How to Incorporate a Company in Nepal as a Foreign Investor: Step-by-Step Guide

Incorporating a company in Nepal as a foreign investor involves navigating several legal steps and government agencies, but it is entirely feasible with the right guidance. Nepal has become more welcoming to foreign investment in recent years, thanks to reforms like the Foreign Investment and Technology Transfer Act (FITTA) 2019. This step-by-step guide will walk you through foreign company registration in Nepal, covering both 100% foreign-owned companies and joint ventures with local partners. We will explain each stage of the process – from securing a company name and preparing a Memorandum and Articles of Association, to obtaining approvals from the Office of Company Registrar (OCR) and Department of Industry, and completing post-incorporation tasks like tax registration and bank account setup. You’ll also learn about FITTA 2019 regulations, foreign capital repatriation rights, typical timelines, required documents, and how to handle incorporation remotely via power of attorney (POA). Throughout, we highlight how Digital Consulting Ventures (DCV) facilitates each stage, ensuring a smooth incorporation process for foreign investors even if you cannot be physically present in Nepal.

(Even if you are new to Nepal’s business environment, don’t worry – this guide is written in clear, non-technical language to help global business owners understand the requirements. Let’s get started on turning your Nepal investment plan into a registered company!)

100% Foreign-Owned vs Joint Venture Companies in Nepal

One of the first considerations is whether to set up a fully foreign-owned subsidiary or a joint venture (JV) with local partners. Nepal allows both options, subject to certain sectoral restrictions:

• 100% Foreign-Owned Entity: In most industries, foreign investors can incorporate a private limited company with all shares held by foreign individuals or companies. Nepal’s laws permit even a single foreign shareholder to form a company (one-person company). This means you do not need a local partner if your sector is open to full foreign ownership. For example, manufacturing, IT, and export-oriented businesses can usually be wholly foreign-owned.

• Joint Venture with Local Partners: In some cases, you may choose or be required to partner with Nepali individuals or firms. A JV structure means sharing ownership (and usually management roles) between foreign and local stakeholders. Certain sectors mandate joint ventures or cap foreign ownership at a percentage. For instance, consulting services are capped at 51% foreign ownership, and sectors like telecommunications allow up to 80% foreign shareholding. In these industries, a local partner is necessary to hold the remaining equity. Even when not required by law, having a local partner can provide advantages like market knowledge and easier navigation of local regulations.

Key Point: Whether 100% foreign-owned or a JV, the incorporation process in Nepal is largely the same. Both types are considered foreign investment companies under Nepali law and must go through the foreign investment approval process. As the Department of Industry (DOI) notes, a foreign investor can register either a fully owned subsidiary or a joint venture company in Nepal after obtaining foreign investment approval. The main difference is that a joint venture will require a Joint Venture Agreement and local shareholder documents during the approval stage.

DCV’s Facilitation: Digital Consulting Ventures (DCV) advises you on the optimal structure (100% vs JV) based on your industry and goals. If a local partner is needed or beneficial, DCV can help identify reputable local partners and draft a solid Joint Venture Agreement. If you go 100% foreign-owned, DCV ensures you meet any specific conditions for that sector. In both cases, DCV will prepare the necessary documentation for foreign investment approval and company incorporation as detailed below.

Regulatory Framework: FITTA 2019 and Company Act 2063

Before diving into the steps, it’s important to understand Nepal’s legal framework for foreign incorporation:

• Foreign Investment and Technology Transfer Act (FITTA) 2019: This is the primary law governing foreign direct investment (FDI) in Nepal. FITTA 2019 modernized the FDI regime and established an investor-friendly environment. Notably, FITTA (along with subsequent regulations) set a minimum investment threshold: foreign investments must be above NPR 20 million (approximately USD 150,000). This threshold was introduced via a 2019 Gazette notice to encourage substantial investments (initially it was NPR 50 million, later revised down to NPR 20 million). FITTA 2019 also guarantees key rights to foreign investors, such as the ability to repatriate profits and capital (dividends, sale proceeds, compensation, royalties, etc.) after paying taxes and obtaining regulatory approval. The act provides “national treatment” to foreign investments, meaning foreign-owned companies are generally treated on par with local companies in allowed sectors. FITTA expanded the list of permissible sectors and slightly increased the number of industries open to up to 100% foreign ownership, while maintaining a Negative List of industries completely closed or restricted to FDI (e.g. cottage industries, real estate trading, arms production, etc.). We will discuss repatriation rights under FITTA in a later section, but keep in mind that foreign investors have legal protection to withdraw their investment returns, provided they follow the procedures.

• Companies Act 2063 (2006): This act (with subsequent amendments) governs the incorporation and operation of companies in Nepal. It applies to both local and foreign investors. Under the Companies Act, you can incorporate a Private Limited Company (the most common vehicle for foreign businesses) with 1 to 50 shareholders, or a Public Limited Company (which requires at least 7 shareholders and is typically for larger ventures). Most foreign investors choose a private limited structure for ease of setup and fewer compliance requirements. The Companies Act lays out the requirements for a company’s Memorandum of Association (MoA) and Articles of Association (AoA), the process for registration with the Office of the Company Registrar, and the post-incorporation compliance such as annual reporting. Notably, Section 154 of the Act also provides for registering foreign companies’ branch or liaison offices, but here we focus on incorporating a new Nepali company for the foreign investor. In general, the Act does not discriminate between Nepali and foreign shareholders – as long as you have the DOI’s foreign investment approval, the OCR will register the company per the standard process.

• Industrial Enterprise Act 2020 (2076): Alongside FITTA, this act classifies industries and outlines licensing and industry registration requirements. It ties into the process by requiring an Industry Registration Certificate for foreign-invested companies after company incorporation. We will cover that step.

• Relevant Agencies: The key government bodies involved are: Department of Industry (DOI) – the one-stop agency for foreign investment approval and industry registration under FITTA; Office of the Company Registrar (OCR) – which handles the company name reservation and company incorporation filings; and the Inland Revenue Department (IRD) – which issues tax registrations (PAN/VAT). Additionally, large projects above NPR 6 billion require approval from the Investment Board of Nepal (IBN) instead of DOI, and the central bank (Nepal Rastra Bank, NRB) is involved in regulating the inflow and outflow of foreign currency (e.g., NRB must approve loans from abroad and will be involved in repatriation clearance).

DCV’s Facilitation: DCV’s experts stay updated on all Nepali laws and regulations. We clarify legal requirements to clients in simple terms and ensure full compliance at each step. DCV will liaise with DOI, OCR, IRD, and other agencies on your behalf, leveraging our familiarity with these processes to prevent mistakes. Essentially, DCV navigates the regulatory maze for you, so you can focus on your business plan.

With the groundwork covered, let’s move into the step-by-step incorporation process.

Step-by-Step Process for Foreign Company Registration in Nepal

In this section, we break down the incorporation process into clear steps. Note: The sequence of steps is important – for example, you must obtain foreign investment approval before registering the company with OCR. Also, if you are not in Nepal, all these steps can be completed via a local representative through a Power of Attorney (we’ll discuss remote registration after the steps). Typical timelines are indicated for each stage, though actual durations can vary.

Step 1: Reserve a Company Name with OCR

The first formal step is to reserve your company name through the Office of the Company Registrar. You need an approved name before you can submit incorporation documents.

• Name Selection Criteria: The proposed name must be unique and not too similar to existing company names in Nepal. It should not infringe on any trademarks and must comply with naming guidelines (for example, certain words related to government or charity may be restricted unless relevant). The name can be in Nepali or English, but if in English, a Nepali translation might be required for the registration documents.

• Name Reservation Process: You (or your representative) apply for name reservation on the OCR’s online portal. The application allows you to input the desired name and provide a few alternatives in case the first choice is taken. The OCR will check against its database for conflicts. This process is now digitized, making it relatively quick – usually a response comes within 1-3 working days. Upon approval, the name is reserved for a certain period (generally 45 days, extendable if needed) during which you must complete the company incorporation filing.

• Outcome: If approved, OCR issues a Name Reservation Certificate or confirmation (often electronically), which you will include in the incorporation application. If the name is rejected (due to similarity or other issues), you can modify and reapply. It’s wise to have a distinct name to avoid delays.

