Company Act Nepal: Guidelines for Foreign Business Registration

Foreign company registration in Nepal is governed primarily by the Company Act Nepal, supported by foreign investment and sector-specific laws. For global companies, Nepal offers cost-effective talent, strategic access to South Asia, and an increasingly investor-friendly regulatory framework.

Yet, compliance matters. Choosing the wrong entry structure or misunderstanding statutory obligations can delay approvals, restrict operations, or expose directors to legal risk.

This guide explains foreign company registration in Nepal through the lens of the Company Act Nepal, while integrating practical insights from foreign investment regulations, tax law, and labour compliance. It is written for founders, general counsel, and expansion leaders seeking clarity, not jargon.

Understanding the Company Act Nepal in Context

The backbone of corporate law in Nepal is the Company Act 2006. It regulates:

• Incorporation and registration

• Corporate governance

• Director and shareholder obligations

• Reporting and disclosure

• Winding-up and exit

For foreign businesses, the Act works alongside:

• Foreign Investment and Technology Transfer Act 2019

• Department of Industry

• Office of Company Registrar

Together, these laws define how a foreign company may legally operate in Nepal.

What Counts as a “Foreign Company” in Nepal?

Under the Company Act Nepal, a foreign company includes:

• Companies incorporated outside Nepal

• Entities with majority foreign ownership

• Overseas companies establishing a Nepal presence

A foreign company cannot operate commercially in Nepal unless registered under an approved structure.

Approved Structures for Foreign Company Registration in Nepal

Foreign investors may enter Nepal using one of four legally recognised routes.

1. Liaison Office

A liaison office is a non-commercial presence.

Permitted activities

• Market research

• Brand representation

• Coordination with head office

Restrictions

• No revenue generation

• No local contracts

This is suitable for early-stage market testing only.

2. Branch Office

A branch office allows limited commercial activity linked to the parent company.

Key features

• No separate legal personality

• Parent company bears full liability

• Must register under the Company Act Nepal

Branch offices are common in infrastructure, consulting, and donor-funded projects.

3. Private Limited Company with Foreign Ownership

This is the most flexible and scalable structure.

Advantages

• Separate legal entity

• Eligible for full commercial operations

• Clear exit and repatriation mechanisms

Most long-term investors choose this route.

4. Joint Venture Company

Foreign and Nepali partners may form a joint venture.

Best for

• Regulated sectors

• Local market access

• Government-linked projects

Ownership ratios depend on sector caps.

Comparison of Entry Structures

Step-by-Step Foreign Company Registration in Nepal

Foreign company registration in Nepal follows a predictable but document-heavy process.

Step 1: Foreign Investment Approval

Applications are submitted to the Department of Industry under FITTA.

Required details include:

• Shareholding structure

• Business objectives

• Capital commitment

Step 2: Company Registration under the Company Act Nepal

Once approved, the entity is registered with the Office of Company Registrar.

Documents include:

• Memorandum of Association

• Articles of Association

• Parent company resolutions

Step 3: Tax and Regulatory Registration

After incorporation, the company must register with:

• Inland Revenue Department

• Local ward office

• Sector regulators if applicable

Step 4: Capital Injection and Reporting

Foreign capital must be remitted through approved banking channels and reported to Nepal Rastra Bank.

Documents Required for Foreign Company Registration in Nepal

A typical checklist includes:

• Certificate of incorporation of parent company

• Board resolution approving Nepal entry

• Passport copies of directors

• Power of attorney

• Approved investment application

All foreign documents must be notarised and apostilled.

Capital Requirements under the Company Act Nepal

The minimum foreign investment threshold is typically NPR 20 million, subject to sectoral rules.

Capital must be:

• Injected through formal banking channels

• Reported within statutory timelines

Failure to comply can suspend operating licenses.

Ongoing Compliance Obligations

Foreign companies registered in Nepal must comply with:

• Annual returns under the Company Act Nepal

• Tax filings and audits

• Labour law compliance

• Social Security Fund contributions

Non-compliance may result in penalties or deregistration.

Common Mistakes Foreign Companies Make

Avoid these frequent issues:

• Choosing a liaison office for revenue activities

• Delayed capital injection

• Ignoring labour law obligations

• Weak shareholder agreements

Proper structuring at entry prevents costly restructuring later.

Why the Company Act Nepal Matters for Foreign Investors

The Company Act Nepal determines:

• Director liabilities

• Share transfer rules

• Dividend distribution

• Exit and liquidation

Understanding it is essential for risk management and investor confidence.

Strategic Insights for Foreign Companies

Foreign businesses that succeed in Nepal typically:

1. Choose the correct entity from day one

2. Align FITTA approvals with company objects

3. Maintain clean compliance records

4. Use local advisors familiar with regulators

FAQs: Foreign Company Registration in Nepal

1. Can a foreign company fully own a company in Nepal?

Yes. Most sectors allow 100 percent foreign ownership, subject to negative lists and sector caps.

2. How long does foreign company registration in Nepal take?

Typically 4 to 8 weeks, depending on approvals and document readiness.

3. Is the Company Act Nepal applicable to branch offices?

Yes. Branch offices must register and comply with reporting provisions.

4. Can profits be repatriated abroad?

Yes. Repatriation is permitted after tax compliance and regulatory reporting.

5. Is local employment mandatory?

Yes. Nepal labour laws apply once employees are hired locally.

Conclusion

Foreign company registration in Nepal under the Company Act Nepal is a structured, transparent process when handled correctly. The law provides flexibility, but only for investors who respect compliance, governance, and reporting standards.

Choosing the right entry model and aligning approvals with long-term strategy is the difference between smooth expansion and regulatory friction.

Call to Action

If you are planning foreign company registration in Nepal, speak with specialists who combine legal precision with commercial insight. Book a consultation to receive a tailored entry strategy, compliance roadmap, and risk assessment.