If you are exploring South Asia, Types of companies in Nepal is one of the first topics you must master. Nepal welcomes foreign investment, but only through specific legal structures. Each option carries different ownership rules, compliance burdens, tax exposure, and repatriation rights.
This beginner-friendly guide explains company structures in Nepal clearly and practically. It is written for foreign founders, CFOs, and expansion teams who want certainty before committing capital.
By the end, you will know which company type fits your business goals and how to move forward safely.
Foreign companies often focus on speed. In Nepal, structure matters more than speed.
Choosing the wrong company type can lead to:
• Rejected FDI approvals
• Inability to hire staff
• Profit repatriation delays
• Regulatory penalties
The correct structure protects your capital, IP, and long-term growth.
Business entities in Nepal are regulated under national commercial and investment laws. Foreign companies mainly interact with:
• The Companies Act, 2006
• Foreign Investment and Technology Transfer Act (FITTA), 2019
• Industrial Enterprises Act, 2020
• Income Tax Act, 2002
Registrations and approvals are handled by the Department of Industry, the Office of Company Registrar, and Nepal Rastra Bank.
Nepal legally recognizes several business forms. However, only a few are suitable for foreign ownership.
Here is the full landscape.
A Private Limited Company is the most common structure for foreign investors.
• Separate legal entity
• Limited liability for shareholders
• Can be 100 percent foreign-owned (sector permitting)
• Minimum one shareholder
• No public share issuance
This is the default structure for startups, tech firms, service providers, and outsourcing operations.
• Long-term operations
• Hiring local teams
• Revenue generation inside Nepal
A Public Limited Company is designed for large-scale ventures.
• Minimum seven shareholders
• Mandatory board governance
• Eligible to issue public shares
• Higher compliance burden
Foreign investors rarely use this structure unless required by sector rules.
• Infrastructure
• Banking and insurance
• Hydropower projects
A branch office is an extension of the foreign parent company.
• No separate legal personality
• Parent company bears full liability
• Allowed only for approved activities
• Cannot freely trade
• Government contracts
• Large infrastructure execution
• Project-based presence
A liaison office is the most restricted structure.
• Market research
• Relationship building
• Coordination with partners
• Earn revenue
• Sign commercial contracts
• Hire staff freely
This structure is often misunderstood.
Partnership firms exist but are not suitable for foreign investors.
• Unlimited liability
• No FDI eligibility
• Weak credibility for international operations
Foreign companies should avoid this structure.
This structure is strictly for Nepali citizens.
Foreign ownership is not allowed.
| Criteria | Private Limited | Public Limited | Branch Office | Liaison Office |
|---|---|---|---|---|
| Foreign ownership | Allowed | Allowed | Allowed | Allowed |
| Legal entity | Yes | Yes | No | No |
| Revenue generation | Yes | Yes | Limited | No |
| Liability | Limited | Limited | Parent liable | Parent liable |
| Hiring employees | Yes | Yes | Restricted | Very limited |
| Best use case | Core operations | Large projects | Execution | Market entry |
Foreign Direct Investment is permitted only through specific structures.
Private Limited Company
Public Limited Company
Branch Office (restricted)
Liaison offices are not considered FDI entities.
Minimum FDI threshold is NPR 20 million under current regulations.
Not all sectors are open to foreign investors.
Restricted or prohibited areas include:
• Small retail trading
• Personal services
• Local courier services
• Certain agriculture activities
Always verify sector eligibility before incorporation.
Once incorporated, foreign-owned companies must comply with:
• Annual financial audits
• Income tax filings
• Withholding tax deductions
• Social Security Fund contributions
• FDI reporting to Nepal Rastra Bank
Non-compliance can freeze bank accounts.
If you are new to Nepal, simplify your decision.
• Will you earn revenue locally?
• Do you need employees in Nepal?
• Is long-term presence required?
• Do you plan profit repatriation?
In 90 percent of cases, the answer leads to Private Limited Company.
Sector eligibility confirmation
FDI approval from Department of Industry
Company registration at OCR
Tax registration and PAN
Bank account opening
Capital injection
Employee onboarding
Skipping steps causes delays.
Corporate tax rates generally apply equally, but exposure differs.
• Corporate income tax: usually 25 percent
• Withholding tax on dividends
• Capital gains tax on exit
• Transfer pricing rules
Branch offices face additional remittance taxes.
• Choosing liaison office for revenue
• Underestimating compliance workload
• Ignoring sector restrictions
• Injecting capital before approvals
Avoiding these saves months.
This article is written using:
• Nepal investment legislation
• Official DOI and OCR procedures
• Practical experience advising foreign companies
• Real compliance outcomes
Accuracy matters when capital is involved.
Understanding Types of companies in Nepal is not optional for foreign businesses. It defines your legal rights, tax exposure, and exit flexibility.
For most foreign investors, a Private Limited Company with FDI approval offers the safest and most scalable route.
Choosing right at the start saves cost, time, and regulatory stress.
Planning to expand into Nepal?
👉 Book a free consultation to evaluate the right company type, FDI eligibility, and compliance roadmap before you invest.
A Private Limited Company is best for most foreign investors. It allows 100 percent ownership, revenue generation, hiring, and profit repatriation.
No. Sole proprietorships are only permitted for Nepali citizens.
No. Liaison offices cannot conduct commercial or revenue-generating activities.
The minimum foreign investment threshold is NPR 20 million per project.
Yes, but it requires fresh FDI approval and full company registration.