DCV’s Facilitation: DCV will help you come up with a compliant and available company name. We perform an availability search in the OCR database to ensure your desired name isn’t already in use or doesn’t conflict with regulations. DCV then files the name reservation request on your behalf through the OCR’s portal. If any issues arise, we communicate with OCR to resolve them quickly. By leveraging DCV’s local knowledge, you get an approved name without hassle, often within a couple of days.

Step 2: Foreign Investment Approval (FITTA Approval via DOI)

Once the name is reserved, the critical step is to obtain Foreign Investment Approval under FITTA 2019. This is handled by the Department of Industry (or the Investment Board for very large investments). Without this approval, a foreign-owned company cannot be incorporated.

• Prepare an FDI Proposal: You must submit an application to DOI’s Foreign Investment Section for approval of your investment project. This includes a project description and various supporting documents. Key documents required are:

  • Project Report or Business Plan: Detailing the nature of the business, proposed activities, projected financials, and how the foreign investment will be utilized. Essentially, DOI wants to know what your company will do in Nepal and the scale of operations.

  • Joint Venture Agreement (if applicable): If you have a Nepali partner (joint venture), you need a signed Joint Venture Agreement outlining the shareholding and roles of each party. For wholly foreign-owned, this is not needed.

  • Identification Documents: For individual investors – copies of passports; for institutional (corporate) investors – incorporation certificate, MoA, and AoA of the foreign company. These should be notarized and, if not in English, translated. Nepali authorities accept documents in English, but an accompanying Nepali translation may be required for some (DCV will arrange translations if needed).

  • Nepali Partner’s Documents: If there is a local investor/shareholder, include their citizenship certificate (for individuals) or company registration certificate and MoA/AoA (for a Nepali company shareholder).

  • Bio-data/Company Profile of Foreign Investor: A CV or profile describing the foreign investor’s background, experience, or company history. This establishes credibility and sector know-how.

  • Financial Credibility Certificate (FCC): A letter from a bank (in the investor’s home country or any reputable international bank) certifying that the investor has the financial capacity to make the proposed investment. This is basically a bank statement or letter confirming you have at least the amount of investment (e.g., > NPR 20 million) ready. It assures the government that funds are available.

  • Power of Attorney/Authority Letter: If you appoint someone (like DCV or a lawyer) to file the application and follow up on your behalf, include an authority letter or POA authorizing them to represent you. This should be signed by the investor and notarized. If issued abroad, sometimes it may need authentication by a Nepali Embassy or notarized in the home country – DCV will guide on the proper format.

  • Application Forms: DOI has a prescribed FDI application form. DCV will fill this out with your details (business scope, investment amount, percentage of foreign vs local share, proposed location of the business, etc.).

  • Government Fee/Deposit: For processing the foreign investment approval, a refundable deposit must be paid to the DOI. As of current rules, this is NPR 20,000 for any new foreign investment proposal. This amount is refunded to you after your industry comes into operation (it’s an incentive to actually start the business). DCV will arrange this payment and keep the receipt for you.

• Minimum Capital Requirement: Remember that your proposed investment must be at least NPR 20,000,000 (20 million Nepali Rupees) to qualify for approval. In your application, you will specify the intended total capital. The DOI will not approve projects below this threshold (few exceptions exist, such as non-profit ventures or maybe technology transfer arrangements, but generally 20M is the rule). Ensure your project plan reflects an investment equal to or above this amount.

• Approval Process: The DOI will review the application and may consult relevant line ministries depending on your sector. If the sector is sensitive or needs extra clearance (e.g., tourism, education, etc.), they might seek opinions from those departments. If everything is in order, DOI will issue a Foreign Investment Approval Letter. This letter specifies the approved amount of foreign investment, the business activities allowed, and any conditions. It also serves as your official go-ahead to bring in capital. In some cases, DOI’s decision might be subject to a meeting of a Foreign Investment Approval Committee, so it can take some time.

• Timeline: Officially, this process might take a few weeks, but in practice, expect roughly 4 to 8 weeks for DOI approval in a straightforward case. Some investors have seen approval in about a month when all documents were perfect, while others might wait 2-3 months if there are queries or bureaucratic delays. Patience is key, and proactive follow-up often helps. (If your project requires Investment Board approval due to high capital > NPR 6 billion, the timeline can be longer and the process slightly different; most small-to-medium businesses go via DOI).

• Additional Approvals: If your home country has restrictions on outbound investment (for example, Indian investors need approval from the Reserve Bank of India to invest abroad in some cases), you should handle that in parallel. Nepal’s DOI will ask for a copy of such approval if applicable, especially for Indian investors (as noted in NRB’s checklist).

DCV’s Facilitation: Obtaining FDI approval is often the most complex part – DCV makes it significantly easier. Our team will prepare your entire approval application, including drafting a solid Project Report highlighting how your investment benefits Nepal (which increases the chances of swift approval). We handle all paperwork: filling forms, collating your documents, getting Nepali translations where needed, and securing the bank’s Financial Credibility Certificate. If you’re not in Nepal, DCV can receive your signed documents by courier and represent you via POA. We then submit the application to DOI and actively follow up on its progress. DCV experts will address any queries from DOI, attend meetings if called, and keep you updated. Essentially, we act as your local liaison to navigate Nepal’s bureaucracy. Thanks to our familiarity with DOI’s procedures, we aim to shorten the approval timeline for our clients. Once the Foreign Investment Approval Letter is issued, DCV will obtain the original letter for you and prepare for the next step.

Step 3: Company Incorporation at the Office of Company Registrar (OCR)

With the foreign investment approval in hand, you can now formally incorporate the company with the Office of Company Registrar. This is the step where the company becomes a legal entity in Nepal, and you receive the company registration certificate.

• Memorandum and Articles of Association (MoA & AoA): Prepare the constitutional documents of the company. The Memorandum of Association outlines the company’s name, registered address, objectives (business activities), share capital, shareholders, and their shareholdings, and the initial directors. The Articles of Association detail the internal governance of the company – procedures for meetings, powers of directors, share transfer provisions, etc. In Nepal, these documents are typically prepared in the Nepali language (officially required to be in Nepali for OCR filing), though an English version can be created for your understanding. For foreign-owned companies, MoA/AoA must still comply with the standard format under the Companies Act. For example, the objectives in the MoA should match the activities approved by DOI and not include any unapproved business. DCV will draft custom MoA/AoA for you, ensuring all necessary clauses (like the ability to repatriate dividends) are included.

• Other Documents for OCR Filing: Along with MoA and AoA, you will submit:

  • Company Registration Application Form: A filled form (in Nepali) provided by OCR, containing details like company name (as reserved), proposed registered address, amount of authorized capital and issued capital, details of shareholders and their shares, details of directors, and the company secretary if any. You’ll also declare that you have fulfilled the requirements of the Companies Act.

  • Prior Approval Letter: A copy of the DOI’s Foreign Investment Approval Letter (or IBN approval, as applicable) must be attached. This is proof that the government has okayed the foreign shareholding. The copy should be notarized or at least self-attested. OCR will not register a company with foreign shareholders without this document.

  • Shareholders’ Documents:

    • For foreign individual shareholders: notarized copy of passport.

    • For foreign company shareholders: notarized copy of the company’s Certificate of Incorporation from home country, along with its MoA and AoA or equivalent charter documents. These prove the existence of the investing entity. If these are in another language, provide English or Nepali translations.

    • For Nepali shareholders (in case of JV): copy of citizenship certificate (if individual) or Nepali company registration certificate (if a company).

  • Board Resolution of Foreign Investor: If a foreign company is investing, that company should pass a resolution authorizing the investment and appointing a person as its representative to act on its behalf for the incorporation. A similar consent letter can be provided by foreign individual investors authorizing the process.

  • Joint Venture Agreement: If not already submitted, include a copy of the JVA (though DOI would have it, OCR also likes to have it for record if multiple shareholders are involved).

