The Company Act Nepal is the backbone of corporate law for anyone doing business in Nepal.
If you are a foreign company planning market entry, incorporation, or expansion in 2026, this Act defines your rights, duties, and risks from day one.
It governs how companies are formed, managed, audited, restructured, and closed.
It also determines how directors are appointed, how shares are issued, and how compliance is enforced.
In short, you cannot operate legally in Nepal without understanding the Company Act Nepal.
This guide is written specifically for foreign founders, CFOs, legal teams, and investors.
It is practical, current, and focused on what actually matters in 2026.
The Company Act Nepal (Companies Act, 2006) is the primary legislation regulating companies in Nepal.
It applies to both domestic and foreign-owned companies incorporated in Nepal.
The Act is administered by the Office of the Company Registrar (OCR) under the Ministry of Industry.
The Act aims to:
Promote transparent corporate governance
Protect shareholders and creditors
Standardise company formation and reporting
Encourage foreign investment with legal certainty
For foreign companies, it provides a predictable legal framework aligned with international corporate norms.
Understanding company types is critical before entry.
This is the most common structure for foreign companies.
Key features:
Limited liability
Shareholders capped (currently up to 101)
No public share issuance
Suitable for subsidiaries and joint ventures
Typically used for large enterprises.
Characteristics include:
Minimum seven shareholders
Mandatory compliance with capital thresholds
Ability to issue shares publicly
Higher disclosure obligations
Used for NGOs and social enterprises.
Important points:
No dividend distribution
Surplus must be reinvested
Often combined with sector-specific approvals
The Act sets a clear, step-by-step incorporation process.
Name reservation with the Office of the Company Registrar
Preparation of Memorandum and Articles of Association
Submission of incorporation application
Payment of registration fees
Issuance of incorporation certificate
Once incorporated, the company becomes a separate legal person.
These two documents define the company’s DNA.
The MOA outlines:
Company name
Registered office address
Objectives and permitted activities
Share capital structure
Foreign companies must ensure objectives align with approved FDI activities.
The AOA governs internal management, including:
Board powers
Share transfers
Meeting procedures
Voting rights
A poorly drafted AOA often leads to shareholder disputes later.
Governance obligations are taken seriously in Nepal.
Minimum one director for private companies
Directors can be foreign nationals
Appointment must be filed with OCR
Under the Company Act Nepal, directors must:
Act in good faith
Avoid conflict of interest
Protect company assets
Comply with laws and filings
Act within granted authority
Failure can lead to personal liability.
The Act clearly regulates ownership.
No minimum capital for most sectors
Capital must match business scale
FDI sectors may impose thresholds
Shareholders are entitled to:
Dividend declarations
Voting rights
Access to financial statements
Legal remedies against mismanagement
Foreign shareholders enjoy equal rights with Nepali shareholders, subject to FDI laws.
Compliance is not optional.
Every company must:
Hold an Annual General Meeting (AGM)
Approve audited financial statements
File annual returns with OCR
Update changes in directors or shareholding
Late filing attracts daily penalties and potential suspension.
The Company Act Nepal mandates transparency.
Annual audit by a licensed Nepali auditor
Financials prepared as per Nepal Accounting Standards
Auditor appointment approved by shareholders
Foreign companies often underestimate audit timelines in Nepal.
The Act supports corporate restructuring.
Share transfers
Capital increases or reductions
Mergers and amalgamations
Conversion between company types
All structural changes require OCR approval.
This distinction is critical.
| Aspect | Company Act Nepal | FITTA 2019 |
|---|---|---|
| Scope | Corporate governance | Foreign investment approval |
| Applies to | All companies | Only foreign investors |
| Regulator | Company Registrar | Department of Industry |
| Focus | Formation and compliance | Entry, repatriation, protection |
Foreign companies must comply with both laws simultaneously.
Non-compliance carries real consequences.
Daily fines for late filings
Director disqualification
Suspension of company status
Court-ordered liquidation
These risks directly affect foreign parent companies.
In 2026, enforcement is stricter than ever.
OCR is fully digital
Cross-checks with tax authorities are routine
Banking KYC relies on OCR records
Directors are held personally accountable
Professional compliance support is no longer optional.
Foreign companies that master the Act benefit from:
Faster incorporation
Cleaner audits
Easier banking relationships
Lower legal risk
Stronger investor confidence
This is often the difference between success and exit.
Avoid these recurring issues:
Copy-pasting foreign Articles of Association
Ignoring AGM timelines
Appointing nominee directors without clarity
Misaligning company objectives with FDI approval
Each mistake is preventable with proper guidance.
A best-practice approach includes:
Legal structuring before incorporation
Clear shareholder agreements
Annual compliance calendars
Local accounting and secretarial support
This protects both local operations and parent entities.
Yes. Any company incorporated in Nepal, including foreign-owned entities, must fully comply with the Company Act Nepal.
Yes. Foreign nationals can be directors, subject to proper appointment and filing with the Company Registrar.
Generally no. However, sector-specific FDI rules may impose minimum capital thresholds.
Penalties apply daily. Prolonged non-compliance can lead to suspension or liquidation.
Yes, where permitted under Nepal’s foreign investment laws and approved sectors.
The Company Act Nepal is not just a legal requirement.
It is a strategic framework that determines how safely and efficiently you can operate in Nepal.
Foreign companies that treat it seriously gain speed, credibility, and long-term stability.
Those who ignore it face delays, penalties, and reputational risk.
Understanding the Act is the first step toward sustainable expansion in Nepal.
If you are planning to incorporate, invest, or expand in Nepal in 2026, now is the time to act.
👉 Book a compliance consultation to review your structure under the Company Act Nepal and avoid costly mistakes before they happen.