How to Incorporate a Company in Nepal Under the Company Act

If you are a foreign company exploring Nepal, incorporation is your first legal milestone. The Company Act Nepal governs how companies are formed, owned, structured, and regulated in Nepal. It applies equally to domestic and foreign-owned companies, with additional layers when foreign investment is involved.

This guide explains how to incorporate a company in Nepal under the Company Act Nepal, step by step. It focuses on what foreign founders, investors, and overseas directors need to know before committing capital.

You will learn the legal process, timelines, costs, compliance duties, and practical risks. The goal is clarity, not complexity.

What Is the Company Act Nepal and Why It Matters

The Company Act Nepal is the primary legislation governing:

• Company incorporation and registration

• Shareholding and directorship

• Corporate governance and filings

• Share transfers and restructuring

• Dissolution and liquidation

For foreign companies, it works alongside Nepal’s foreign investment laws. Incorporation must comply with both frameworks.

Key point:
The Company Act allows 100 percent foreign ownership in permitted sectors, subject to investment approval.

Who Can Incorporate a Company in Nepal

Under the Company Act Nepal, the following can incorporate a company:

• Foreign individuals

• Foreign companies or holding entities

• NRNs (Non-Resident Nepalis)

• Joint ventures between foreign and Nepali shareholders

There is no citizenship requirement for shareholders. Directors can also be foreign nationals.

However, foreign ownership triggers additional approvals, discussed below.

Types of Companies You Can Incorporate Under the Company Act Nepal

1. Private Limited Company (Most Common)

This is the preferred structure for foreign companies.

Features:

• 1 to 101 shareholders

• Limited liability

• No public share issuance

• Suitable for services, tech, trading, and investment holding

2. Public Limited Company

Used for large projects or regulated sectors.

Features:

• Minimum 7 shareholders

• Higher compliance burden

• Mandatory public disclosures

3. Branch or Liaison Office

Not incorporated entities, but registered presences.

Use cases:

• Market testing

• Project execution

• Non-commercial activities

Step-by-Step: How to Incorporate a Company in Nepal Under the Company Act

Step 1: Name Reservation

You must reserve a unique company name with the Office of the Company Registrar.

Rules:

• No similarity with existing companies

• No restricted or misleading words

• English or Nepali names allowed

Approval usually takes 1–3 working days.

Step 2: Foreign Investment Approval (If Applicable)

If the company has foreign ownership, you must obtain investment approval before registration.

Approval authority depends on:

• Investment size

• Sector

• Nature of activities

This step runs parallel to Company Act compliance.

Step 3: Prepare Incorporation Documents

Documents required under the Company Act Nepal include:

• Memorandum of Association

• Articles of Association

• Shareholder and director details

• Registered office address

• Capital structure

All documents must clearly reflect foreign ownership.

Step 4: File Incorporation Application

The application is submitted to the Office of the Company Registrar.

Upon approval, you receive:

• Certificate of Incorporation

• Company Registration Number

This legally creates the company.

Step 5: Post-Incorporation Registrations

After incorporation, additional registrations are mandatory.

These include:

• Tax registration (PAN or VAT)

• Social Security Fund registration

• Industry registration (if applicable)

• Bank account opening

Only after this can operations begin.

Typical Timeline for Company Incorporation in Nepal

Total: 4–6 weeks on average.

Minimum Capital Requirements Under the Company Act Nepal

The Company Act itself does not prescribe a minimum capital.

However, for foreign-owned companies:

• Sector-specific thresholds apply

• Authorities may impose minimum investment levels

Capital must be declared and injected as per approvals.

Director and Shareholder Rules Explained Simply

Directors

• Minimum 1 director

• Can be foreign nationals

• No residency requirement

Shareholders

• Individuals or corporate entities

• 100 percent foreign ownership allowed in permitted sectors

• Share transfers must follow Company Act procedures

Corporate Governance Obligations After Incorporation

Once incorporated, companies must comply with ongoing obligations under the Company Act Nepal.

These include:

• Annual general meetings

• Maintenance of statutory registers

• Annual filings with the Registrar

• Disclosure of changes in directors or shareholders

Failure leads to fines and potential deregistration.

Common Mistakes Foreign Companies Make

Avoid these frequent issues:

• Incorporating before investment approval

• Incorrect activity descriptions

• Non-compliant Articles of Association

• Missing post-registration filings

• Using nominee structures incorrectly

Professional structuring reduces risk significantly.

Company Act Nepal vs Practical Reality for Foreign Companies

This gap is where expert guidance matters.

Tax and Compliance After Incorporation

Incorporation is only the beginning.

Foreign-owned companies must manage:

• Corporate income tax

• Withholding taxes

• Payroll and social security

• Annual audits

• Regulatory reporting

These operate alongside Company Act obligations.

When a Branch or Liaison Office Makes More Sense

Incorporation is not always ideal.

Consider alternatives if you:

• Do not want local profit generation

• Need short-term market presence

• Are executing a single project

Each option has different compliance profiles.

Why the Company Act Nepal Is Friendly to Foreign Investors

Despite common myths, the Company Act Nepal is investor-friendly.

It offers:

• Clear incorporation rules

• Limited liability protection

• Shareholding flexibility

• Predictable governance framework

The challenge is alignment with other laws, not the Act itself.

Final Thoughts: Incorporation Is a Strategic Decision

Incorporating under the Company Act Nepal is a legal step and a strategic one.

The right structure:

• Protects your investment

• Simplifies compliance

• Enables smooth repatriation

• Builds long-term credibility in Nepal

With the right guidance, Nepal can be a stable and cost-efficient base.

Call to Action

Planning to incorporate a company in Nepal?

Speak with our incorporation and compliance specialists to structure your company correctly under the Company Act Nepal, avoid delays, and ensure full legal compliance from day one.

Frequently Asked Questions (People Also Ask)

Is the Company Act Nepal applicable to foreign companies?

Yes. The Company Act Nepal governs all incorporated companies, including foreign-owned entities, with additional approvals required for foreign investment.

Can a foreigner own 100 percent of a Nepali company?

Yes, in permitted sectors. Full foreign ownership is allowed, subject to investment approval and sectoral regulations.

How long does company incorporation take in Nepal?

Typically 4–6 weeks for foreign-owned companies, depending on investment approval timelines.

Is a local director required under the Company Act Nepal?

No. Directors can be foreign nationals. However, immigration compliance applies for active roles.

What happens if annual filings are missed?

Penalties apply, and continued non-compliance can lead to deregistration under the Company Act Nepal.