  • Registered Office Address Proof: You need to declare a registered office address for the new company in Nepal. Typically, a rent agreement or ownership document for the office space is required at the tax registration stage, but for OCR, you usually just provide the address in the forms. It’s good to have a tentative address at least (you can even use your service provider’s address initially if allowed). DCV can provide guidance on arranging a local address if you haven’t fixed an office yet.

  • Consent of Directors: If the shareholders have decided on the directors of the company, each director (or the representative for a foreign director) might need to sign a consent agreeing to act as director. In practice, this is often included within the application form or MoA, where the initial directors sign.

  • Power of Attorney: If someone (like DCV’s agent) is submitting documents on your behalf, a POA for that person to represent you in company registration may be filed (this may be the same POA used for DOI if it’s broad enough, or a separate one specific to OCR procedures).

• Authorized and Issued Capital: You will specify the authorized capital of the company (the maximum capital the company is allowed to issue) and the issued (paid-up) capital at incorporation (the amount being actually invested and shares issued initially). Authorized capital can be higher than issued. The minimum issued capital for foreign company will generally be the amount you intend to invest (at least the 20 million NPR threshold). For example, you might authorize NPR 50 million and issue NPR 20 million worth of shares initially to the foreign investor. The registration fee payable to OCR depends on the authorized capital: it is a sliding scale fee. For instance, for authorized capital up to NPR 10 million, the fee is NPR 16,000; higher capital incurs higher fees. DCV will calculate and let you know the exact fee based on your capital. This fee must be paid to OCR at the time of filing (usually via bank voucher to the Government Treasury).

• Filing Process: The incorporation documents are submitted electronically through OCR’s online system and also in physical copy (signed documents) to the OCR office. Typically, one creates an account on OCR’s website, uploads the forms/MoA/AoA, and after preliminary online approval, you visit OCR with the signed hardcopies. If you are not in Nepal, your representative (with POA) can sign and submit on your behalf. OCR officials will review the documents. They might make minor corrections or ask for clarification – for example, if any wording in the MoA is not as per their standard, they’ll advise to adjust it. Once satisfied, they will issue the Certificate of Incorporation (also known as the Company Registration Certificate) and the company’s Unique Registration Number. They will also endorse the MoA and AoA with a registration stamp.

• Timeline: Company incorporation is relatively fast after you have the DOI approval. It can take about 5-10 working days from submission to get the registration certificate, assuming documents are in order. Sometimes it’s even quicker (a few days) if there are no backlogs at OCR.

• Result: Congratulations, at this point your company (e.g., XYZ Nepal Pvt. Ltd.) is legally formed! You will have the Certificate of Incorporation, and copies of MoA/AoA as approved by OCR. The company now exists as a Nepali legal entity, albeit you still need to complete subsequent formalities before starting operations (tax registration, etc.).

DCV’s Facilitation: DCV plays a crucial role in this step. We draft the MoA and AoA tailored to your business goals while complying with Nepali law. Our legal experts ensure that all necessary clauses (like share capital, company objectives, directors’ powers, and exit provisions) are correctly captured. We handle translations and explain to you what each clause means. DCV also prepares the application form and gathers all supporting documents (passport copies, approval letters, resolutions, etc.) in the exact format OCR requires. When it’s time to file, our team submits the application through the online system and physically. We communicate with OCR examiners on any queries and pay the registration fee on your behalf. Essentially, DCV takes care of every paperwork detail. Once the company is approved, we pick up your Certificate of Incorporation and certified MoA/AoA from OCR and deliver copies to you. You won’t have to worry about local language issues or bureaucratic nuances – DCV streamlines the incorporation so that your Nepali company is established correctly the first time.

Step 4: Tax Registration (PAN/VAT) with Inland Revenue Department

After the company is registered, it must register for taxes with the Inland Revenue Department (IRD). The primary requirement is obtaining a Permanent Account Number (PAN), which is the tax identification number for the company. Without a PAN, the company cannot legally conduct financial transactions or open a fully operational bank account.

• PAN Registration: All companies in Nepal are required to register for a PAN – essentially enrolling with the tax authority. The PAN will be used for corporate income tax, and it’s also required when issuing invoices, signing contracts, etc. The process is straightforward and usually done at the local Tax Office corresponding to the company’s registered address. It generally takes only 1-2 days to obtain the PAN certificate once you submit the form and documents.

• Documents for PAN: According to IRD guidelines (and as summarized in various process manuals), you need to submit the following to get a PAN:

  • Application Form: A completed PAN registration form (available at the Tax Office or online). It will capture details like company name, registered address, registration number from OCR, business activity, and authorized signatory.

  • Company Registration Certificate: Copy of the certificate from OCR.

  • MoA and AoA: Copies of the Memorandum and Articles of Association.

  • Foreign Investment Approval Letter: Copy of the DOI approval letter to show this is an FDI company (often required to tag the company appropriately in IRD records).

  • Board Resolution for Tax Registration: A corporate resolution (on your company letterhead) stating that the company is to be registered for tax and authorizing a specific person to handle the process. This is typically needed to designate the company’s authorized representative for tax matters (could be one of the directors or an appointed accountant).

  • Proof of Office Address: Copy of the rent agreement or property ownership document for the company’s registered office. If the company is using a temporary address (like DCV’s office) initially, that agreement would be provided. This is to ensure the tax office knows where the business is physically located.

  • Location Map: Many tax offices ask for a simple sketch or map showing the location of the company’s office (for future inspections or verification).

  • Photos and IDs of Signatory: Passport size photographs of the person who will sign the application (director or authorized agent) – usually 1 or 2 copies, and a copy of their citizenship certificate or passport. If a foreign director is the one signing and is abroad, you might instead authorize someone via POA to sign at IRD.

• VAT Registration: If your company will engage in activities that cross the VAT threshold or fall under mandatory VAT categories, you should register for VAT (Value Added Tax) concurrently with PAN. The current threshold is NPR 5 million annual turnover for most businesses; however, services like consultancy or imports/export trade often require immediate VAT registration regardless of turnover. VAT registration is done at the same Tax Office. You submit a separate VAT application (often combined with PAN form these days) and need a few additional items: for example, VAT security deposit (a refundable deposit or bank guarantee of around NPR 50,000 is usually required for trading companies registering for VAT), and sometimes proof of proper books of account or an accounting system in place. DCV will advise if your business needs VAT now or can defer until reaching the threshold.

• Business Stamp: Alongside PAN, you’ll want to make a rubber company stamp (chop) in the Nepali script – while not legally mandatory for registration, it is commonly required for sealing documents submitted to government offices including IRD. DCV can help get a stamp made with your company name in Nepali and English.

• Outcome: Once the application is processed, the Tax Office will issue a PAN Registration Certificate (and VAT Certificate if applied). The PAN is a unique number that will be used in all tax filings. Keep this document safe, as banks will ask for a copy when opening accounts, and you’ll quote the PAN on invoices and official documents.

DCV’s Facilitation: DCV will prepare and file the PAN (and VAT) registration for you immediately after the company is incorporated. We fill out the tax forms in Nepali, gather the required documents (we’ll use the certified copies of your registration, MoA, etc.), and even provide a board resolution template for PAN registration for your signature. If you don’t have a local office yet, DCV can assist in arranging a temporary address or guide you on leasing a small space, since an address proof is needed. Our team members will handle the submission at the IRD and obtain the PAN certificate on your behalf, usually within a day or two. We’ll also advise you on VAT necessity and complete that registration if required. With DCV managing this, you won’t need to navigate the tax office – we’ll ensure your company is properly registered with the tax authorities and fully compliant from day one.

Step 5: Industry Registration with the Department of Industry

After getting the company registration and PAN, there is an often-overlooked but important step: Industry Registration at the DOI. When you first obtained the foreign investment approval, your project was approved in principle. Now that the company is established and tax-registered, the DOI needs to officially register your company as an “industry” under the Industrial Enterprise Act and issue an Industry Registration Certificate. This step essentially finalizes the FDI approval process and is necessary for accessing certain investor facilities (like visas or incentives) and for future repatriation of funds.

• When & Why: Industry registration should be done after you have the company’s registration and PAN, but ideally before you start business operations. It’s basically informing the DOI that “the company has been incorporated as per the approval given, and here are the details.” The DOI then tracks foreign investment inflows against this registration. Failing to do industry registration can cause problems down the line (e.g., difficulties in repatriating profits or getting work visas for foreign staff), so it’s a must-do for foreign investors.

