Understanding the types of companies in Nepal is essential for any foreign business planning market entry. Nepal’s corporate landscape did not evolve overnight. It reflects six decades of legal reform, economic liberalisation, and foreign investment policy shifts. From tightly controlled domestic entities in the 1960s to today’s foreign-friendly structures under modern FDI rules, company types in Nepal tell a story of transformation.
This guide explains that evolution clearly. You will learn how company structures changed, what options exist today, and which structure suits foreign investors best. The focus is practical, compliant, and decision-oriented.
Nepal’s company framework has progressed through defined legal phases. Each phase reshaped ownership rules, liability, and foreign participation.
1964: First Companies Act introduced formal incorporation.
1992: Liberalisation era opens Nepal to private sector growth.
2006: Companies Act modernised governance and liability.
2019–2020: FDI and industrial reforms streamline foreign entry.
2023–present: Digital filings and compliance tightening.
The 1964 Act created Nepal’s first recognised company forms. These were simple and highly regulated.
Core features
Strong government oversight
Limited corporate autonomy
No meaningful foreign ownership
Company types introduced
Private companies
Public companies
Foreign companies could not incorporate directly. Operations were limited to trade representation.
Economic reforms in the early 1990s marked a turning point.
What changed
Recognition of entrepreneurship
Growth of private limited companies
Reduced licensing barriers
Impact
SMEs flourished
Joint ventures increased
Banking, tourism, and manufacturing expanded
Foreign investors entered mainly via minority joint ventures.
The Companies Act 2006 remains the backbone of Nepal’s corporate system.
Major improvements
Clear director duties
Shareholder protections
Defined liability structures
This Act formally differentiated company types and remains central to how businesses register today.
The most popular structure for both domestic and foreign investors.
Key characteristics
1–101 shareholders
Limited liability
No public share issuance
Why foreign companies prefer it
Flexible ownership
Easier compliance
Ideal for long-term operations
Designed for large enterprises and capital markets.
Key characteristics
Minimum 7 shareholders
Can issue shares publicly
Heavily regulated
Often used by banks, hydropower firms, and listed companies.
A branch is an extension of the parent company.
Important points
Not a separate legal entity
Parent bears full liability
Restricted activities
Best suited for execution-based or time-bound projects.
A non-commercial presence.
Permitted activities
Market research
Relationship management
Promotion only
Not allowed
Revenue generation
Contract signing
Ideal for market testing.
Nepal now allows 100% foreign ownership in many sectors.
Governed by
Foreign Investment and Technology Transfer Act
Industrial Enterprises Act
Minimum capital thresholds apply depending on sector.
These structures exist but are not recommended for foreign investors.
Limitations
Unlimited liability
Residency requirements
No FDI eligibility
1964–1991: No incorporation rights for foreigners
1992–2005: Minority joint ventures allowed
2006–2018: Structured foreign shareholding permitted
2019–present: 100% foreign ownership in approved sectors
| Aspect | 1964–1991 | 1992–2005 | 2006–2018 | 2019–Present |
|---|---|---|---|---|
| Foreign ownership | Not allowed | Limited JV | Majority allowed | 100% allowed |
| Compliance | Manual | Manual | Hybrid | Digital |
| Liability clarity | Low | Medium | High | High |
| Sector access | Restricted | Selective | Expanding | Broad |
Foreign companies now choose structures based on risk, control, and timeline.
Private Limited Company with FDI
Branch Office
Liaison Office
Decision drivers
Duration of presence
Revenue plans
Regulatory exposure
Consider the following before deciding:
Planned investment size
Sector eligibility
Repatriation needs
Hiring and payroll requirements
Exit strategy
Foreign companies interact with multiple regulators.
Key institutions
Company Registrar
Department of Industry
Nepal Rastra Bank
Inland Revenue Department
Non-compliance can delay profit repatriation and visa renewals.
Nepal ranks among South Asia’s emerging FDI destinations.
Post-2019 reforms reduced approval timelines by over 40 percent.
Digital company registration is now standard.
Sources include national legislation, government investment guidelines, and central bank directives.
The types of companies in Nepal have evolved from rigid domestic structures to flexible, foreign-friendly entities. Today, Nepal offers clear pathways for global businesses seeking South Asian expansion. Choosing the right structure is no longer about permission. It is about strategy, compliance, and scalability.
Planning to expand into Nepal?
Book a consultation with our Nepal market-entry specialists to select the right company structure, secure approvals, and launch compliantly.
A private limited company with foreign direct investment is the most flexible and widely used option.
Yes. Full foreign ownership is allowed in approved sectors under current FDI laws.
A branch suits short-term projects. A subsidiary is better for long-term growth.
With proper documentation, registration typically takes two to four weeks.
No. Liaison offices are strictly non-commercial.