The Company Act Nepal is the single most important law governing how businesses are formed, operated, and regulated in Nepal.
If you are a foreign company planning to enter Nepal in 2026, understanding this Act is not optional. It determines who can invest, how companies are structured, what compliance looks like, and what risks you face.
Many international founders underestimate the Company Act Nepal. That mistake often leads to delays, rejected applications, or compliance penalties. This guide gives you the clearest, most practical explanation available. It is written specifically for foreign companies, investors, and founders.
By the end, you will know exactly how the Company Act Nepal affects your market entry strategy and how to stay compliant from day one.
The Company Act Nepal is the primary legislation that regulates company incorporation, governance, restructuring, and dissolution in Nepal. The current framework is based on the Companies Act, 2063 (2006), with amendments and regulatory practices applied through the Office of the Company Registrar (OCR).
The Act applies to:
Domestic companies
Foreign companies
Joint ventures
Subsidiaries and branch-type registrations
For foreign investors, the Company Act Nepal works alongside other key laws, including:
Foreign Investment and Technology Transfer Act (FITTA)
Income Tax Act
Labour Act
Social Security Act
Together, these laws shape the full compliance landscape.
Any entity that wants to operate as a company in Nepal must comply with the Company Act Nepal.
This includes:
Foreign-owned private limited companies
Joint ventures with Nepali partners
Public limited companies
Not-for-profit companies
Companies converting from one structure to another
If your entity is registered with the Office of the Company Registrar, the Company Act Nepal applies to you.
The Company Act Nepal was designed to balance investor freedom with regulatory oversight.
Its main objectives are:
Promoting transparent corporate governance
Protecting shareholders and creditors
Regulating foreign and domestic investment structures
Standardising company registration and reporting
Ensuring accountability of directors and officers
For foreign companies, this creates predictability. Predictability reduces risk.
This is the most common structure for foreign investors.
Key features:
Minimum one shareholder
Maximum fifty shareholders
Cannot issue public shares
Flexible governance
Used for large-scale operations and capital markets.
Key features:
Minimum seven shareholders
Mandatory board structure
Higher compliance burden
Can issue shares to the public
Formed for social or charitable objectives.
Key features:
Profits cannot be distributed
Strict purpose limitations
Regulated closely by authorities
Foreign companies operating without incorporation must still register under the Company Act Nepal if they establish a place of business.
The registration process is central to the Act.
Name reservation with the Office of the Company Registrar
Preparation of Memorandum of Association (MOA)
Preparation of Articles of Association (AOA)
Submission of incorporation application
Payment of registration fees
Issuance of company registration certificate
Most foreign companies complete registration within 7 to 15 working days, assuming documents are accurate.
Foreign investors often face delays due to incomplete documentation.
You typically need:
Passport copies of shareholders and directors
Board resolutions from parent companies
MOA and AOA drafted per Nepalese law
Registered office address in Nepal
Power of attorney for local representatives
All foreign documents must be notarised and, in some cases, apostilled.
The Company Act Nepal itself does not impose a universal minimum capital requirement.
However:
Sector-specific regulators may impose minimum thresholds
Foreign investment approvals often require a minimum capital commitment
Banks may request capital adequacy evidence
For most foreign-owned private limited companies, capital planning is strategic rather than purely legal.
The Company Act Nepal places strong emphasis on governance.
Directors must:
Act in the best interest of the company
Avoid conflicts of interest
Maintain proper records
Comply with annual filing requirements
Failure can lead to personal liability.
Shareholders are entitled to:
Voting rights
Dividend rights, if declared
Access to financial statements
Participation in major decisions
Compliance does not end after registration.
Under the Company Act Nepal, companies must:
File annual returns
Submit audited financial statements
Update changes in directors or shareholders
Maintain statutory registers
Non-compliance can result in fines, blacklisting, or suspension.
| Factor | Nepal | India | Bangladesh |
|---|---|---|---|
| 100% foreign ownership | Allowed in many sectors | Restricted in some | Limited |
| Incorporation timeline | 7–15 days | 15–30 days | 20–40 days |
| Capital controls | Moderate | Moderate | High |
| Compliance complexity | Medium | High | High |
This comparison highlights why Nepal is increasingly attractive for foreign SMEs.
Many issues are avoidable.
The most common mistakes include:
Using generic MOA and AOA templates
Ignoring sector-specific approvals
Underestimating annual compliance
Misclassifying foreign investment structures
Delaying tax and labour registrations
Avoiding these errors saves time and money.
The Company Act Nepal governs incorporation and governance.
Foreign investment laws govern:
Capital inflow
Repatriation of profits
Technology transfer
Sector restrictions
You must comply with both simultaneously. One approval does not replace the other.
While the Company Act Nepal is publicly available, interpretation is not always straightforward.
Professional advisors help you:
Choose the right structure
Draft compliant documents
Coordinate with multiple authorities
Reduce approval timelines
Maintain long-term compliance
For foreign companies, this support is often the difference between success and frustration.
Yes. Any company registered in Nepal, including foreign-owned entities, must comply with the Company Act Nepal.
Yes. A private limited company can be 100% foreign-owned, subject to sector rules.
No. However, having a local representative is often practical for compliance.
Penalties apply. Continued non-compliance can lead to company suspension.
No full replacement is confirmed, but procedural updates and digitalisation are ongoing.
The Company Act Nepal offers a balanced, transparent framework for foreign companies. It is simpler than many regional alternatives, yet robust enough to protect stakeholders.
With proper guidance, foreign investors can register, operate, and scale in Nepal efficiently. The key is understanding the Act early and planning compliance strategically.
If you are planning to register or restructure a company in Nepal, now is the right time to act.
👉 Book a free consultation with our Nepal company law specialists to ensure full compliance with the Company Act Nepal and related foreign investment regulations.