• Documents Required: As per DOI’s procedures, you will need:

  • Application form for Industry Registration: A simple form where you state the company name, address, registration number, date of incorporation, and reference your earlier foreign investment approval.

  • Company Registration Certificate: Copy of the certificate from OCR.

  • MoA and AoA: Copies of these as well, to attach.

  • PAN Certificate: Some require this to verify tax registration (though DOI primarily is concerned with OCR registration).

  • Board Resolution: A resolution from your company’s board of directors stating that “we have incorporated the company and now seek industry registration with DOI as per the Foreign Investment Approval”. This is basically a formality to show the company’s decision to register under the Industrial Enterprise Act.

  • Applicable Fee: The fee for industry registration is nominal – currently NPR 100 only. (Yes, it’s very small, unlike the OCR fee, because this is more of a record-keeping exercise.)

• Process: Submit the application and documents to the DOI (Foreign Investment Section). If you are in Kathmandu, this is done at the DOI office; if outside, it may be through the Department’s provincial offices or one-stop service centers. Given that you already have the prior approval and now the proof of incorporation, this registration is typically processed quickly, often within 1-2 days. DOI will then issue an Industry Registration Certificate (often titled “Industry License” or “Registration of Industry”) which references your company and the amount of foreign investment. It’s essentially the final document in the incorporation chain for an FDI company.

• Post-Industry Registration: With this certificate, you can now also apply for facilities like investor visas or certain incentives if applicable. Additionally, the DOI will expect you to report when you actually bring in the foreign capital (more on that soon) so they can endorse the amount on record.

DCV’s Facilitation: DCV will not let you miss this step. Once your company is formed and PAN obtained, we prepare the industry registration application on your behalf. We compile the necessary copies (we maintain a ready file of your documents from earlier steps). Our staff will submit the application to DOI and follow up to get the Industry Registration Certificate issued promptly. We then hand over this certificate to you (or keep it in the company file if you prefer). DCV’s end-to-end service ensures that your foreign investment approval comes full circle with the industry registration – cementing your legal status as a foreign-invested company in Nepal.

Step 6: Opening a Bank Account and Injecting Capital

Now that the company is fully registered and tax-compliant, the next step is to open a corporate bank account in Nepal and bring in the foreign investment funds. Injecting the capital as approved is crucial to actually start operations and also to retain your government approvals.

• Bank Account Opening: Choose a reputable commercial bank in Nepal to open your company’s account. Nepal has many banks (both domestic and joint venture international banks). DCV can recommend banks that are experienced with handling FDI accounts. To open an account, the bank will require:

  • Company Documents: Certified copies of the company registration certificate, MoA and AoA, and PAN registration.

  • Board Resolution: A resolution from the company authorizing the opening of the account and specifying the signing authorities (who will operate the account). This should list the persons (directors or managers) who will be signatories, and the mode of operation (e.g., any one signatory can sign, or two jointly, etc.).

  • KYC Documents: Identification documents of the account operators – passports for foreigners, citizenship cards for Nepalis, with photos. If your company has hired a local manager/director who will also be a signatory, include their info.

  • Initial Deposit: Some banks might require a minimum initial deposit (often minimal like NPR 1000 or so) just to activate the account.

  • Foreign Investment Approval Letter: It’s useful to provide a copy of DOI approval to the bank as well, so they are aware you will be receiving foreign currency. The bank’s forex department will reference that when your funds arrive.

  • Other Forms: Each bank has account opening forms and specimen signature cards to fill.

  The account opening process is usually done in a day if all docs are in order. Since you (as the foreign investor) might not be present, you can appoint someone (via the earlier POA or a company resolution) to open and operate the account initially. Many foreign owners designate a local director or a DCV representative as an interim signatory to get things started, and later you can change signatories as needed.

• Remitting the Investment Capital: Once the account is open, the foreign shareholder should remit the pledged capital from abroad into the company’s account in Nepal. This must be done in foreign currency, from the investor’s bank account to the company’s account, referencing it as FDI capital. When sending the wire transfer, it’s important to include a note like “Investment in equity of [Company Name], as per Foreign Investment Approval dated [X]”. The reason is to clearly identify the nature of the inflow. The receiving bank in Nepal will credit the money to your account and issue an “inward remittance certificate” or advice which records the foreign currency amount and the NPR equivalent credited.

• Notifying DOI/NRB: After the capital is received, you need to inform the DOI (and Nepal Rastra Bank) about the receipt of funds:

  • The DOI will typically endorse the amount on your foreign investment approval or industry registration record. They might ask for a copy of the bank advice showing the money came in.

  • Nepal Rastra Bank (NRB) requires filing for a Foreign Investment Registration Certificate on their end. Essentially, NRB keeps track of foreign currency coming into Nepal. You would submit documents to NRB such as the DOI approval letter, the company registration certificate and PAN, and evidence of the fund transfer. NRB then issues a certificate or letter acknowledging that $X or €Y has been received as foreign equity in [Company]. This NRB approval is critical for future repatriation of dividends or return of capital – it’s proof that the money came in via official channels.

• Share Allotment: Now that the funds are in the company, the company should officially allot shares to the foreign investor equal to that investment. For example, if $200,000 was remitted and the par value of shares is NPR 100 each, the company would issue appropriate number of shares to equal NPR 20 million. A board meeting would be held to approve the allotment of shares to the foreign investor against the received capital. An updated share register of the company is prepared, listing the foreign investor as the owner of those shares. This completed share register then must be filed at OCR for shareholder registration (so that OCR’s records show the paid-up capital and the foreign shareholder details). Essentially, it’s an update to the company’s file that the initial shares have been issued and paid for. OCR will then endorse or record the updated paid-up capital.

• Timeline: Opening the bank account – 1 to 3 days. International wire transfer – typically 2-5 days to arrive. NRB certification – perhaps 1-2 weeks after submission of documents (NRB might do its own verification). Share allotment and OCR update – a week or so. Overall, injecting capital and completing these formalities could take a few weeks. It’s important not to delay the actual inflow of funds: FITTA regulations as updated in 2021 require that at least 70% of the committed foreign investment be brought in before starting operations, and the remaining 30% within 2 years. Delays in bringing investment might lead to your approval being questioned in the long term.

DCV’s Facilitation: DCV assists every step of the way here:

• We coordinate with banks to get your account opened quickly. Through our network, we can recommend banks known for efficient FDI handling and even arrange introductory meetings. We help prepare the board resolution for account opening and ensure all KYC documents are provided. If needed, a DCV team member can serve as an interim local signatory to open the account, with proper authorization.

• When you’re ready to remit funds, DCV will advise on the transfer details (currency, banking info, and the exact purpose wording). We keep an eye out for the fund’s arrival and liaise with the bank’s forex department to get the remittance certificate.

• After the money arrives, DCV prepares the filing to NRB. We compile the set of documents NRB needs and submit the application for the foreign investment registration. Our experience with NRB means we can address any questions they have (e.g., source of funds documentation) promptly.

• We also handle the corporate steps: drafting the share allotment resolution, updating the share register, and submitting the shareholder list to OCR for verification. Essentially, DCV makes sure that your injection of capital is properly documented with all authorities. This ensures you can repatriate funds later without hiccups, and it proves to the government that your company is financially operational.

At this point, your company is not only legally formed but also capitalized. You have a bank account with your funds ready to be used for the business. The major hurdles to start operations have been overcome.

Step 7: Post-Incorporation Compliance and Ongoing Requirements

With the company up and running, foreign investors should be aware of the ongoing compliance obligations in Nepal. Maintaining good standing is important for smooth operations and eventual profit repatriation. Here are key post-incorporation considerations:

• Local Management and Representative: While Nepali law doesn’t force you to have a Nepali citizen as a director or shareholder in a fully foreign-owned company, it is practical to have a local point of contact. Many foreign investors appoint a local director or manager to handle day-to-day affairs and be an authorized signatory for routine matters. If you (the foreign owner) are not residing in Nepal, consider who will represent the company to sign documents, interact with government offices, and manage banking. This could be a trusted hire, or DCV can provide nominee director services if needed. The Company Registrar does require an official address in Nepal and will send correspondence there, so ensure you maintain a local office or at least a virtual office arrangement.

