April 14, 2017

The Industry, Commerce, and Consumer Welfare Committee for enterprise facilitation in Nepal deliberates over reforms to the Companies Act, after consultation with the Samriddhi Foundation.

Economies can’t flourish when it’s difficult to start a business. The Samriddhi Foundation, an Atlas Network partner based in Nepal, had a recent victory reforming business registration procedures with the country’s Office of Company Registrar (OCR), reducing the time it takes to register a  new domestic business from several days down to a maximum of 30 hours. Businesses funded by foreign investments have also had their registration time reduced from weeks down to seven days. Samriddhi consulted with the government throughout the reform process.

“While Samriddhi has been working on easing market entry process (entry regulations) for a long time, we have been constantly working with the Ministry of Industry to bring forth positive changes along this end,” explains Akash Shrestha, research coordinator for Samriddhi, who recently participated in Atlas Network’s Think Tank Leadership Training. “Towards the end of December 2016, the minister announced that all domestic businesses should be registered by the Office of Company Registrar within 30 hours, and those with foreign investments should be registered within one week of having filed an application for registration. The OCR has been directed to work as per this guideline straight away. With this, we can expect to see a substantial leap in the ‘Registering a Business’ category of World Bank's Ease of Doing Business report.”

Nepal was ranked 107th in the world for ease of starting a business, out of 159 measured economies, in the World Bank’s 2017 “Ease of Doing Business” report. Overcoming arbitrary delays in the registration process should go a long way toward an increased international ranking for Nepal.

“The government is drafting new bills including but not limited to industrial enterprises, foreign investment, labor, and banks and financial institutions,” Samriddhi wrote in November. “The government seems to have realized the insufficiency in the previous editions of these acts and has decided to reform them. The new bills have also opened up more areas where entrepreneurs can operate new enterprises. For example, the new Foreign Investment bill has opened up provisions for private equity and venture capital, and grants on accessing international capital markets. This will open up new avenues for foreign entrepreneurs and investors. The new provision of private equity and venture capital can solve problems of access to finance to small innovative businesses. Furthermore, the Ministry of Industry seems to be keen on improving the business climate in the country, about which they have been publicly vocal time and again. While the government did try to ease business registration by introducing an online system for the same, a lack of provision for electronic payments and that relating to digital signature proved to be rather problematic.”

Samriddhi recommends additional reforms, including devolving business registration powers from the centralized OCR to the governments of each province, interdepartmental sharing of business incorporation information, an online digital signature and payment system that would remove an extra layer of bureaucracy, a single-document incorporation system for sole proprietorships, and a model document for larger private companies.