Understanding the types of companies in Nepal is essential for foreign investors who plan to scale, restructure, or comply with evolving regulations. Many businesses start small. Over time, strategy changes. Capital grows. Foreign ownership becomes relevant.
This is where company conversion comes in. Nepal allows legal conversion from one company type to another under the Companies Act. When done correctly, the business continues without dissolution. Assets, contracts, and employees remain intact.
This guide explains how to convert from one company type to another in Nepal, step by step, with a clear focus on foreign companies, NRNs, and global founders.
Company conversion is a statutory restructuring process. The legal identity remains, but the form of the company changes.
Examples include:
Private Limited → Public Limited
Partnership → Private Limited
Local Company → Foreign-owned Company
Liaison Office → Branch Office
The conversion is regulated by the Companies Act", overseen by the Office of the Company Registrar".
Nepal recognizes several business structures. Not all conversions are allowed. Below are the most common and legally supported transitions.
Most popular structure for foreign investors
Limited liability
Restriction on public share issuance
Common conversions:
Private Limited → Public Limited
Private Limited → Foreign-owned Company
Minimum seven shareholders
Can raise capital publicly
Higher disclosure requirements
Conversion notes:
Reverse conversion to private is allowed, but regulated
Governed by Partnership Act
Unlimited liability for partners
Allowed conversion:
Partnership → Private Limited Company
Not a separate legal entity
Owner bears full liability
Important:
Direct conversion is not permitted. A new company must be incorporated instead.
Extension of parent company
No separate legal personality
Possible restructuring:
Branch Office → Subsidiary Company (new incorporation)
Non-commercial presence
Market research and coordination only
Typical transition:
Liaison Office → Branch Office
Foreign investors usually convert due to growth, compliance, or strategic expansion.
Common reasons include:
Allowing foreign direct investment (FDI)
Raising capital or issuing shares
Limiting personal or partner liability
Meeting regulatory thresholds
Improving credibility with banks and regulators
Conversion is often cheaper and faster than closing and reincorporating.
Company conversion is governed by multiple statutes.
Key laws include:
Companies Act"
Foreign Investment and Technology Transfer Act"
Industrial Enterprises Act"
Directives of Nepal Rastra Bank"
Foreign-owned conversions require FDI approval before registration.
A formal resolution must approve:
The new company type
Capital structure changes
Updated ownership pattern
Before conversion, authorities review:
Tax clearance
Pending liabilities
Employee compliance
Shareholder agreements
Unresolved issues delay approval.
Key documents include:
Amended Memorandum of Association
Updated Articles of Association
Conversion application form
Share structure statement
Foreign investors must obtain approval from:
Department of Industry
Or Investment Board Nepal
This step is mandatory before registrar filing.
Documents are filed with the Office of the Company Registrar.
If approved, a conversion certificate is issued.
After approval, update:
PAN and tax records
Bank mandates
Contracts and licenses
Payroll and SSF registrations
| Conversion Type | Typical Timeline | Government Fees | Complexity |
|---|---|---|---|
| Partnership → Pvt Ltd | 3–4 weeks | Low | Medium |
| Pvt Ltd → Public Ltd | 1–2 months | Medium | High |
| Local → Foreign-Owned | 4–8 weeks | Medium | High |
| Liaison → Branch | 3–5 weeks | Medium | Medium |
Costs vary based on capital, foreign ownership, and advisory support.
Foreign companies should watch for these common mistakes:
Ignoring tax or SSF arrears
Assuming conversion avoids FDI approval
Poorly drafted shareholder resolutions
Mismatch between old and new objectives
Failure to update banks and regulators
Professional guidance reduces rejection risk.
When conversion is better:
Existing contracts must continue
Licenses are already issued
Brand continuity matters
When new incorporation is better:
Ownership structure changes completely
Legacy liabilities exist
Strategic reset is planned
Each case requires legal analysis.
Yes. The Companies Act allows conversion if capital, shareholders, and compliance requirements are met. Approval from the Company Registrar is mandatory.
Yes. However, prior FDI approval under FITTA is compulsory before filing conversion documents.
No. Conversion allows continuity. The company retains assets, contracts, and legal identity.
Timelines range from three weeks to two months. Foreign involvement usually extends the process.
Yes. Tax authorities must confirm no outstanding liabilities before approval.
Choosing among the types of companies in Nepal is not permanent. Nepal’s legal framework allows businesses to evolve without disruption.
For foreign companies, conversion is a powerful tool. It supports scaling, compliance, and long-term investment strategy. When handled correctly, it saves time, cost, and risk.
Planning to convert your company type in Nepal?
Book a consultation with our Nepal FDI and corporate restructuring specialists to receive a step-by-step conversion roadmap tailored to your business.