• Labor Compliance: If you hire employees, you must adhere to Nepal’s labor laws. This includes issuing appointment letters, complying with minimum wage, contributing to the Social Security Fund (SSF), and provident fund if applicable. Companies with more than 10 employees are expected to register for and contribute to the Social Security Fund (covering retirement, insurance, etc.). Also, if you plan to hire any expatriate employees, you will need to get work permits for them and provide justifications that a Nepali could not fill that role. Typically, DOI (or the Department of Labor) and the Immigration Department handle work permits and visas for foreign workers.

• Business Licenses and Sectoral Permits: Depending on your industry, you might need additional licenses:

  • For example, a hospitality business (hotel, travel agency) would need a license from the Department of Tourism.

  • A manufacturing industry may need an environmental clearance or local municipality permit.

  • If dealing in import-export, you need to register with the customs/EXIM department for an export-import code.

  • Sectors like banking, insurance, telecom, medical, education, etc., have their own regulatory bodies and licensing regimes. Ensure you obtain all necessary sector-specific approvals before commencing those business activities. DCV can help identify and secure any such licenses.

• Annual Reporting to OCR: Every registered company is required to file annual returns with the Office of Company Registrar. This usually includes:

  • An Annual Report/Return (detailing shareholders, directors, any changes in capital) to be filed within 30 days of the Annual General Meeting (AGM).

  • Audited Financial Statements: Companies need to appoint a certified auditor and have their books audited annually. The audited financials often need to be submitted to OCR and tax office within 6 months of fiscal year end.

  • Renewal Fees: Though Nepal doesn’t “renew” company registration annually, there is a small annual fee to be paid to OCR to maintain the registration (often paid during return filing). Missing annual filings can lead to fines or even suspension of the company’s status.

• Tax Compliance: You will need to file monthly/quarterly VAT returns (if VAT-registered) and withhold taxes on certain payments (e.g., salaries, rent, service fees to abroad, etc.) as per Nepali tax law. Annually, a corporate income tax return must be filed with IRD. Nepal’s corporate tax rate is generally 25% on net profits (though it can vary by industry). If you incur losses, you still file a return (losses can be carried forward for a limited years). It’s advisable to hire a local accountant or use DCV’s accounting services to handle bookkeeping and tax filings. The fiscal year in Nepal runs Shrawan to Ashad (mid-July to mid-July), and tax finalization is due by the end of Poush (mid-Jan) for advance tax and within 3 months of year end for final returns.

• Foreign Currency and Repatriation Compliance: When you start earning profits, you may want to remit dividends back to your home country. Nepal allows this, but you must follow a procedure:

  • The company should declare dividends through an AGM and have audited financial statements showing profits.

  • Pay applicable dividend tax (currently 5% on repatriated dividends) to IRD and get a tax clearance certificate.

  • Apply to DOI or IBN (whoever approved your FDI) for approval to repatriate the dividend. You’ll provide documents like board minutes declaring the dividend, auditor’s verification of profits, tax payment proof, and request letter.

  • Apply to NRB for approval to remit out the foreign currency. NRB will check that DOI/IBN approved and that the company is compliant with all reporting.

  • Once approvals are in hand, your bank will effect the outward remittance of the dividend to the foreign shareholder. This multi-step approval is required for each repatriation (dividends, capital repatriation, technology fee, etc.). While this sounds tedious, it is a standard process. Planning ahead is key (expect a few weeks to get repatriation approvals each time).

• Corporate Changes: If you need to make changes like increasing capital, adding new foreign investors, or changing the company name or objectives, you will often need prior approval from DOI and then approval from OCR. Increasing foreign investment, for instance, means you submit a proposal to DOI again (even if the investor is existing) to inject additional capital. Always consult DCV or legal advisors before making structural changes, to navigate the necessary approvals.

• Renewal of Industry Registration: Under current rules, industry registration does not require annual renewal; it is a one-time registration. However, if the project is not implemented in a reasonable time, DOI might inquire. Also, the Industrial Enterprise Act provides certain benefits (like customs duty concessions or tax rebates for certain industries) – to claim these, you need to ensure compliance with that Act’s provisions, which might include reporting production figures or so on a periodic basis if you’re availing any facility.

• Additional Compliance: Depending on your business, you might need to adhere to environmental regulations (conducting an Initial Environmental Examination or full Environmental Impact Assessment for industries with potential environmental impact). Also, if you have more than 10 employees, certain labor welfare regulations kick in; more than 50 employees, you need a workplace employee union facilitation, etc.

In summary, after incorporation, running a company in Nepal involves typical corporate housekeeping: accounting, auditing, tax filings, regulatory filings, and license renewals. Staying compliant ensures you can operate without fines and repatriate your earnings smoothly.

DCV’s Facilitation: DCV doesn’t just set up your company and leave; we offer ongoing support to keep you compliant:

• We provide accounting and tax services, handling your bookkeeping, VAT returns, payroll, and annual tax filings so that you meet all IRD deadlines.

• Our legal team assists with annual company returns to OCR and maintains your corporate records. We remind you of AGM dates and prepare minutes/resolutions as needed.

• If you plan to repatriate funds, DCV will prepare the applications to DOI and NRB and guide you through the process, ensuring all paperwork (audit reports, tax clearances) are in order for swift approval.

• We can also act as your nominee local representative to receive government correspondence and even hold a non-executive directorship if you need a local resident director for practicality. This means if you are abroad, DCV ensures your company’s presence is felt here.

• For any sector-specific compliance (say, you need a tourism license or a pollution control certificate), DCV will research the requirements and help obtain the necessary permits.

• Essentially, DCV’s goal is to be your long-term partner in Nepal. We keep you updated on regulatory changes (for example, any changes in FITTA policies or tax law) and handle the “red tape” so you can concentrate on growing your business. Many foreign investors find that having DCV manage compliance gives them peace of mind and prevents costly mistakes in an unfamiliar regulatory environment.

Now that we have detailed the process and compliance, let’s highlight some specifics of FITTA 2019 regarding investor rights and the ability to repatriate funds, as these are crucial considerations for foreign investors.

FITTA 2019: Foreign Investor Rights and Capital Repatriation

Nepal’s Foreign Investment and Technology Transfer Act, 2019 (FITTA 2019) is a cornerstone legislation that not only lays out the approval process but also protects foreign investors’ rights and establishes provisions for moving money in and out of Nepal. Here’s what foreign investors should know about FITTA 2019 and related regulations:

• Repatriation of Profits and Investment: Under FITTA, foreign investors are explicitly allowed to repatriate a variety of funds out of Nepal in the currency of the original investment (or any convertible currency). This includes:

  • Dividends or Profit Earnings: After paying applicable Nepali taxes, you can send your net profits (dividends) to your home country.

  • Sale Proceeds from Shares: If you sell your equity in the company (fully or partially) to a Nepali or another foreigner, you can repatriate the proceeds of that sale.

  • Capital on Liquidation: If you wind up the company, you can take back the remaining capital after settling liabilities.

  • Technology Transfer Fees: Royalties, technical know-how fees, or management fees paid to a foreign investor (perhaps if you have a technology license agreement) can be remitted.

  • Compensation Payments: Any compensation or indemnity payable to the foreign investor (for example, if the government were to compensate for any assets) can be taken out.

  • Lease Rentals in Lease Financing: If your investment was in the form of lease, you can repatriate lease payments earned.

  These rights are guaranteed, but subject to fulfilling all obligations – meaning the company must have complied with local laws, paid all due taxes, and obtained the necessary approvals prior to repatriation. In practice, as described earlier, repatriation requires clearance from DOI/IBN and NRB to ensure compliance.

• Approval Agencies for Repatriation: The act and regulations typically require you to get:

  • DOI/IBN Approval: The body that approved your investment initially must approve the repatriation. This is often a formality if your accounts and taxes are in order, but they check that you’re only repatriating legitimately earned profits or capital.

