Company Act Nepal 2063: Key Provisions Every Business Should Know

Nepal’s Company Act 2063 (Companies Act 2006) is the core of the country’s corporate legal framework. For foreign companies eyeing Nepal, understanding this Act is crucial. It governs everything from how you register a company to how you must operate and report your business activities. In this guide, we’ll explore what the Company Act 2063 is and why it matters – so let’s dive in.

The Company Act 2063 provides the legal foundation for this growth by outlining clear rules for company incorporation, governance, and investor protection. Nepal’s push for business-friendly laws and transparency has attracted both local and foreign investments, contributing to a vibrant corporate landscape.

Passed in 2006, the Companies Act 2063 modernized Nepal’s business laws with measures to improve transparency, accountability, and economic growth. It simplified company registration procedures and introduced global best practices like one-person companies and better shareholder protections. Whether you plan to set up a new venture or register a branch office of an existing foreign company, compliance with this Act isn’t optional – it’s mandatory. By the end of this comprehensive guide, you’ll know the key provisions of Nepal’s company law and how to leverage them for your business success in Nepal.

Before we delve deeper, here’s an overview of what you should know about the Companies Act:

1. Types of Companies & Formation: The Act defines different company types (private, public, one-person, non-profit) and their incorporation requirements.

2. Share Structure & Capital: It sets rules on shareholding (including 100% foreign ownership) and limited liability for investors.

3. Corporate Governance: It mandates proper governance – board of directors, annual meetings, audits, and transparent records.

4. Foreign Company Registration: Foreign companies must register in Nepal (branch or liaison office) before doing business.

5. Compliance & Penalties: The Act enforces regular compliance (filings, renewals) and imposes fines or legal action for non-compliance.

Now, let’s break down these points into detail, so you have both the “big picture” and the specifics needed to operate confidently under Nepal’s Company Act 2063.

Overview of Nepal’s Company Act 2063

Nepal’s Company Act 2063 (also referred to as the Companies Act 2006) is the primary legislation governing how companies are formed, run, and dissolved in Nepal. Enacted on 6 October 2006 (20 Ashwin 2063 B.S.), it replaced the older 2053 Act and ushered in more modern corporate practices. This law applies to both local entrepreneurs and foreign investors – any business operating in Nepal must adhere to its provisions.

Key Objectives: The Act was designed to make company incorporation easier, simpler, and more transparent. Its preamble emphasizes promoting investment and economic development through liberalization while ensuring proper administration of companies. In practice, this means:

• Streamlined procedures for registering a new company,

• Clear definitions of company types and their governance structure,

• Protections for shareholders and creditors,

• Oversight powers for regulators like the Office of the Company Registrar (OCR),

• Requirements for disclosure and accountability (such as audits and annual reports).

Regulatory Authority: The Office of the Company Registrar (OCR) is the main body enforcing the Act. Any new company – whether Nepali or foreign-owned – must register with the OCR. They handle name approvals, incorporation filings, and monitor ongoing compliance (like annual return filings). Other bodies like the Department of Industry (for foreign investment approvals under FITTA 2019) and Nepal Rastra Bank (for foreign exchange matters) also coordinate due to related laws, but the OCR is central for company law matters.

Evolution: The Act hasn’t remained static since 2006. Several amendments have been made to align with changing needs:

• In 2017 (First Amendment, 2074 B.S.), the maximum number of shareholders in a private company was raised from 50 to 101.

• Certain sectors (like telecoms above a capital threshold) were required to convert to public companies to ensure wider accountability.

• Provisions for one-person companies were clarified to encourage single entrepreneurs.

• Mandatory conversion clauses (forcing some private companies to become public if owned by a public company) were removed to offer flexibility.

• Special procedures to de-register defunct companies were introduced, giving relief to dormant companies to close out by paying minimal fees.

These updates show that Nepal’s company law is evolving to be more business-friendly while maintaining corporate governance standards. Always check for the latest amendments or consult experts to ensure you’re following the current law.

Why Company Act 2063 Matters for Foreign Companies

If you’re a foreign investor or company looking to enter Nepal, the Companies Act 2063 is highly relevant. It provides a level playing field – under this law, foreign shareholders are treated on par with Nepali shareholders in terms of rights and protections. Here are some reasons the Act matters to overseas businesses:

• Legal Gateway to Business: You cannot legally operate in Nepal without registering a local entity or a branch. The Act stipulates that any foreign company must register a branch or liaison office to conduct business in Nepal. Similarly, if you’re establishing a new Nepal-based subsidiary, it must be incorporated under this Act. In short, the Act is your entry ticket.

