If you are a foreign business planning market entry, understanding the types of companies in Nepal is your first strategic decision. Nepal offers multiple legal structures for foreign companies. Each comes with different ownership rules, compliance obligations, and repatriation rights.
Choosing the wrong structure can delay approvals, restrict operations, or increase tax exposure. Choosing the right one can accelerate growth and reduce risk. This guide gives you the most authoritative, practical explanation available.
We focus on how foreign companies are classified in Nepal, not just local company law. You will learn what structure fits your goals, budget, and timeline.
Foreign companies face different rules than domestic investors. Nepal distinguishes clearly between local ownership and foreign participation.
Your classification determines:
Whether foreign ownership is allowed
Minimum capital requirements
Approval authorities
Permitted business activities
Tax treatment and repatriation rights
Most foreign investors interact with three regulators:
Office of Company Registrar (OCR)
Department of Industry (DOI)
Nepal Rastra Bank
From a foreign investor’s lens, Nepal recognizes five practical entry structures.
Foreign Direct Investment (FDI) Private Limited Company
Public Limited Company with foreign investment
Branch Office
Liaison Office
Representative Office
Each serves a different strategic purpose. Let’s break them down.
This is the most common and flexible option.
A Private Limited Company incorporated in Nepal with foreign shareholding under FDI laws.
Separate legal entity in Nepal
Foreign ownership up to 100 percent in permitted sectors
Limited liability protection
Eligible for profit repatriation
IT and software companies
Outsourcing and shared services
Manufacturing and assembly
Consulting and professional services
Minimum paid-up capital applies
Annual audit required
Monthly and annual tax filings
Social Security Fund compliance
FDI Private Limited Companies are the backbone of Nepal’s foreign investment ecosystem.
This structure is suitable for large-scale or capital-intensive ventures.
A Public Limited Company incorporated in Nepal that allows foreign shareholders.
Minimum seven shareholders
Higher capital threshold
Shares can be publicly issued
Strong regulatory oversight
Infrastructure projects
Hydropower and energy
Banking and insurance
Large manufacturing
This structure offers scale but requires heavier governance.
A Branch Office is not a separate legal entity.
An extension of the foreign parent company registered in Nepal.
No separate legal personality
Parent company bears full liability
Limited scope of activities
Usually project-based
Government of Nepal approval
Sectoral ministry clearance
Central bank approval for inward funds
Branch Offices work well for time-bound projects, not long-term operations.
This is the most restricted structure.
A non-commercial presence used only for coordination.
Market research
Brand promotion
Communication with headquarters
No revenue generation
No invoicing
No commercial contracts
A Liaison Office is ideal for early-stage market exploration.
Often confused with liaison offices, but more narrowly defined.
A presence to represent a foreign company’s interests in Nepal.
Cannot conduct business
Cannot earn income
Funded entirely by the parent company
This structure is common for NGOs, chambers, and trade bodies.
| Structure | Legal Entity | Revenue Allowed | Foreign Ownership | Best For |
|---|---|---|---|---|
| FDI Private Limited | Yes | Yes | Up to 100% | Long-term operations |
| Public Limited | Yes | Yes | Permitted | Large investments |
| Branch Office | No | Limited | 100% | Project execution |
| Liaison Office | No | No | 100% | Market research |
| Representative Office | No | No | 100% | Representation only |
This table highlights why most foreign companies choose FDI Private Limited companies in Nepal.
Not all sectors are open to foreign investment.
Small retail trading
Certain media activities
Domestic courier services
Personal services
Always check the latest negative list before structuring your investment.
Foreign companies operate under multiple laws.
Key legislation includes:
Companies Act
Foreign Investment and Technology Transfer Act
Industrial Enterprises Act
Income Tax Act
Central bank foreign exchange directives
These laws collectively define how the types of companies in Nepal operate for foreign investors.
Here is a practical decision framework.
Define your business activities
Confirm sector eligibility
Decide ownership and control
Assess capital and timeline
Choose compliance capacity
Most strategic investors move from liaison office to FDI company as confidence grows.
Avoid these costly errors.
Registering a liaison office when revenue is planned
Underestimating compliance timelines
Choosing a branch office for long-term presence
Ignoring repatriation planning
Professional structuring advice saves time and capital.
Tax obligations vary by structure.
Corporate tax applies to FDI companies
Withholding taxes on dividends and services
Branch profits taxed differently
Repatriation requires regulatory clearance
Early tax planning is essential.
One major advantage of FDI companies is repatriation.
Foreign investors can repatriate:
Dividends
Royalties
Loan repayments
Sale proceeds
Approval is routed through commercial banks under central bank oversight.
More than 90 percent of active foreign businesses choose this route.
Reasons include:
Operational flexibility
Legal certainty
Scalable structure
Investor-friendly exit
This makes it the default recommendation for most foreign companies entering Nepal.
FDI Private Limited Company with 100 percent ownership.
FDI Company or Public Company depending on scale.
Branch Office for projects. FDI Company for long-term presence.
FDI Private Limited Company.
Nepal continues to liberalize foreign investment.
Key trends include:
Faster digital approvals
Improved repatriation processes
Greater sectoral openness
Understanding the types of companies in Nepal positions you ahead of regulatory change.
Most foreign investors choose an FDI Private Limited Company. It allows revenue, profit repatriation, and full operational control.
Yes. Many sectors allow up to 100 percent foreign ownership under FDI regulations.
Branch offices suit short-term projects. Subsidiaries are better for long-term operations and scalability.
No. Liaison offices cannot conduct commercial activities or generate revenue.
An FDI Private Limited Company typically takes four to eight weeks, depending on approvals.
Understanding the types of companies in Nepal is the foundation of a successful market entry. Foreign companies must align structure with strategy, compliance capacity, and growth plans.
For most investors, an FDI Private Limited Company offers the best balance of control, flexibility, and compliance.
Planning to enter Nepal?
Book a free market-entry consultation to determine the right company structure, approvals, and compliance roadmap for your business.