Types of Business Registration in Nepal: Which One Fits You Best?

Establishing business registration in Nepal can feel complex, especially for foreign companies entering a new market. Nepal is opening up to global trade, with investment opportunities across IT, tourism, hydropower, manufacturing, and services. Foreign entrepreneurs can register various business entities, from private limited companies to branch offices. Each option comes with distinct rules, costs, and advantages. Understanding these choices helps you pick the structure that best fits your expansion strategy.

Understanding Business Entities in Nepal

Nepal’s Companies Act and related laws recognize multiple business structures:

Private Limited Company

• Most popular form.

• 1–101 shareholders allowed.

• Liability is limited to the company’s assets.

• Minimum capital: NPR 100,000.

• Up to 100% foreign ownership permitted in most industries.

• Cannot offer shares to the public but enjoys flexibility in operations.

Public Limited Company

• Requires at least 7 shareholders, no upper limit.

• Minimum paid-up capital: NPR 10,000,000.

• May raise funds from the public and list shares on stock exchanges.

• Higher compliance but better suited for large projects.

Company Not Distributing Profit

• Designed for social or charitable objectives.

• At least 5 promoters required.

• Profits cannot be distributed; all earnings must be reinvested.

Partnership Firm

• At least 2 partners, no upper limit.

• Partners have unlimited liability.

• Quick to form but less secure for foreign investors.

Sole Proprietorship

• Owned by a single individual.

• Unlimited liability.

• Simple but not a practical option for foreigners.

Options for Foreign Companies

Foreign investors often choose one of these entry routes:

• Wholly-Owned Subsidiary: Incorporate a local private limited company with up to 100% foreign equity.

• Joint Venture (JV): Partner with Nepali companies or individuals to share capital and expertise.

• Branch Office: A registered extension of a foreign parent company, fully liable under the parent.

• Liaison Office: For research, marketing, or coordination only — cannot generate income.

• Project Company: Large projects (often in hydropower or infrastructure) may be registered through special approval for investments above NPR 6 billion.

Comparison of Entity Types

How to Register a Company in Nepal

The standard steps are:

1. Reserve Company Name – Apply online through the Office of Company Registrar.

2. Prepare Documents – Draft MOA and AOA, provide shareholder IDs, office address, and photos.

3. Obtain FDI Approval – From the Department of Industry or Investment Board (for foreign investors).

4. Submit Registration Application – File forms and documents at the Company Registrar.

5. Pay Fees – Government fee depends on authorized capital.

6. Receive Registration Certificate – Official incorporation document.

7. Post-Registration Tasks – Obtain PAN, VAT, and other business licenses.

Documents required typically include:

• Company registration form.

• Memorandum and Articles of Association.

• Shareholder and director identification.

• Passport-sized photos.

• Office address proof.

• FDI approval (if foreign-owned).

Costs, Timeline & Compliance

• Timeline: 2–3 weeks for a private company; up to 2 months for FDI approvals.

• Costs: OCR registration fees range from NPR 1,000 to 9,500 depending on capital. Additional costs include FDI application fees, legal drafting, and licenses.

• Compliance: Annual filings, audited accounts, and tax returns are mandatory. Corporate tax is typically 25%.

Key Considerations for Foreign Investors

• Ownership: Up to 100% foreign ownership is allowed in most sectors. Restricted industries include small-scale agriculture, arms production, and local media.

• Capital: Private limited companies require a minimum NPR 100,000; public companies require NPR 10,000,000.

• Liability: Only companies provide limited liability; partnerships and proprietorships do not.

• Process: Branch and liaison offices require OCR approval and yearly compliance.

Which Option Fits You Best?

• Private Limited Company: Best for most investors — simple, flexible, and fully foreign-owned.

• Public Limited Company: Suitable for large-scale ventures needing big capital.

• Joint Venture: Ideal for restricted sectors or when local expertise is critical.

• Branch Office: Useful for foreign firms delivering projects in Nepal.

• Liaison Office: For companies testing the market without revenue activities.

FAQ

Q: What types of companies can foreigners register in Nepal?
A: Private and public limited companies, joint ventures, branch offices, and liaison offices.

Q: Can foreigners fully own a Nepali company?
A: Yes, up to 100% ownership is allowed in most sectors.

Q: How much capital is required?
A: Minimum NPR 100,000 for private limited, NPR 10,000,000 for public limited.

Q: How long does registration take?
A: About 2–3 weeks for simple private companies; longer if FDI approvals are involved.

Q: What’s the difference between branch and liaison offices?
A: Branches can do business and generate income; liaison offices cannot.