• 100% Foreign Ownership Allowed: The Act allows 100% foreign-owned companies in Nepal (subject to sectoral restrictions under investment laws). You can form a private limited company with even a single foreign shareholder – a concept known as a One Person Company (OPC). This means you don’t need a local partner if your industry is open to full foreign investment. Many global companies have taken this route to maintain full control of their Nepali operations.

• Investor Protection: By complying with the Act, you gain the benefit of legal protections. For example, as a shareholder, your liability is limited to the capital you invested – your personal assets are safe from company debts beyond your investment amount. The Act also provides mechanisms for dispute resolution, protection of minority investors, and transparent processes for things like profit repatriation (handled in practice via the Foreign Investment and Technology Transfer Act, or FITTA).

• Repatriation of Profits: While profit repatriation is primarily governed by FITTA 2019, the Companies Act complements it by establishing the structures (like dividend declarations and solvency tests) that allow you to legally take profits out. Compliance with the Act (e.g., proper financial reporting and auditing) is often a prerequisite to getting approvals to send dividends abroad.

• Examples of Foreign Companies in Nepal: Nepal has seen a steady increase in foreign business presence. As of 2024, 320 foreign company branch offices were registered in Nepal, alongside countless fully foreign-owned local companies. Global brands in sectors like consumer goods, banking, and IT have successfully set up subsidiaries under the Act’s provisions. This growing foreign investment is a testament to Nepal’s improving business climate, made possible in part by the robustness of Company Act 2063.

In summary, for foreign companies, the Companies Act 2063 is not just red tape – it’s a framework that, when followed, provides clarity and confidence. It allows you to operate in Nepal knowing the rules of the game, and it assures you that your company has the same standing as any Nepali company in the eyes of the law. Of course, it comes with responsibilities too, which we’ll explore next.

Key Provisions of the Company Act 2063

Let’s break down the key provisions of Nepal’s Company Act 2063 that every business (especially foreign-owned ones) should know. These cover how to set up a company, run it responsibly, and meet all legal obligations.

Company Types and Incorporation Requirements

Nepal recognizes several types of companies under the Act, each with different requirements:

• Private Limited Company: Can have 1 to 50 shareholders (now up to 101 after amendment). This is the most common vehicle for foreign investors. It’s fast to set up and has relatively lighter compliance. Private companies cannot publicly trade shares and face some restrictions on transferring shares to outsiders.

• One Person Company (OPC): A special category of private company with a single shareholder. OPCs were introduced to encourage small entrepreneurs and allow even a single foreign investor to incorporate easily. Essentially, it’s a private company that can be started by one individual or one corporate entity as the sole owner.

• Public Limited Company: Requires a minimum of 7 shareholders and typically a higher capital base. Public companies can invite the public to buy shares (e.g., via IPO) and are subject to stricter governance rules (like a larger board, independent directors, and audit committees). Foreign investors usually consider a public company only if planning large-scale operations, joint ventures with government, or stock market listings in Nepal.

• Non-Profit Company (Company not distributing profits): Formed under Chapter 19 of the Act, these are like “Section 8 companies” (if you’re familiar with other jurisdictions) – meant for social, charitable, or non-profit purposes. They cannot distribute dividends to members. Foreign NGOs or non-profits often register under this category to carry out not-for-profit activities in Nepal.

• Foreign Company (Branch/Liaison): A company incorporated abroad that registers a branch or liaison office in Nepal is also recognized under the Act. This is not a separate Nepali legal entity, but it’s a registration allowing the foreign company to operate within Nepal within a defined scope. We’ll detail the branch/liaison process in a dedicated section below.

Incorporation Process: To form a new company in Nepal (private or public), the Act outlines a clear process:

1. Name Reservation: You must propose a unique company name and get it approved by the OCR (to ensure no duplicates or prohibited names). Names that are too similar to existing ones or that imply illegal/unethical activities are rejected.

2. Charter Documents: Prepare the Memorandum of Association (MOA) and Articles of Association (AOA). The MOA defines the company’s objectives, registered address, capital structure, and initial shareholders. The AOA contains the internal rules of management – how directors are appointed, meeting procedures, etc. These must comply with minimum content requirements set by the Act.

