If you are planning to enter Nepal, the Company Act Nepal will shape almost every legal and operational decision you make. From incorporation to annual filings, director duties, and penalties, this law governs how companies are formed and run in Nepal.
Foreign companies often struggle to find one authoritative, plain-English explanation. This guide solves that problem. It answers the most common questions foreign investors ask about the Company Act Nepal, while also explaining compliance obligations you must meet after registration.
This article is written for decision-makers. Founders. CFOs. Legal heads. And foreign promoters who want clarity without legal jargon.
The Company Act Nepal (Companies Act, 2063 – 2006) is the primary legislation governing company incorporation, governance, compliance, restructuring, and dissolution in Nepal.
It applies to:
Nepali companies
Foreign-owned companies
Joint ventures
Subsidiaries formed under Foreign Direct Investment
The Act is administered by the Office of the Company Registrar (OCR) under the Ministry of Industry, Commerce and Supplies.
Foreign companies are subject to additional scrutiny. Regulators expect strict adherence to:
Capital structure rules
Board governance standards
Disclosure and filing timelines
Share transfer restrictions
Penalties for non-compliance
Ignoring these requirements can delay operations, freeze bank accounts, or invalidate corporate actions.
The Company Act Nepal recognises several company structures. Foreign investors typically choose one of the following.
Most common structure for foreign-owned businesses.
Key features:
Minimum 1 shareholder
Maximum 101 shareholders
Share transfer restrictions
No public share issuance
Used for large enterprises and regulated sectors.
Key features:
Minimum 7 shareholders
Public share issuance allowed
Higher compliance burden
Mandatory statutory disclosures
Not separate legal entities. Operate under foreign parent approval.
Foreign companies must follow a structured process.
Name reservation with the Office of Company Registrar
Drafting constitutional documents (MOA and AOA)
Submission of incorporation application
Capital declaration and shareholder details
Certificate of incorporation issued
After incorporation, additional registrations are mandatory under tax, labour, and foreign investment laws.
Foreign promoters must prepare:
Passport copies of shareholders and directors
Board resolution approving Nepal incorporation
Memorandum of Association
Articles of Association
Registered office address in Nepal
Power of attorney (if applicable)
All foreign documents must be notarised and, in some cases, apostilled.
Minimum one director required
Can be foreign nationals
Fiduciary duties imposed by law
Liable for statutory non-compliance
Can be 100% foreign owned (subject to FDI sector rules)
Capital contribution must align with approved investment
Share transfers are regulated and must be reported
Once incorporated, compliance does not stop.
Annual General Meeting (AGM)
Annual return filing
Financial statement submission
Shareholding updates
Director appointment changes
Failure to comply attracts penalties under the Company Act Nepal.
| Compliance Item | Due Timeline | Authority |
|---|---|---|
| AGM | Within prescribed fiscal period | Shareholders |
| Annual Return | Within statutory deadline | OCR |
| Financial Statements | Post-audit submission | OCR |
| Director Updates | Immediately upon change | OCR |
This table highlights where foreign companies most often default.
Non-compliance is costly.
Penalties may include:
Daily fines for late filings
Lump-sum penalties for serious breaches
Personal liability of directors
Invalidation of corporate decisions
Repeat offenders face higher scrutiny and operational disruption.
The Company Act Nepal does not operate in isolation.
Foreign companies must also comply with:
Foreign Investment and Technology Transfer Act
Industrial Enterprises Act
Income Tax Act
Labour Act
Social Security regulations
In practice, incorporation under the Company Act is only the first step.
Many foreign investors repeat the same errors.
Assuming incorporation equals operational readiness
Missing annual filing deadlines
Ignoring director liability provisions
Misunderstanding capital repatriation rules
Using incorrect constitutional clauses
These mistakes are preventable with proper advisory support.
Here is a practical checklist:
Company registered under Company Act Nepal
FDI approval obtained where required
Tax registration completed
Labour and SSF compliance active
Annual filings calendar maintained
Using a compliance calendar is strongly recommended.
Yes. Subject to sectoral FDI rules, foreign companies can own 100% equity in a Nepali company incorporated under the Company Act Nepal.
No. The Act allows foreign directors. However, certain regulators and banks may prefer a local authorised representative.
Late filings attract daily penalties. Persistent non-compliance may invalidate corporate records and restrict operations.
Yes. Repatriation is allowed but governed by FDI and central bank regulations, not the Company Act alone.
Yes. All companies must maintain accounts and submit audited financial statements annually.
| Feature | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7 |
| Public Shares | Not allowed | Allowed |
| Compliance | Moderate | High |
| Suitable for Foreign Investors | Yes | Limited cases |
This comparison helps foreign investors choose the right structure.
The Company Act Nepal is detailed. Interpretation matters as much as compliance.
Foreign companies benefit from:
Structuring advice before incorporation
Constitution drafting aligned with FDI approval
Ongoing secretarial compliance
Director liability protection strategies
This is not an area to rely on templates alone.
If you are planning to register or already operate a foreign-owned company in Nepal, professional guidance saves time and risk.
Speak with a corporate compliance specialist today to ensure your company fully complies with the Company Act Nepal and related FDI laws.
The Company Act Nepal is the legal backbone of corporate operations in Nepal. For foreign companies, understanding it is essential for long-term success.
With the right structure, timely filings, and expert support, compliance becomes a strategic advantage rather than a burden.