the concerned department through application which must be signed by all partners. If the changes are not notified timely the concerned department will impose fine up to Rs.100. to the partnership firm.

Effects of Non-Registration of a Firm

a. Unregistered partnership firm cannot file a suit against a third party.
b. A partner of an unregistered partnership firm cannot file a suit against another partner of the same firm.
c. Partner of an unregistered partnership firm cannot use the firm for claims.
d. Unregistered partnership firm cannot file a suit against the partners of that firm.
e. If unregistered partnership firm found operating, the concerned department will impose fine of Rs.50 to each partner.
f. Above all the transactions of an unregistered firm have no legality.

Advantages of Registration

The transactions of a registered partnership firm have legality according to act. Besides, following are the important advantages of registration.

(1) Benefits to the firm : A registered partnership firm can file suits against the third parties. It can also file suits against the partners.
(2) Benefits to the Incoming Partner : An incoming partner can get required information of a registered firm from the concerned department. Thus he can decide properly whether to join the firm as partner or not.
(3) Benefits to Retiring Partner : A retired partner is exempted from liabilities of the firm incurred after his retirement.
(4) Benefits to Partners : A partner can file suits against the partnership firm as well as against the co-partners.
(5) Benefits to Third Partners : Third partners can get correct information of a registered partnership firm from the concerned department. Hence, they are protected against misrepresentation and fraud done by the members of the firm.