3. Application to OCR: Submit an application with the MOA, AOA, and prescribed forms to the OCR. You’ll also need to attach identity documents of promoters (passports for foreign promoters), an address proof for the office, and any sector-specific approvals if applicable. The registration fee is based on the company’s authorized capital (small for low capital companies, and higher for larger ventures).

4. Certificate of Incorporation: If all documents are in order, the OCR registers the company and issues a Certificate of Incorporation with a unique company registration number. At this point, the company becomes a legal entity – or as the law says, a corporate body with perpetual succession.

5. Post-Incorporation Tasks: The Act requires new companies to hold a board meeting and an inaugural general meeting to adopt a common seal, appoint the first auditor, and complete any initial formalities. You’ll also need to register for taxes (Permanent Account Number, VAT if applicable) with the Inland Revenue Department, and obtain other relevant licenses or industry registrations (e.g., an Industry Registration Certificate from DOI for foreign-invested projects).

Note: Foreign investors must also obtain approval under FITTA 2019 if injecting foreign capital. This runs in parallel – you get a Letter of Approval from the Department of Industry for the foreign investment, which is then submitted during or prior to the OCR application. FITTA imposes a minimum foreign investment of NPR 20 million (~USD 150,000) for most cases, so plan your capital accordingly.

Share Structure, Capital, and Shareholder Rights

The Companies Act 2063 lays out important rules about share capital and shareholder rights, which are vital for investors:

• Limited Liability: Perhaps the most significant principle – if you invest in a Nepali company, your liability is capped at the amount you paid for your shares. Creditors cannot claim your personal assets to settle company debts. This encourages investment by reducing personal risk.

• Capital Requirements: The Act itself does not mandate a minimum paid-up capital for most companies (except certain regulated sectors that have their own laws). You could technically start a company with a very low capital. However, practical thresholds exist: for example, as noted, foreign-owned companies need to bring in at least NPR 20 million as FDI per government rules. Additionally, banks, insurance companies, and other financial institutions have higher minimum capital set by sector regulators.

• Types of Shares: Companies can issue various classes of shares. Common categories include ordinary shares (basic voting shares) and preference shares (which might have preferential dividends but limited voting). All shares must be registered (no bearer shares in Nepal). If you plan multiple classes (say one class for founders, one for investors), the AOA should specify the differences.

• Number of Shareholders: A private company is limited to 101 shareholders maximum after the latest amendment (previously 50). Public companies can have unlimited shareholders. One Person Companies by definition have just one.

• Shareholder Rights: Every shareholder has certain basic rights under the Act:

  • Right to vote in general meetings (for ordinary shares – typically one share, one vote).

  • Right to receive dividends once declared.

  • Right to inspect certain company documents and financial statements.

  • Right to attend Annual General Meetings (AGMs) and ask questions.

  • Minority protections: The law has safeguards like the ability to call an extraordinary general meeting by a certain percentage of shareholders, and remedies if majority shareholders oppress the minority. For instance, minority shareholders can seek court intervention if they believe the company’s affairs are being conducted in a prejudicial manner.

• Transfer of Shares: In private companies, share transfers often require either board approval or an offer to existing members first (as per the AOA, since private companies can restrict free transferability). In public companies, shares are freely transferable and often traded on the stock exchange if listed.

• Increase/Reduction of Capital: The Act provides mechanisms for increasing capital (issuing new shares, rights issues, etc.) as well as reducing capital (with court approval to protect creditors). If your company grows and you need more capital, you can bring in new shareholders or have existing ones put in more money by following the procedures in the Act.

For foreign investors, these provisions mean you can structure the ownership and financing of your Nepali entity flexibly. You could own 100% of the shares, or share equity with local partners if you prefer, and you can be assured that the law recognizes your rights to profits and votes just like any local shareholder.

Corporate Governance and Compliance Requirements

Running a company in Nepal comes with ongoing governance and compliance obligations under the Company Act 2063. These are not just formalities – they ensure your business is run responsibly and transparently:

• Board of Directors: Every company must have a Board. Private companies can have a single director in an OPC or a few directors in larger companies, while public companies must have at least 3 directors (including at least one independent director for certain large companies). Directors have fiduciary duties: they must act in good faith, in the best interest of the company, and with care. The Act also outlines disqualifications (e.g., insolvent or convicted individuals can’t serve as directors in certain cases).