  • NRB Approval: The central bank oversees foreign exchange. They verify the source of the funds (profits as per audited accounts, etc.) and ensure Nepal’s foreign currency reserves aren’t jeopardized by the transfer. They also check that the amount being sent does not exceed what was invested or earned legitimately.

  • In some sectors, additional sign-off is needed (e.g., Nepal Telecommunications Authority if a telecom company repatriates certain fees), but for most ordinary businesses, DOI and NRB suffice.

• Timeline for Repatriation: While the law permits repatriation, approvals can be time-consuming. It’s not an automatic process like transferring from a freely convertible account. Investors should expect several weeks (sometimes a couple of months) of lead time to complete repatriation formalities each time. This is a noted pain point, and one the government is continually trying to streamline.

• Protection Against Nationalization: FITTA and Nepal’s other laws provide that foreign investments shall not be nationalized. In other words, the government will not seize your business or assets except in extreme cases of law violation, and even then with proper compensation. Additionally, Nepal is party to bilateral investment treaties (BITs) with several countries that ensure protection and offer dispute arbitration routes. This gives foreign investors confidence that their assets are safe from arbitrary government interference.

• Investors’ Visa Facilities: Recognizing that foreign investors may need to stay in or frequently visit Nepal, FITTA and immigration rules grant certain visa privileges:

  • Business Visa: Any foreign investor in a Nepal-based company can get a renewable Business Visa. Usually, investing the minimum threshold (NPR 20M) qualifies you for a year-long multiple-entry business visa, which can be extended as long as the investment remains. This visa can also be extended to the investor’s immediate family in many cases.

  • Residential Visa: If you invest a significant amount (over USD 1 million in equity), you become eligible for a Residential Visa. This is a long-term visa that allows you to live in Nepal permanently (renewable every five years or so) and is a privilege given to large investors.

  • Working Visas for Expat Staff: FITTA allows foreign-invested companies to hire a certain number of expatriate employees in specialized roles. Such employees can get work visas (typically one year at a time) on the company’s request, provided the positions are technical or managerial and could not be filled by locals. The company must obtain a recommendation from DOI for each expat hire. Usually, a ratio is applied (like 5% of total employees can be foreign, etc., though in practice exceptions are made for new enterprises in startup phase).

• Foreign Loan Borrowing: FITTA 2019 opened the door for foreign-invested companies to take loans from foreign banks or parent companies, subject to Nepal Rastra Bank approval. If your company might need debt financing from abroad, this is possible, but NRB and possibly DOI will need to okay the loan terms and ensure interest rates are reasonable. The ability to borrow externally can be useful, for example, for scaling up a project beyond the initial equity.

• One-Stop Service Center: After FITTA, Nepal set up a one-stop service center at DOI to streamline various investor services. In theory, this means you go to one place for approvals, industry registration, visa recommendations, etc., rather than running around different ministries. While not perfect, it has improved coordination. DCV often utilizes these one-stop facilities to get things done faster on behalf of clients.

• Limitations (Negative List): We touched on the industries not open to FDI (Negative List) earlier. To reiterate, FITTA’s schedule and subsequent regulations bar foreign investment in areas like small retail, real estate trading, traditional cottage industries (handicrafts, small-scale agriculture), arms and ammunition production, lottery/gambling, etc. Additionally, some services like legal services, accounting, engineering consulting are restricted for foreigners (max 51% foreign stake allowed in consulting agencies). Always check if your intended business falls under a restricted category. DCV will help confirm this during the initial phase. If an industry is on the negative list, no approval will be granted.

In summary, FITTA 2019 is designed to protect foreign investors and ensure you can operate profitably and ultimately take your profits home. It provides a legal assurance that Nepal values your investment and will treat you fairly (national treatment/MFN status). However, it also mandates that you follow all local laws and procedures to enjoy those rights. By being compliant and working within the guidelines, you can mitigate risk and fully benefit from Nepal’s growing market.

DCV’s Facilitation: DCV’s role with respect to FITTA and investor rights is to ensure you take full advantage of what you’re entitled to. We remind you of rights like visa facilitation – for instance, we will help apply for your Business Visa or Residence Visa through DOI’s recommendation process. If you need to repatriate funds, our experts handle the paperwork so that regulators approve your transfers with minimal fuss, aligning with FITTA’s provisions. If there are incentives under Industrial Enterprise Act (like tax rebates for certain industries or locations), we inform you so you can claim them. Essentially, DCV acts as your advocate in front of Nepali authorities, invoking the protections of FITTA and other laws whenever needed to safeguard your investment and returns.

Registering Remotely via Power of Attorney (POA)

One major concern for foreign investors is how to incorporate without being physically present in Nepal. The good news: you do not have to be in Nepal to complete any of these steps. Nepal’s laws and practices allow representation through a Power of Attorney. Here’s how remote registration works:

• Power of Attorney Basics: A Power of Attorney is a legal document in which you (the “principal”) authorize someone else (your “attorney-in-fact” or agent) to act on your behalf. For incorporating a company, the POA can be tailored to cover activities like signing and submitting the incorporation documents, representing you at government offices (OCR, DOI, IRD, banks, etc.), and handling necessary procedural tasks.

• Who Can be the Attorney? Typically, you would appoint a trusted person or firm in Nepal – it could be a lawyer, a consultant (like DCV), or even a Nepal-based friend/colleague. Many foreign investors choose to appoint a representative from their consulting firm (DCV often serves in this role for clients) because we have experience dealing with the bureaucratic process.

• Drafting the POA: DCV can provide a draft POA wording to ensure it grants all the needed powers. It will usually list powers such as: signing the MoA/AoA, submitting applications to OCR and DOI, receiving documents, opening bank account, obtaining PAN, and even representing the investor in any necessary interviews. Essentially, it can cover the entire gamut of incorporation and post-incorporation formalities.

• Execution and Legalization: If you are executing the POA outside Nepal, you will typically sign it in front of a Notary Public. In many jurisdictions, that notarized POA then should be attested by the Nepali Embassy/Consulate to be recognized in Nepal. If Nepali Embassy attestation is difficult, another route is to notarize and then “apostille” the document (if your country is part of the Apostille convention) – Nepal accepts apostilled documents as well. The POA should ideally be either in English (which is widely understood by Nepali officials) or Nepali. If in another language, a certified translation to English or Nepali is needed.

• Using the POA: Once the POA is sent to Nepal (original hardcopy usually required, since it may need to be stamped in Nepal), your appointed attorney-in-fact can present it to various authorities as proof of authorization. For example, when DCV submits your company incorporation papers, we attach a copy of the POA showing that we have authority to sign on your behalf. Government offices here are accustomed to this, as many foreign investors incorporate companies remotely.

• Scope and Duration: You can limit the POA’s scope to just the incorporation process, or make it broader to handle ongoing matters. Some investors give DCV a broader POA to handle not just incorporation but also routine filings, banking, and even to represent the company in certain matters for a year or two. It’s up to your comfort level – the POA can always be revoked or time-bound. After your work in Nepal is set up, you can revoke the POA if you no longer need a representative to act for you.

• Multiple Agents: You might also execute multiple POAs – for instance, one for a lawyer to handle legal filings, and another for a consultant to handle administrative tasks. But often a single experienced agent (like DCV) can suffice.

• Digital Signatures: Nepal is moving towards digital processes (OCR has an online system, etc.), but currently, the need for physical signed documents is still prevalent, especially for foreign investment cases. As of now, you cannot complete the entire process purely with digital/e-signatures; someone will have to physically sign and submit documents in Nepal. That’s why a POA to a local representative remains important.

DCV’s Facilitation: DCV routinely acts as the authorized representative for foreign investors. We provide a ready-made POA template covering all necessary powers, for you to sign and notarize in your country. Once we receive the duly executed POA, we proceed with all steps on your behalf, as described throughout this guide. We will only ever act within the authority you grant and keep you informed at every stage. This service is invaluable if you cannot travel to Nepal or prefer not to spend weeks here doing paperwork. With DCV as your proxy, the process becomes virtually hands-off for you – we handle the legwork, and you handle strategic decisions from abroad. Our clients have successfully incorporated companies in Nepal without setting foot here until their business was ready to launch, which shows the effectiveness of the POA approach.

