Drafting Business Partnership Agreements in Kathmandu

Starting a business with a partner in Nepal requires a carefully drafted and properly executed Business Partnership Agreement (also called a Partnership Deed). In Nepal, a partnership agreement defines the rights, obligations, profit-sharing, decision-making authority, and dissolution terms for all partners. While notarization of a partnership agreement is not always legally mandatory under Nepal’s Partnership Act, it is strongly advisable and is required by banks, the Office of Company Registrar (OCR), and many financial institutions. Hamro Notary at Chabahil, Kathmandu, drafts and notarizes business partnership agreements for new and existing businesses.

What Is a Business Partnership Agreement?

A business partnership agreement is a legally binding contract between two or more persons (partners) who agree to carry on a business together with a view to profit. In Nepal, partnerships are governed by the Partnership Act 2020 (1964) and, for business registration purposes, by the Office of Company Registrar (OCR). Partnership firms in Nepal include:

• General Partnership: All partners have equal management authority and unlimited liability for the firm’s debts
• Limited Partnership: A mix of general partners (unlimited liability, active management) and limited partners (liability limited to their investment, no active management)
• Informal/unregistered partnership: Legally valid between partners but cannot use the firm name commercially or open accounts without OCR registration

Why Notarize a Business Partnership Agreement in Nepal?

• Bank account opening: Banks in Nepal require a notarized partnership deed to open a business bank account in the firm’s name
• OCR registration: The OCR requires a notarized partnership deed as part of the firm registration application
• Tax registration: The Inland Revenue Department (IRD) and Inland Revenue Office require a notarized partnership deed for PAN and VAT registration
• Dispute resolution: A notarized agreement is stronger evidence in Nepali courts than an unnotarized document
• Business tenders and contracts: Government tenders and corporate contracts often require a notarized partnership deed as evidence of the firm’s existence and partner authority

Key Clauses in a Nepali Business Partnership Agreement

A comprehensive partnership agreement should include:

• Name and address of the firm: The partnership firm’s registered business name and principal office address
• Names and addresses of all partners: Full name, citizenship number, and address of each partner
• Nature of business: Description of the business activities the partnership will conduct
• Capital contribution: How much each partner contributes (cash, property, expertise) and in what proportion
• Profit and loss sharing ratio: How profits and losses will be divided among partners
• Management and decision-making: Who manages day-to-day operations, voting rights, and how major decisions are made
• Partner salary/drawings: Whether partners receive a salary from the firm or only profit distributions
• Admission and exit of partners: Process for adding new partners or for a partner to exit
• Dissolution provisions: How and when the partnership can be dissolved and assets distributed
• Non-compete clause: Restrictions on partners from starting competing businesses

Partnership Registration with OCR Nepal

To operate officially in Nepal, a partnership firm must be registered with the Office of Company Registrar. The registration requires:

• Notarized partnership deed
• Citizenship copies of all partners
• Application form (from OCR)
• Tax clearance (if applicable)
• Registration fee payment

After OCR registration, the firm can open a business bank account, obtain PAN/VAT registration from IRD, and participate in government tenders.

The Drafting and Notarization Process at Hamro Notary

Visit Hamro Notary at Naramaya Bhawan, Chabahil (Sunday–Friday, 9 AM–6 PM). Describe your business, the number of partners, capital contributions, and profit-sharing intentions. We advise on appropriate clauses for your specific business type.

Hamro Notary drafts the partnership deed incorporating all agreed terms. For simple two-person partnerships with equal sharing, a standard draft is available quickly. For more complex arrangements (limited partners, special provisions), additional drafting time is needed.

All partners review the draft together. Every partner must agree to all terms before signing. If modifications are needed, they are made at this stage. Never sign a draft you have not fully understood.

All partners must personally appear at Hamro Notary, bring their original citizenship cards or passports, and sign the partnership deed in the Notary Public’s presence. The notary verifies each partner’s identity and certifies the execution.

Hamro Notary applies the official stamp and certification. The partnership deed is now a notarized legal document, ready for OCR registration, bank account opening, and other business processes.

Frequently Asked Questions

How long does it take to draft and notarize a partnership agreement?

For a straightforward two-partner business with standard terms, we can draft and notarize a partnership deed in one visit — typically 1–2 hours if both partners are available with their IDs. For more complex agreements requiring multiple rounds of review or unusual business structures, allow 1–2 business days.

Does a partnership agreement need to be on stamp paper in Nepal?

For OCR registration purposes, Nepal’s business registration process does not require stamp paper for the partnership deed. The notarized deed on plain A4 paper is accepted. For some legal purposes (courts, government tenders), stamp paper may be advisable — ask us when you come in to discuss your specific needs.

Can a foreigner be a partner in a Nepali partnership firm?

Nepal’s Foreign Investment and Technology Transfer Act (FITTA) governs foreign participation in Nepali business ventures. Foreign nationals may participate in Nepali businesses through a private limited company structure more easily than through an unregistered partnership. Consult a Nepali business lawyer about the appropriate structure if one of the partners is a foreign national. Hamro Notary can notarize partnership deeds once the structure is decided.