• Annual General Meeting (AGM): Companies are required to hold an AGM of shareholders every year. For public companies, it must be within 6 months of fiscal year end. At the AGM, the directors present the annual financial statements, auditors’ report, and often declare dividends. Private companies have more flexibility in timing, but usually also need an annual meeting or a resolution in lieu of it.

• Financial Statements and Audit: All companies in Nepal must prepare annual financial statements as per Nepal Accounting Standards. Crucially, an annual audit is mandatory for every company, regardless of size. A licensed independent auditor must be appointed (in the AGM for public companies, or by the Board/shareholders for private companies) to audit the books and give an audit report. This audit requirement surprises some foreign SMEs (in many countries small companies are exempt from audit) – but in Nepal even a one-person company needs an audit report each year.

• Statutory Registers and Records: The Act requires maintaining certain registers at the registered office:

  • Register of shareholders (with details of shares held, transfers, etc.).

  • Register of directors and officers.

  • Minutes book for Board meetings and General Meetings.

  • Register of mortgages and charges (if the company’s assets are pledged for loans).
    These records should be up to date and available for inspection by shareholders. They help enforce accountability within the company.

• Annual Return Filing: Every year, companies must file an annual return with the OCR (usually within 30 days of the AGM). The return includes particulars of shareholders, directors, capital, etc. as of the year-end. This keeps the OCR’s public registry updated about your company’s status. In addition, the audited financial statements are often required to be submitted to regulators (OCR or sector regulators) for public companies.

• Tax Compliance: Although taxation is governed by separate tax laws, there’s an interplay: you need to maintain a PAN (Permanent Account Number), file yearly tax returns, and clear applicable taxes to avoid penalties, which can affect your company’s good standing.

• Other Governance Measures: The Act encourages good governance through provisions like:

  • Allowing formation of Audit Committees in larger companies.

  • Enabling consensus agreements in private companies (unanimous shareholder agreements that can override some default rules).

  • Requiring disclosure of conflicts of interest – if a director has an interest in any contract or arrangement, they should disclose it and abstain from voting on it.

  • Powers for shareholders to remove directors or not re-elect them if performance is unsatisfactory.

Staying on top of these compliance requirements is essential. Not only do they keep your company in good legal standing, but they also instill confidence in investors, banks, and partners that your business is well-managed. Many foreign businesses in Nepal hire professional firms (like accounting or law firms) to handle routine compliance – for example, maintaining books, preparing minutes, and filing annual returns – so they can focus on operations.

Foreign Company Branch and Liaison Offices

Not all foreign companies want to incorporate a separate local subsidiary. Sometimes, you might just want a branch office to execute a project or a liaison office to explore opportunities. The Company Act 2063 (Chapter 16) provides for this, allowing foreign companies to register in Nepal for limited purposes.

Registration Requirement: Section 154 of the Act states that a foreign company must not conduct any business in Nepal without registering a local office. In essence:

• If you carry out transactions through an office for over a month in Nepal, or

• Appoint someone for regular contact in Nepal,
  you are considered to be doing business and must register accordingly.

Branch Office: A branch is an extension of the parent company. It can engage in commercial activities like selling products or providing services, but usually within the scope approved by Nepali authorities (often tied to a specific contract or project).

• Application: To register a branch, you apply to OCR with documents such as: a certified copy of the parent company’s incorporation certificate, charter (MOA/AOA), a board resolution authorizing the branch, power of attorney for a local representative, and details of the business to be done in Nepal. You also need prior approval from relevant government agencies if the sector is regulated, and from the Department of Industry if foreign investment approval is needed (the branch will be bringing in capital).

• Capital and Finance: There isn’t a share capital since it’s not a separate company, but you’ll typically inject funds as needed for operations. Profits of the branch can be remitted back to the parent after paying taxes, as they are considered foreign investment income.

• Compliance: Branches must file audited financial statements of their Nepal operations and other prescribed reports to OCR annually (and sometimes to DOI or Nepal Rastra Bank, since they involve foreign exchange). They must display the parent company name and country of incorporation at the branch premises clearly.

• Liability: The parent company is fully liable for branch obligations. Unlike a subsidiary, liability isn’t ring-fenced in Nepal.