How Digital Consulting Ventures (DCV) Supports Foreign Investors

Throughout this guide, we have highlighted DCV’s role at each step. Here we summarize how Digital Consulting Ventures provides end-to-end assistance for foreign company incorporation in Nepal:

• Initial Consultation & Strategy: DCV begins by understanding your business plan and advising on the appropriate entity type (private limited, branch, JV, etc.) and capital structure. We clarify Nepal’s foreign investment policies (what’s allowed, any sectoral restrictions) so you start on solid footing.

• Documentation & Compliance Preparation: We compile all required documents for you. This includes drafting project reports, MoA/AoA, JV agreements, board resolutions, and POAs in line with Nepali regulations. Our bilingual team ensures Nepali translations where needed and that forms are filled correctly, minimizing back-and-forth with authorities.

• Foreign Investment Approval Process: DCV will prepare and submit the FDI approval application to the Department of Industry on your behalf. We handle the communications with DOI, answer their queries, and secure the approval letter. Because we are familiar with FITTA 2019 and DOI’s one-stop center, we can often get approvals processed faster and with fewer hurdles than an investor trying on their own.

• Company Incorporation Filing: Our legal experts draft the Memorandum and Articles perfectly aligned with Nepali law and your needs. We reserve your company name and file the incorporation application at OCR. DCV representatives will sign and submit documents using the power of attorney you provide, and we pay the registration fees on your behalf. Essentially, we turn the bureaucratic multi-step filing into a smooth one-stop experience for you.

• Post-Incorporation Setup: Right after company registration, DCV obtains your PAN (and VAT) from the tax office. We also help open your company bank account, leveraging our working relationships with banks. When you send the investment funds, we coordinate with the bank and central bank to acknowledge the inflow. We complete industry registration at DOI, making sure all formal approvals are wrapped up.

• Local Representation & Nominee Services: If you need a local director or simply someone to receive official mail, DCV can act in that capacity. We provide a local address if required for initial setup. Our staff can serve as nominee shareholders or directors for compliance purposes (with proper legal arrangements to protect your ownership) if you desire.

• Operational Support: DCV’s service doesn’t end at incorporation. We offer accounting and payroll services, tax compliance (filing periodic returns, maintaining books), and even HR services for hiring local staff. Consider us an extension of your team on the ground – we handle administrative tasks so you can focus on business development.

• Regulatory Compliance & Advisory: We keep you informed of any changes in laws (tax rates, labor law updates, FITTA amendments, etc.). DCV will prepare and file your annual company returns to OCR, manage your annual tax filings, and ensure you don’t miss any renewal or compliance event. If you plan to expand, say by increasing capital or adding a new foreign partner, we’ll manage the approvals needed for that too.

• Investor Facilitation: Planning a visit to Nepal? We assist with logistics and scheduling meetings with relevant officials if needed. Need to apply for your investor visa or visa for foreign personnel? We handle the paperwork and follow-ups for visa recommendations from DOI.

• Problem Resolution: Should any challenges arise – for example, unexpected delays at a government office, or a misunderstanding about a regulation – DCV jumps in to troubleshoot. Our local expertise and network can often resolve issues informally by clarifying them with officials. If needed, we have legal advisors to step in for complex matters.

In short, Digital Consulting Ventures is your dedicated partner from start to finish in incorporating and operating a company in Nepal. We pride ourselves on making the process as turnkey as possible for international clients. By entrusting the process to DCV, you gain an experienced guide, avoid common pitfalls, and set a strong foundation for your venture in Nepal. Your success as a foreign investor in Nepal is our success, and we go the extra mile to achieve it.

The following FAQs address common questions foreign investors have about company incorporation in Nepal:

FAQ: Foreign Company Registration in Nepal

Q1. Can a foreigner own 100% of a company in Nepal, or is a local partner required?
A1. Yes, a foreigner (or foreign company) can own 100% of a company in Nepal in many sectors. Nepal allows wholly foreign-owned private limited companies. A local partner is not legally required unless the industry falls under specific restrictions. Only certain sectors (called the Negative List or with ownership caps) mandate local participation – for example, in management consultancy services, foreign ownership is capped at 51%, so you’d need a local partner for the remaining 49%. But if your business is in an open sector (IT, manufacturing, export, etc.), you can incorporate a company with 100% foreign shareholding. Always check the specific industry regulations, but generally Nepal is quite open to full foreign ownership.

Q2. What is the minimum capital requirement for a foreign investor in Nepal?
A2. The minimum investment required by law is NPR 20 million (approximately USD 150,000) as per a 2019 regulation under FITTA. This means your company’s paid-up capital (or the total foreign investment brought in) must be at least NPR 20,000,000. This threshold was instituted to ensure foreign investments are significant enough to contribute to the economy. There is no upper limit – you can invest as much as you want (though investments above NPR 6 billion require approval from the Investment Board instead of the Department of Industry). If your project cannot justify NPR 20 million initially, you likely won’t get approval unless an exception applies (some specific small-scale projects or startups have sought exemptions, but those are rare). It’s advisable to plan for at least this amount. Note that you don’t have to bring all the money in one go – you could stagger it (e.g., 70% upfront and 30% within two years as required by a 2021 rule).

Q3. How long does it take to register a foreign-owned company in Nepal?
A3. The timeline can vary, but here’s a rough breakdown:

• Name reservation: 1-3 days for approval.

• FDI approval from DOI: Typically 4-8 weeks. Some straightforward cases might be done in 3-4 weeks, but it’s safer to budget ~2 months for this step due to government processing time.

• Company incorporation (OCR): Once you have FDI approval, the company registration itself is fast – about 1 week to 10 days.

• PAN/VAT registration: 1-3 days after company registration.

• Industry registration: 1-2 days.

• Bank account and fund transfer: Opening account ~2 days; remittance could take a week or so; NRB certification maybe another 1-2 weeks.
  Overall, from start (name reservation & applying for approval) to finish (having a fully registered company with capital in the bank), you might be looking at approximately 2.5 to 3 months. With proactive follow-ups (which DCV does), some projects complete in as little as 6-8 weeks total. But unforeseen delays (queries from DOI, document corrections, etc.) can extend it a bit. Proper planning and complete documentation are key to a quicker process.

Q4. Do I need to visit Nepal during the incorporation process?
A4. No, you do not need to be physically present in Nepal to incorporate your company. All procedures can be handled via a Power of Attorney appointing a local representative. Your representative (e.g., a DCV agent or lawyer) can reserve the name, file the applications, sign documents on your behalf, open bank accounts, etc. You’ll need to provide the necessary documents and signed powers/forms via courier. Many foreign investors only visit Nepal after the company is incorporated (for example, to oversee setup or for the opening of the office). That said, you are always welcome to come and be personally involved, but it’s not a requirement. Nepal’s offices accept duly authorized agents to act for foreign investors.

Q5. What documents do I (the foreign investor) need to provide?
A5. You will need to furnish:

• Passport copies of all individual investors (notarized).

• If an investing entity (company), then the incorporation certificate, MoA, AoA of that company (notarized and translated if not in English).

• A Financial Credibility Certificate from your bank confirming you have ability to invest the required amount.

• A brief bio-data or company profile describing your (or your firm’s) background.

• If a JV, then a Joint Venture Agreement with your Nepali partner and the partner’s citizenship or company registration documents.

• Power of Attorney to your Nepal rep (if you won’t sign documents yourself in Nepal).

• Once the company is being registered, you’ll also provide passport-sized photos and some specimen signatures for forms.

• Later, for bank account and PAN, similar ID documents and maybe additional forms will be needed, which your representative can help fill.
  All in all, the initial critical documents are identification, proof of funds, and agreements between stakeholders. DCV will give you a detailed checklist and even draft many documents for you to just review and sign.

Q6. Are there any restricted industries for foreign investors in Nepal?
A6. Yes, certain industries are off-limits or partially limited to foreign investment, as outlined in Nepal’s Negative List under FITTA. Fully restricted areas include:

• Small-scale traditional agriculture and cottage industries (like small farming, local crafts) unless for export.

• Real estate trading (buying/selling land for profit) and local retail businesses (except international retail chains).

