Can You Incorporate in Nepal Without a Local Partner? Here's the Truth

For foreign investors looking to establish a presence in South Asia, company incorporation in Nepal offers a strategic entry point with lower operational costs, growing sectors, and increasing digital infrastructure. But one of the most frequently asked questions is: Do I need a local partner to incorporate a company in Nepal?

The short answer: No, a local partner is not always required—but the full truth depends on your industry, ownership structure, and investment model. This article unpacks the current legal framework, exceptions, and strategic considerations for foreign companies planning to incorporate in Nepal without a local partner.

What the Law Says: 100% Foreign Ownership Is Allowed in Many Cases

Nepal’s Foreign Investment and Technology Transfer Act (FITTA), 2019, allows 100% foreign ownership in most sectors that are open to foreign direct investment (FDI). This means that a foreign individual or company can fully own a Nepali-registered entity without needing a local shareholder or partner, provided:

• The sector is not restricted under the Negative List

• The investment meets the minimum capital threshold

• The company is registered and approved under FITTA and the Company Act, 2006

✅ Yes – You Can Incorporate Without a Local Partner
In sectors like:

• Information Technology (IT) and BPO

• Education and training services

• Consulting and management services

• Renewable energy

• Tourism and hospitality

• Manufacturing (in SEZs or export-oriented zones)

Where Local Partners Are Required or Common

While foreign investors are legally permitted to fully own companies in many industries, certain sectors either restrict foreign ownership, require joint ventures, or strongly benefit from local partnerships.

1. Restricted Sectors

Nepal’s Negative List prohibits foreign investment in specific industries, including:

• Retail trading (small-scale)

• Security services

• Traditional herbal medicine production

• Arms and ammunition

• Poultry and dairy farming

• Real estate and land trading

In these sectors, even partial foreign ownership is not allowed, making local partnerships legally irrelevant unless the business structure changes.

2. Conditional Sectors (Joint Venture Recommended or Required)

Sectors such as:

• Financial institutions

• Aviation

• Media and telecommunications
  …may require government-level approvals, and a joint venture model with local partners is often more favorable or essential.

Why Some Foreign Investors Choose Local Partners Anyway

Even in open sectors, many foreign investors voluntarily engage local partners for strategic reasons:

• Market Access: Navigating government bureaucracy, land issues, and customer behavior becomes easier with a Nepali co-founder or stakeholder.

• Operational Efficiency: Local teams understand cultural norms, labor laws, and language intricacies.

• Risk Sharing: Distributing risk between foreign and domestic investors can make large projects more manageable.

However, this is a strategic choice, not a legal necessity—especially in open sectors.

Incorporating Without a Local Partner: Legal Steps

If you choose to proceed with 100% foreign ownership, here's the process:

1. Submit Foreign Investment Proposal to the Department of Industry (DOI) under FITTA.

2. Ensure your proposed capital meets the minimum threshold (typically NPR 20 million, or NPR 10 million for select sectors as of 2025 reforms).

3. After approval, register your company with the Office of the Company Registrar (OCR).

4. Obtain PAN/VAT registration, open a corporate bank account, and report capital inflow through Nepal Rastra Bank.

5. Comply with labor laws, tax filings, and annual reporting.

Common Misconceptions

Challenges When Going Solo

While legal, incorporating without a local partner comes with its own set of challenges:

• Language and regulatory interpretation issues

• Navigating government departments for renewals and licenses

• Building trust with local vendors and clients

• Land leasing and labor compliance hurdles

These can be mitigated by hiring local staff or appointing a compliance officer or accounting advisor in Nepal.

Conclusion

Company incorporation in Nepal does not require a local partner in most open sectors. Foreign investors can enjoy 100% ownership, full repatriation rights, and direct control—provided they meet FITTA requirements and follow Nepal’s legal procedures.

That said, while legally possible, operating without local knowledge can be risky. Smart investors often balance control with collaboration by bringing on local advisors, team members, or joint venture partners where needed—not because it’s mandatory, but because it’s practical.