Company registration in Nepal is often misunderstood by foreign investors because the term is used interchangeably with business registration.
In reality, these are two distinct legal concepts with very different implications for ownership, liability, taxation, and foreign investment eligibility.
If you are a foreign company planning to enter Nepal, choosing the wrong structure can delay approvals, block FDI repatriation, or expose you to personal liability.
This guide breaks down the differences clearly, legally, and practically—so you can make the right decision from day one.
Many international founders assume “business registration” equals “company registration.”
In Nepal, that assumption can be costly.
Understanding the difference determines whether you can:
Legally bring foreign direct investment (FDI) into Nepal
Open a corporate bank account
Hire staff compliantly
Repatriate profits
Limit personal liability
Nepalese law treats individual businesses and corporate entities very differently.
Business registration refers to registering an individual or partnership business, not a separate legal entity.
It is governed primarily by:
Local Municipality / Ward Office rules
Partnership Act, 2020 (1964)
Income Tax Act, 2002
The business and the owner are legally the same.
Sole Proprietorship
Partnership Firm
Family-Owned Trade Business
These are typically used by local entrepreneurs.
No separate legal personality
Unlimited personal liability
Simple registration process
Limited scalability
Not suitable for FDI
Business registration is suitable if:
You are a Nepali citizen
You operate a small local business
You do not plan to raise capital
You accept personal liability
For foreign companies, this option is not legally viable.
Company registration creates a separate legal entity under the Companies Act, 2006.
The company exists independently of its shareholders and directors.
Private Limited Company
Public Limited Company
Not-for-Profit Company
Foreign Branch Office
Liaison Office
For foreign investors, Private Limited Company with FDI approval is the most common route.
Separate legal personality
Limited liability
Eligible for FDI
Can own property
Can hire employees
Can repatriate profits
Office of the Company Registrar (OCR)
Department of Industry (DOI)
Nepal Rastra Bank (NRB)
Inland Revenue Department (IRD)
| Feature | Business Registration | Company Registration |
|---|---|---|
| Legal status | Not separate | Separate legal entity |
| Liability | Unlimited | Limited |
| FDI eligibility | ❌ Not allowed | ✅ Allowed |
| Ownership | Individual / partners | Shareholders |
| Compliance level | Low | Medium to high |
| Profit repatriation | ❌ Not allowed | ✅ Allowed |
| Suitable for foreigners | ❌ No | ✅ Yes |
Insight:
Foreign investors attempting “business registration” often face bank account rejections and FDI denial later.
👉 Only company registration is permitted for foreign investors in Nepal.
Foreign investment is governed by:
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Companies Act, 2006
These laws explicitly require corporate registration for FDI.
Foreign nationals cannot:
Register sole proprietorships
Operate informal partnerships
Run businesses under personal names
Any such attempt is non-compliant.
Proposed company name approval.
Application to the Department of Industry with:
Shareholding structure
Business plan
Capital commitment
Submission of:
Memorandum of Association
Articles of Association
Foreign capital remitted through an NRB-approved bank.
PAN and VAT (if applicable).
SSF registration
Labor compliance
Annual filings
Here are the most frequent issues we see:
Registering a business instead of a company
Underestimating compliance obligations
Assuming nominee structures are legal
Ignoring NRB capital flow rules
Delaying tax and labor registration
These mistakes often lead to FDI rejection or penalties.
Cost: Low
Timeline: 1–3 days
Risk: High for foreigners
Cost: Moderate
Timeline: 2–4 weeks (FDI included)
Risk: Low if compliant
Professional support significantly reduces delays.
Once registered, companies must comply with:
Annual company filings
Monthly tax returns
Employee social security contributions
Foreign exchange reporting
Failure to comply can block profit repatriation.
Choose company registration if you want to:
Enter Nepal legally as a foreigner
Protect personal assets
Scale operations
Repatriate profits
Hire teams compliantly
Business registration does not support these goals.
Nepal’s regulatory system involves multiple authorities.
Misalignment between them causes delays.
Professional advisors ensure:
Correct entity selection
Clean FDI approval
Bank-ready documentation
Ongoing compliance
This is where most foreign companies struggle without local expertise.
Company registration in Nepal is the only legally sound option for foreign investors.
Business registration may look simpler, but it is not permitted for foreigners and exposes serious risks.
Understanding the difference upfront saves time, money, and regulatory headaches.
If Nepal is part of your expansion strategy, choosing the right structure is your first—and most important—decision.
Planning company registration in Nepal as a foreign investor?
👉 Book a free consultation to assess the right structure, FDI eligibility, and compliance roadmap for your business.
No. Foreigners must register a company under the Companies Act and obtain FDI approval.
Yes. FDI is only permitted through registered companies, branches, or approved entities.
Business registration is cheaper, but illegal for foreigners. Company registration is compliant and safer.
Typically 2–4 weeks, including FDI approval and incorporation.
No direct conversion exists. A new company must be registered.