• Weapons, ammunition, explosives manufacturing.

• Security printing (currency, passports) and coin minting.

• Lottery, gambling businesses.

• Consultancy services in management, accounting, engineering, legal etc. are restricted to max 51% foreign share.

• Tourism activities like travel agencies, trekking agencies and local tour guides are on the restricted list (the law currently bars foreign investment in ordinary travel agencies and trekking guide services).

• Media (print newspapers, TV, online news in Nepali language) and films in national language are restricted for foreign investment.
  If your proposed business touches any of these, you’ll likely not get approval. For sectors with a cap (like consulting), you can proceed but only with a local partner to meet the ownership structure rules. It’s always good to consult with DCV or refer to the latest FITTA schedule to confirm if your sector is open. Many standard businesses (IT, manufacturing, trading, services, export/import) are open 100%. Also note, even if an industry is restricted for direct foreign equity, some forms of collaboration (like technology transfer or franchise agreements) may still be possible without equity – those are separate arrangements.

Q7. What taxes will my company and I be subject to once operational?
A7. Major taxes for a typical company in Nepal include:

• Corporate Income Tax: Generally 25% of net profit for standard businesses. Some industries have lower or higher rates (for example, 30% for banks/financial institutions, 20% for special industries like agriculture or IT under certain conditions).

• Dividend Tax: When you repatriate dividends, there’s a 5% tax on the dividend paid to foreign investors (this is a final withholding tax in many cases).

• VAT: 13% Value Added Tax on sale of goods and services (if your company is registered for VAT). You collect this from customers and pay to the government, offset by any VAT you paid on purchases.

• Withholding Taxes: You’ll withhold taxes on payments like salaries (known as TDS on employment income), rent, service fees, interest, and send those to the tax office. Rates vary (e.g., 1% on payments to local suppliers, 15% on certain payments abroad like royalties).

• Customs/Excise: If you import goods, customs duty and possibly excise (for certain products like vehicles, alcohol, etc.) would apply as per the tariff schedule.

• Social Security Contributions: If you have employees, currently employers contribute 20% of basic salary (and employee contributes 11%) to the Social Security Fund, which covers various insurance and retirement benefits.
  As an investor, when you repatriate your share of profit (dividend) out of Nepal, aside from the 5% dividend tax, there are no additional personal taxes in Nepal on that (your home country’s tax laws would apply to the received dividend possibly). It’s advisable to engage a local accountant (or use DCV’s accounting services) to ensure full compliance with Nepali tax law and to explore any tax incentives. For instance, the Industrial Enterprise Act sometimes gives tax holidays or rebates for certain industries or remote area investments – if applicable, you’d want to take advantage of those.

Q8. Can I repatriate 100% of my profits, and how easy is it to get the money out?
A8. You are entitled to repatriate 100% of lawful profits, dividends, and even the principal capital upon exit. There’s no cap like you must reinvest X% in Nepal or anything – after taxes, the money is yours. However, the process is not automatic: you must follow the approval steps from DOI and NRB each time as described in the guide. Provided your financial statements are transparent and you’ve paid all due taxes, approvals are generally granted. The ease of process has been improving, but it can still take a few weeks and quite a bit of documentation for each remittance. Many companies accumulate a year’s worth of profit and do a single dividend repatriation annually to minimize paperwork. It’s important from day one to keep records of your inward investment (the money you brought in) and have audited accounts for any money you want to take out, so regulators can verify you aren’t repatriating more than you should. In summary: yes, you can take out all profits, but plan ahead for a procedural hurdle each time. DCV or your accountants can greatly assist in preparing those applications so that the central bank approval goes smoothly. Also, Nepal does not restrict converting NPR to USD (or other currency) for approved repatriation, so once you have the clearance, the banking channel works fine to send the money to your account abroad.

Q9. Does Nepal offer any incentives or special benefits to foreign investors?
A9. Nepal has been working on making the environment more attractive. Some incentives and facilities include:

• Tax incentives: As per the Industrial Enterprise Act, certain industries (like agriculture, tourism, and manufacturing) and industries established in less developed regions may get partial income tax exemptions for a number of years. For example, an industry in a very undeveloped area might get 90% tax exemption for 10 years, or export businesses might get a 50% reduction in taxable income for some years. These tend to change with fiscal policies, but they apply equally to Nepali and foreign investors.

• Customs concessions: Import of machinery and equipment for industries often has reduced customs duties, especially if listed as an industry under DOI. Similarly, there’s VAT exemption on some capital machinery imports.

• Repatriation guarantee: The biggest “assurance” benefit is that the law explicitly allows repatriation of funds (which we discussed) – that clarity itself is an incentive compared to some countries where laws are vague.

• Visa facilitation: As mentioned, getting Business Visas and Residential Visas for investors is a benefit – it allows you hassle-free long-term stay in Nepal to oversee your business.

• One-stop service: The government’s one-stop service center aims to reduce bureaucratic friction by providing many services (registration, immigration, tax, etc.) under one roof for investors.

• No local content requirements: Nepal generally doesn’t impose requirements to source a certain percentage locally or export certain amount, unlike some countries. You’re free to run the business as you see fit (subject to regular laws).
  There are plans and discussions for further incentives (like special economic zones with tax holidays for export industries, etc.), but these are evolving. It’s good to check current fiscal year policies. DCV can inform you at the time of your investment if any special schemes apply to your business (for example, hydropower projects get certain tax holidays and royalty arrangements; IT startups recently got some tax breaks; etc.). While incentives might not be game-changing, they can certainly sweeten the deal.

Q10. How does Digital Consulting Ventures (DCV) help in the incorporation process?
A10. DCV provides comprehensive support at every stage of incorporating and operating a foreign business in Nepal. In summary, DCV will:

• Advise you on legal structure and investment requirements before you start.

• Handle all paperwork for government approvals (name reservation, FDI approval, company registration, PAN, industry registration).

• Draft and translate necessary documents (MoA, AoA, JV agreements, resolutions) in line with Nepali law.

• Represent you through a Power of Attorney so you don’t need to travel for paperwork.

• Open your bank account and assist in transferring the capital into Nepal.

• Obtain any additional licenses or permits specific to your business.

• Provide accounting and tax compliance services post-incorporation.

• Act as your local liaison for any governmental communications and annual filings.

• Essentially, DCV turns what could be a complicated, months-long ordeal into a managed project with clear timelines and deliverables. We’ve helped numerous foreign investors successfully establish companies in Nepal and would do the same for you, making the process efficient and stress-free.

Have more questions? Feel free to reach out to DCV for a personalized consultation. We’re here to help international investors thrive in Nepal’s emerging market.

Sources

• Foreign Investment and Technology Transfer Act, 2019 (FITTA 2019) – Governs FDI in Nepal, including minimum investment threshold and repatriation provisionslawbhandari.comnepaleconomicforum.org. Clarifies sectors open to 100% foreign ownership vs. restricted (Negative List)doind.gov.np and ensures rights to profit repatriation with regulatory approval.

• Companies Act 2063 (2006) – Legal framework for company incorporation in Nepal. Details requirements for incorporation (application, MoA, AoA) and operation of companiesr. Under this Act, foreign companies can be registered as private limited companies (even with a single shareholder), and branch or liaison offices of foreign firms are covered by Section 154.

• Office of the Company Registrar (OCR) Guidelines – Procedures for name reservation and company registration. OCR requires online name application and submission of incorporation documents including MoA, AoA, and prior approval letter for foreign investments. Registration fees are based on authorized capital as per OCR’s fee schedule

• Department of Industry (DOI) – FDI Approval Process – The DOI (One Stop Service Centre) handles new foreign investment approvals and industry registration. It specifies required documents like project report, joint venture agreement, investor’s credentials, and financial credibility certificate for FDI approval. The DOI also issues the Industry Registration Certificate post-incorporation and provides investor aftercare services (e.g., visa recommendations).

• Inland Revenue Department (IRD) – Tax Registration Requirements – All companies must register for tax (PAN) with IRD. The process takes 1-2 days and needs the company certificate, charter documents, resolution for PAN, and proof of office address. For VAT registration, additional conditions apply depending on turnover and business nature.