Private firms serve as the means through which individuals engaging in business, trade, and industry safeguards their economic rights, access financing, make secure self- investments, and participate in market competition. Although the primary objective of private firms is to generate profits, owners seek legal recognition through registration and periodic renewal from the government. Additionally, the government, in order to regulate the market and establish a reliable system, has established statutory provisions that require businesses to register under a designated authority as prescribed by law. This ensures that individuals’ economic activities fall within the formal economy of the country. To simplify and streamline the regulatory functions such as registration, renewal, transfer, amendment, and monitoring of private firms, the Gandaki Province has enacted the Private Firm Registration Act, 2078, along with its accompanying Private Firm Registration Regulations, 2079.
As per Section 4 of the Act, after submission of an application for registration, the concerned Office, if found reasonable to register a private firm, shall register and issue a firm registration certificate.This certificate remains valid for a period of two years, requiring renewal within this timeframe. The duration of two years may seem reasonable as it allows the government for verification of information, facilitates monitoring of changes, ensures regulatory compliance, and addresses administrative and legal matters. However, for newly established firms, especially those owned by individuals, this duration can be relatively short. Such businesses often face financial challenges, tax obligations, and procedural hurdles during their initial period. The additional burden of renewal fees and a lengthy renewal process adds the challenges faced by these firms. Consequently, this situation discourages business owners from registering their firms, creating an unfavorable environment for business-friendly practices.
Furthermore, the federal law relating to private firm registration specifies that the initial registration remains valid for a period of five years. It is worth noting that, when compared to the regulations in other provinces, excluding those acts that do not explicitly mention the renewal duration, the shortest initial registration validity period, apart from Gandaki Province, is observed in Koshi Province, which is three years. This means that, except for Koshi Province, all federal and provincial laws establish a longer timeframe for the first registration period. On the other hand, after the first registration, all the firms across all federal and provincial jurisdictions, except for Koshi Province, are required to renew their registration every two years.
In this context, a question arises: Should Gandaki Province consider extending its first renewal term ? Such a move would allow newly established firms to operate without financial and administrative burdens for a more extended period, creating a welcoming atmosphere for newcomers in the business realm. Moreover, providing additional incentives, beyond the renewal fee, to young businesses would contribute to a conducive environment. This aligns with the federal province’s vision of fostering a thriving economy by promoting economic interests and facilitating citizens’ endeavors concerning the registration and renewal of private firms engaged in industry, trade, or business.
The Gandaki province Private Firm Registration act 2021 aims to foster a thriving economy within the province by promoting the economic interests and facilitating the citizens’ endeavors in economic activities of their choices, specifically in regards to the regulatory functions such as registration, renewal, transfer, amendment of Private Firms. It is crucial for these regulatory functions to be streamlined, eliminating obstacles for entrepreneurs to foster economic growth.Considering this, this policy brief evaluates the provisions of private firm registration within the Gandaki province, seeking to determine whether existing legal provisions genuinely foster business growth or are mere facade. By examining the registration process and identifying potential obstacles, this brief provides actionable recommendations to enhance the business environment, empowering entrepreneurs and fostering sustained economic progress.
An undergraduate Law student at Tribhuvan University. Passionate about legal issues and advocacy.