How to Incorporate a Company in Nepal: Legal Steps & Documents

Company incorporation Nepal is becoming a strategic move for foreign companies seeking cost efficiency, skilled talent, and access to South Asia. Nepal offers a growing digital workforce, improving ease of doing business, and strong legal protections for investors.

If you are a foreign founder, SME, or multinational exploring Nepal, this guide gives you a complete, practical, and legally accurate roadmap. You will learn the exact legal steps, required documents, timelines, and common pitfalls.

This article is written for decision-makers who want clarity, not complexity.

Why Foreign Companies Are Incorporating in Nepal

Nepal is no longer just a low-cost outsourcing destination. It is evolving into a structured investment market.

Key drivers include:

• Competitive operating and salary costs

• English-speaking, graduate-level workforce

• Government-backed FDI protection under FITTA 2019

• Free repatriation of profits and capital

• Access to India and China via regional trade routes

For service-based, tech, consulting, and professional firms, Nepal is especially attractive.

Legal Framework Governing Company Incorporation in Nepal

Before starting company incorporation in Nepal, foreign companies must understand the governing laws.

Key laws and regulations

• Companies Act 2006 – Core incorporation law

• Foreign Investment and Technology Transfer Act (FITTA) 2019

• Industrial Enterprises Act 2020

• Income Tax Act 2002

• Labour Act 2017 & Social Security Act 2018

These laws collectively regulate ownership, taxation, employment, and investor rights.

Types of Legal Entities Available in Nepal

Foreign companies can choose from several structures depending on their goals.

1. Private Limited Company (FDI Company)

This is the most common option.

• Can be 100 percent foreign-owned in permitted sectors

• Separate legal entity

• Suitable for long-term operations

2. Branch Office

• Extension of the foreign parent company

• No separate legal personality

• Restricted business activities

3. Liaison Office

• Non-commercial

• Used for market research and coordination

• Cannot generate revenue

For most foreign investors, a Private Limited Company under FDI is the preferred model.

Company Incorporation Nepal: Step-by-Step Legal Process

This is the exact process foreign companies must follow.

Step 1: Sector approval and FDI eligibility

First, confirm whether your business sector is open to foreign investment.

Nepal maintains a Negative List, covering restricted industries such as:

• Defense

• Certain media businesses

• Small-scale retail trade

Most IT, consulting, outsourcing, and service sectors are fully open.

Step 2: Name reservation at OCR

The proposed company name is submitted to the Office of Company Registrar (OCR).

Requirements:

• Unique name

• No similarity to existing companies

• No prohibited or sensitive terms

Approval usually takes 1 to 3 working days.

Step 3: FDI approval from Department of Industry

For foreign shareholders, FDI approval is mandatory.

Documents submitted include:

• Application form

• Project profile

• Shareholder details

• Investment amount and structure

Approval timelines typically range from 7 to 15 working days.

Step 4: Company registration at OCR

Once FDI approval is granted, the company is incorporated.

OCR issues:

• Certificate of Incorporation

• Company Registration Number

• PAN eligibility

At this stage, the company legally exists.

Step 5: Tax and PAN registration

Every company must register for tax.

This includes:

• Permanent Account Number (PAN)

• VAT registration if applicable

Tax registration is done at the Inland Revenue Department.

Step 6: Bank account and capital injection

A local bank account is opened in Nepal.

Foreign investors then:

• Remit capital through banking channels

• Declare source of funds

• Obtain capital credit confirmation

This step is critical for profit repatriation later.

Step 7: Post-incorporation compliance

After incorporation, companies must complete:

• Local ward registration

• Social Security Fund (SSF) enrollment

• Labour office registration

This ensures full operational compliance.

Documents Required for Company Incorporation in Nepal

Foreign companies must prepare documents carefully to avoid delays.

Key documents for foreign shareholders

• Certificate of Incorporation of parent company

• Memorandum and Articles of Association

• Board resolution approving Nepal investment

• Passport copies of directors and shareholders

• Power of Attorney

All foreign documents must be notarised and apostilled.

Local incorporation documents

• Memorandum of Association (MOA)

• Articles of Association (AOA)

• Share subscription agreement

• Joint venture agreement, if applicable

Accuracy here prevents future legal disputes.

Minimum Capital Requirement for Foreign Investors

Nepal mandates a minimum FDI threshold.

• Minimum foreign investment: NPR 20 million

• Applies to equity capital, not operating expenses

This threshold is set under FITTA 2019 and may change via government notification.

Timeline for Company Incorporation Nepal

Here is a realistic timeline foreign companies can expect.

Total estimated timeline: 3 to 5 weeks

Cost Breakdown: Incorporating a Company in Nepal

Costs vary depending on structure and advisors used.

Typical cost components

• Government registration fees

• Legal and compliance advisory fees

• Notarisation and apostille costs

• Bank and compliance charges

Compared to other South Asian markets, Nepal remains cost-efficient.

Compliance Obligations After Incorporation

Company incorporation Nepal is only the beginning.

Foreign-owned companies must comply with:

• Annual financial audits

• Tax filings and TDS submissions

• SSF contributions for employees

• Annual returns to OCR

Non-compliance can result in penalties or operational restrictions.

Company Incorporation Nepal vs Other Market Entry Options

This comparison helps foreign companies choose the right entry path.

Common Mistakes Foreign Companies Make

Avoid these frequent errors:

• Underestimating compliance workload

• Incorrect document apostille

• Poor capital structuring

• Ignoring labour and SSF laws

Working with local experts reduces risk significantly.

Taxation Overview for Foreign-Owned Companies

Key points to know:

• Corporate tax typically ranges from 25%

• Withholding tax applies on salaries and services

• Dividend tax applies on repatriation

Nepal has double taxation avoidance agreements with several countries.

Repatriation of Profits and Capital

Foreign investors are legally allowed to repatriate:

• Dividends

• Royalties

• Loan repayments

• Capital on exit

Repatriation is governed by Nepal Rastra Bank regulations and requires proper documentation.

Why Professional Support Matters

Company incorporation Nepal involves:

• Multiple government bodies

• Strict document standards

• Ongoing compliance obligations

Professional advisors ensure speed, accuracy, and long-term compliance.

Frequently Asked Questions (People Also Ask)

Can a foreigner fully own a company in Nepal?

Yes. Most sectors allow 100 percent foreign ownership, except restricted industries listed under the Negative List.

What is the minimum investment for company incorporation Nepal?

The minimum foreign investment is NPR 20 million under current FDI regulations.

How long does company incorporation in Nepal take?

Typically 3 to 5 weeks, depending on approvals and document readiness.

Is profit repatriation allowed in Nepal?

Yes. Nepal legally guarantees repatriation of profits and capital through banking channels.

Do foreign companies need a local director?

No. However, a local authorised representative is required for regulatory purposes.

Conclusion

Company incorporation Nepal offers foreign companies a rare combination of affordability, talent, and legal protection. With the right structure and guidance, Nepal can become a strategic base for South Asia operations.

The key is doing it right from day one. Legal accuracy, compliant documentation, and ongoing advisory support make all the difference.

Call to Action

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