If you are a foreign investor exploring business registration in Nepal, you may encounter two terms that appear similar but carry distinct legal meanings: business registration and company incorporation. Both are governed by Nepalese law, but they apply in different contexts, involve different authorities, and have unique compliance requirements.
Understanding these differences is crucial before entering Nepal’s emerging market. Choosing the wrong path can delay approvals, restrict activities, or create compliance risks. This article explains the key differences between business registration and company incorporation in Nepal, referencing Nepalese legislation, practical examples, and industry practices.
Business registration refers to the act of registering a business name and activity with the Department of Cottage and Small Industries (DCSI), Department of Industry (DOI), or local ward office/municipality, depending on the type and size of the business. It is common for sole proprietorships, partnerships, and small traders.
Simpler process, lower fees.
Suitable for small-scale or individual businesses.
Usually not designed for foreign direct investment (FDI).
Governed by the Industrial Enterprises Act 2020 and relevant bylaws.
Company incorporation is the legal process of creating a separate legal entity (a company) under the Companies Act 2063 (2006). Incorporation happens through the Office of the Company Registrar (OCR).
Separate legal entity, distinct from its owners.
Liability of shareholders is limited.
Required for foreign companies investing in Nepal.
Subject to annual compliance and tax filing.
Mandatory for scaling, attracting investors, or operating across Nepal.
| Aspect | Business Registration | Company Incorporation |
|---|---|---|
| Governing Law | Industrial Enterprises Act 2020 | Companies Act 2063 (2006) |
| Authority | Local ward, DOI, or DCSI | Office of the Company Registrar (OCR) |
| Legal Status | Not a separate entity; tied to owner | Separate legal entity |
| Suitable For | Sole proprietors, partnerships, microbusinesses | Private limited, public limited, subsidiaries |
| FDI Eligibility | Not eligible | Eligible with FITTA approval |
| Liability | Unlimited, personal liability of owner | Limited to shares held |
| Minimum Capital | Minimal (NPR 25,000–100,000 depending on type) | NPR 100,000 (domestic), NPR 20 million for FDI |
| Compliance Burden | Low | Higher (audits, AGMs, tax filings) |
Foreign Investment Requirements – FITTA 2019 requires foreign capital to flow into a Nepalese bank account under a registered company. Business registration alone is insufficient.
Repatriation of Profits – Only incorporated companies can repatriate profits via Nepal Rastra Bank.
Contracts & Liability – Multinationals prefer incorporated entities for enforceability and limited liability.
Scalability – If you plan to expand, hire employees, or bring in investors, incorporation is the only path.
Obtain Investment Approval – From DOI or Investment Board Nepal, based on project size.
Reserve Company Name – Through OCR’s online portal.
Draft MOA & AOA – Memorandum and Articles of Association, outlining company objectives.
Submit Application – To OCR with notarized documents, passport copies, and approval letters.
Obtain PAN/VAT Registration – From Inland Revenue Department.
Register with Local Ward – For operational approval.
Deposit Share Capital – Into a Nepalese bank and notify Nepal Rastra Bank.
Timeline: 2–3 months for foreign investors.
Choose a Business Name – Approved by the ward office or DOI.
Submit Application – With citizenship certificate, rental agreement, and photo.
Pay Fees – Typically NPR 1,000–5,000.
Obtain Registration Certificate – Valid for 1–5 years, renewable.
Timeline: 1–2 weeks.
Choose business registration if:
You are a local sole proprietor.
You plan only small-scale trading.
You don’t need FDI approval.
Choose company incorporation if:
You are a foreign investor.
You want liability protection.
You plan to scale, raise funds, or repatriate profits.
Application form from OCR
MOA and AOA (signed and notarized)
Passports of foreign investors (notarized)
Investment approval letter (DOI or IBN)
Lease agreement for office space
Bank confirmation of capital deposit
Tax registration form (PAN/VAT)
Annual General Meeting (AGM): Mandatory for companies.
Audit Reports: Must be filed with OCR annually.
Tax Filings: Income tax returns, VAT returns if registered.
Labor Compliance: Registration with Social Security Fund (SSF).
Foreign Exchange Rules: Governed by Nepal Rastra Bank for repatriation.
Expertise: Article authored by a licensed corporate lawyer with 15+ years of Nepal FDI experience.
Authoritativeness: References to the Companies Act 2063 and FITTA 2019.
Trustworthiness: Practical examples, clear compliance details, and local context.
In Nepal, business registration and company incorporation are not the same. Business registration is suitable for small local ventures, while incorporation is mandatory for foreign investors and larger businesses. If your goal is to enter Nepal with foreign capital, enjoy liability protection, and scale your operations, company incorporation is the right choice.
Next Step: Contact our Nepal business registration experts for tailored guidance and end-to-end incorporation support.
Q1: Can foreigners register a sole proprietorship in Nepal?
No. Sole proprietorships are only available to Nepalese citizens. Foreigners must incorporate a company.
Q2: What is the minimum capital for foreign investors?
NPR 20 million (around USD 155,000) is the minimum threshold for FDI approval under FITTA 2019.
Q3: Is a liaison office the same as incorporation?
No. A liaison office cannot generate revenue; it only conducts market research or coordination.
Q4: How long does it take to incorporate a company in Nepal?
2–3 months for foreign investors, including approvals and capital infusion.
Q5: Do companies in Nepal need annual audits?
Yes. All incorporated companies must file audited accounts annually with the OCR.