Liaison (Representative) Office: A liaison office is for non-commercial activities. Think of it as a representative or marketing office. It can liaise with clients, gather information, or promote the parent company’s business, but cannot engage in revenue-generating activities.

• Application: The registration process is similar to a branch (Section 154 covers both). You must explicitly state that it’s a liaison office and typically assure that no commercial transactions will be done. Many foreign banks, airlines, or manufacturers open liaison offices just to have a presence and gather market data. If the scope of operations grows beyond promotion, a liaison office should be upgraded to a branch or subsidiary.

• Activities: Limited to things like market research, networking, coordinating with the parent company. All expenses of the liaison office must be funded by remittances from the parent company abroad (since it won’t earn local income).

• Compliance: Liaison offices also report to OCR and must renew approvals (usually every 5 years or so). They cannot directly engage in business, and any staff and expenses are solely for supportive roles. Because they don’t generate revenue, their compliance is simpler (no tax filings, just periodic reports/renewals).

The choice between establishing a subsidiary (local company) vs. a branch/liaison often depends on your goals:

• If you plan a long-term operation, hiring staff, and local revenue, a private limited subsidiary is usually better (and it satisfies foreign investment regulations).

• If you have a one-off project or just want a presence without committing capital, a branch or liaison might suffice.

Below is a comparison of these options for foreign investors:

As shown, each mode has pros and cons. Many foreign businesses start with a liaison or branch if testing the waters, then incorporate a fully-fledged company once they decide to commit long-term. Importantly, operating without any registration is illegal – you should choose one of these forms before doing business or even hiring in Nepal.

Penalties for Non-Compliance

Nepal’s company law comes with teeth. If you don’t comply with the Companies Act 2063, there are consequences:

• Fines: The Office of the Company Registrar can levy fines for various infractions. For example, missing the deadline for filing your annual return or financial statements can result in monetary penalties. These fines might start small (a few thousand NPR) but can accumulate for prolonged defaults.

• Legal Action: Serious violations (fraudulent reporting, operating an unregistered business, siphoning off funds, etc.) can lead to lawsuits or even criminal charges against the company’s officers. Directors who knowingly commit offenses could face prosecution. In worst cases, a court may order the company to cease operations. While the Act itself enumerates many specific offenses, generally any action contrary to the Act’s provisions could attract penalties.

• License Revocation: If a foreign company operates without registration (in violation of Section 154), the government can order it to shut down operations in Nepal. Similarly, failing to obtain required foreign investment approval can result in cancellation of projects by the Department of Industry.

• Reputational Damage: Beyond official penalties, non-compliance can hurt your reputation. Nepal’s business community is close-knit, and news of non-compliance or legal troubles can make potential partners or clients wary. Also, if you ever seek to expand to other sectors or apply for incentives, a bad compliance history might work against you.

• Remedies and Grace: The regulatory approach in Nepal has been improving. For instance, a recent amendment provided a two-year window for defunct companies to de-register without heavy fines. Regulators do sometimes give chances to rectify mistakes (like an OCR notice to submit overdue filings within 35 days to avoid further action). The key is to respond proactively if you slip up.

Remember, compliance is easier with the right guidance. Many foreign businesses engage local consultants to handle filings and keep track of deadlines. It’s a small investment compared to potential fines or the headache of legal proceedings. Always stay on the right side of the law – if you do, Nepal’s business environment will reward you with stability and the freedom to operate without disruptions.

Recent Developments and Updates

To maintain E-E-A-T (Experience, Expertise, Authority, Trustworthiness), let’s quickly touch on recent developments up to 2025:

• Continued Amendments: Nepali authorities continue to refine company law. Allowing up to 101 shareholders in a private company was a big change, particularly beneficial for startups that want to include more investors or employees. It provides flexibility while keeping the private company status.

• Digitalization: The Office of Company Registrar has moved towards online systems. Name reservations and company registrations can now be applied for through an online portal, making it easier for foreign investors abroad to initiate processes (though some paperwork still needs physical submission). This has improved the ease of doing business in Nepal.

• Corporate Governance Codes: Regulators like the Securities Board of Nepal (SEBON) have issued corporate governance guidelines (for example, a Code of Corporate Governance for listed companies). While not part of the Companies Act itself, these reflect a push for greater transparency and accountability, supplementing the Act’s provisions especially for public companies.

