Company Registration Process in Nepal for Startups and Small Businesses

The company registration process in Nepal has become increasingly relevant for foreign startups and small businesses seeking cost-efficient expansion in South Asia. Nepal offers competitive labour costs, a growing digital workforce, and a legally structured foreign investment regime. However, the process is compliance-heavy and unfamiliar to many overseas founders.

This guide breaks down the company registration process in Nepal in clear, practical terms. It is written specifically for foreign companies, startups, and SMEs. You will learn the legal steps, timelines, costs, and risks. You will also understand how to structure your entry correctly from day one.

The company registration process in Nepal is governed primarily by:

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act (FITTA), 2019

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

• Labour Act, 2017

Foreign companies usually register a Private Limited Company as a wholly owned subsidiary. This structure allows profit repatriation and operational control.

Common Business Structures for Foreign Companies

1. Private Limited Company (FDI Company)

2. Branch Office

3. Liaison Office (Non-commercial)

4. Employer of Record (Pre-FDI entry model)

For startups and SMEs, a Private Limited Company under FDI is the most scalable option.

Step-by-Step Company Registration Process in Nepal

Step 1: Confirm FDI Eligibility and Sector Approval

Not all sectors are open to foreign investment. Nepal maintains a Negative List under FITTA 2019.

Permitted sectors include:

• IT and software services

• Consulting and professional services

• Manufacturing

• Tourism and hospitality

• Education services (with conditions)

Restricted sectors include small retail trade, personal services, and certain media activities.

Tip: Sector misclassification is one of the most common causes of rejection.

Step 2: Obtain Foreign Investment Approval

Foreign investors must obtain approval from:

• Department of Industry (DOI), or

• Investment Board Nepal (IBN) for large investments

Required documents include:

• Application form

• Investor profile and passport

• Board resolution of parent company

• Joint Venture Agreement (if applicable)

• Project Report and financial forecast

Approval timelines typically range from 15 to 30 working days.

Step 3: Name Reservation at the Office of Company Registrar (OCR)

Once FDI approval is granted, you apply for company name reservation with the Office of Company Registrar.

Name rules:

• Must be unique

• Cannot resemble existing companies

• Must reflect business activities

Approval usually takes 1–3 working days.

Step 4: Draft Constitutional Documents

You must prepare:

• Memorandum of Association (MOA)

• Articles of Association (AOA)

These documents define:

• Business objectives

• Share capital structure

• Director powers

• Share transfer rules

Foreign founders often underestimate the importance of drafting. Errors here create long-term compliance risks.

Step 5: Company Incorporation with OCR

The OCR registers the company after reviewing all documents.

You receive:

• Certificate of Incorporation

• Company Registration Number

This completes the legal birth of the company.

Step 6: Tax Registration and PAN/VAT

Every company must register with the Inland Revenue Department (IRD).

Registrations include:

• Permanent Account Number (PAN)

• VAT registration (mandatory if turnover exceeds threshold)

Tax compliance begins immediately after incorporation.

Step 7: Capital Injection and Bank Compliance

Foreign investors must bring in capital through:

• Approved Nepali commercial banks

• Foreign currency inward remittance

The bank issues a Capital Inflow Certificate, which is critical for future profit repatriation.

Step 8: Labour, Social Security, and Operational Compliance

After registration, companies must comply with:

• Labour Act, 2017

• Social Security Fund Act, 2018

• Bonus Act, 1974

Key requirements:

• Employment contracts

• SSF contributions

• Leave and working hour compliance

Timeline for the Company Registration Process in Nepal

This timeline assumes documents are correct on first submission.

Cost Breakdown for Foreign Startups

Typical Government and Professional Costs

• OCR registration fees

• DOI/IBN processing fees

• Legal drafting and advisory

• Bank compliance charges

Costs vary by capital size and business complexity.

Important: Under-budgeting compliance costs leads to delays and penalties.

Common Mistakes Foreign Startups Make

Foreign founders often struggle because of avoidable errors.

Frequent issues include:

• Incorrect sector classification

• Weak MOA and AOA drafting

• Improper capital inflow routing

• Ignoring labour law obligations

• No repatriation planning

A compliant setup protects both capital and reputation.

Employer of Record vs Direct Company Registration

Many startups test Nepal before full incorporation.

An EOR → FDI transition strategy is increasingly popular among tech startups.

Legal Guarantees for Foreign Investors

Nepalese law provides several protections:

• National treatment principle

• Protection against expropriation

• Right to profit and capital repatriation

• Access to arbitration

These guarantees are enshrined under FITTA 2019.

Strategic Advantages of Registering a Company in Nepal

Nepal offers:

• Competitive operating costs

• English-speaking workforce

• Growing IT and service sector

• Strategic access to India and China

For startups, Nepal is a high-leverage growth base.

Compliance Checklist After Registration

Ongoing obligations include:

• Annual tax filings

• Audit and financial statements

• OCR annual returns

• Labour and SSF reporting

Non-compliance can lead to fines or licence suspension.

Why Professional Support Matters

The company registration process in Nepal is not just administrative. It is legal, financial, and strategic.

Professional support helps with:

• Correct entry structuring

• Faster approvals

• Long-term tax efficiency

• Risk mitigation

This is especially critical for foreign founders unfamiliar with Nepalese law.

Conclusion: Getting the Company Registration Process in Nepal Right

The company registration process in Nepal offers strong opportunities for startups and small businesses. However, success depends on compliance, documentation, and strategic planning.

With the right structure, Nepal can become a powerful offshore growth hub. With the wrong setup, it becomes a compliance burden.

Call to Action

Planning to register a company in Nepal?
Speak with our FDI and compliance specialists for a free entry-strategy consultation. We help foreign startups structure, register, and scale in Nepal with full legal confidence.

Frequently Asked Questions (People Also Ask)

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

Yes. Foreigners can own up to 100 percent equity in permitted sectors under FITTA 2019.

2. How long does the company registration process in Nepal take?

Typically four to six weeks if documents are complete and compliant.

3. What is the minimum investment required?

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

4. Can profits be repatriated?

Yes. Profits, dividends, and capital can be repatriated after tax compliance and bank approval.

5. Is local director or shareholder mandatory?

No local shareholder is mandatory, but local compliance representation is required.