• Foreign Investment Rules: Changes in foreign investment regulations (FITTA 2019 and its updates) indirectly affect companies. For instance, the foreign investment minimum threshold (currently NPR 20 million) influences how companies plan their capital. The list of industries open to 100% foreign ownership has been expanded slightly, meaning more fully foreign-owned companies can register under the Act in new sectors.

• Post-Pandemic Flexibility: In the wake of COVID-19, Nepal temporarily allowed virtual shareholder meetings and extended compliance deadlines. While these measures were temporary, they may pave the way for future amendments to formally recognize electronic meetings and filings.

• Staying Informed: As Nepal’s economy evolves, further updates to company law are expected. Always keep an eye on new amendments or consult a legal advisor for the latest information. Being proactive ensures you remain compliant and can take advantage of any business-friendly changes (such as simplified processes or incentives for certain industries).

Staying updated is part of compliance. Joining business associations or consulting with legal experts can ensure you hear about changes that might affect your company. Digital Consulting Ventures (DCV) routinely updates its clients on regulatory changes, so they are never caught off guard.

Conclusion

The Company Act Nepal 2063 is much more than a rulebook – it’s your manual for successfully doing business in Nepal. By familiarizing yourself with its key provisions on company formation, governance, foreign company registration, and compliance, you set a strong foundation for your enterprise. Nepal’s corporate law might appear complex at first, especially to foreign entrepreneurs, but it offers a stable framework that protects businesses and investors alike when followed properly.

As an expert yet personable guide, we’ve walked you through the essentials: from choosing the right company structure and understanding your duties as a director, to ensuring you meet annual compliance and avoid penalties. The tone of the law is clear – if you play by the rules, Nepal welcomes you to thrive and contribute to its growing economy.

However, we understand that navigating legal intricacies in a new country can be daunting. That’s where our team comes in. Digital Consulting Ventures (DCV) is here to help you every step of the way. With a blend of local expertise and international experience, we make sure your business not only complies with the Companies Act 2063 but also leverages it to your advantage. From drafting perfect MOA/AOAs to handling your annual filings, DCV has you covered.

Ready to take the next step? Whether you need full company incorporation in Nepal or ongoing accounting & compliance support, our experts are just a call away. We invite you to reach out for a free consultation to discuss your business needs. Let us handle the legal fine print so you can focus on your growth.

Take action now – contact Digital Consulting Ventures (DCV) today to ensure your Nepal venture is not only legally compliant but set up for long-term success. We’ll be your trusted partner in turning Nepali legal complexities into a competitive advantage for your company.

Frequently Asked Questions (FAQs)

Q1: What is the Company Act 2063 in Nepal?
A1: It’s the primary law governing companies in Nepal, enacted in 2006. The Companies Act 2063 outlines how businesses are formed, operated, and dissolved. It covers the requirements for incorporation, responsibilities of directors, shareholder rights, and compliance rules for all companies in Nepal.

Q2: Can foreign nationals own 100% of a company in Nepal?
A2: Yes. Nepal allows foreign investors to own up to 100% of a company in permitted sectors. Under the Companies Act 2063, even a single foreign individual or company can form a private limited company (one-person company). No local partner is required if the business activity is open to full foreign ownership (per Nepal’s FDI regulations).

Q3: What types of companies are recognized under Nepali law?
A3: The Act recognizes several types of companies: private limited companies, public limited companies, one-person companies, non-profit companies (companies not distributing profits), and foreign company offices (branch or liaison). Each type has specific features – for instance, private companies are limited to 101 shareholders, while public companies can seek investment from the general public.

Q4: Is there a minimum capital requirement to register a company in Nepal?
A4: The Companies Act 2063 does not set a universal minimum capital for most companies. You can register a company with a very small capital. However, for foreign investors, current policy under the Foreign Investment Act requires a minimum investment of NPR 20 million (around USD 150,000). Certain industries (like banking or insurance) also have their own higher capital requirements set by regulators.

Q5: What are the penalties for not complying with the Companies Act?
A5: Non-compliance can lead to fines and legal trouble. The Office of the Company Registrar may impose financial penalties for late filings or failing to submit required documents. Serious violations (like fraud or operating without registration) can result in legal action against the company’s directors or even closure of the business. It’s important to meet all filing deadlines and follow the Act to avoid these issues.