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.
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.
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.
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
Used for large projects or regulated sectors.
Features:
Minimum 7 shareholders
Higher compliance burden
Mandatory public disclosures
Not incorporated entities, but registered presences.
Use cases:
Market testing
Project execution
Non-commercial activities
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.
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.
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.
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.
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.
| Stage | Estimated Time |
|---|---|
| Name reservation | 1–3 days |
| Foreign investment approval | 2–4 weeks |
| Company registration | 3–5 days |
| Tax and statutory setup | 1–2 weeks |
Total: 4–6 weeks on average.
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.
Minimum 1 director
Can be foreign nationals
No residency requirement
Individuals or corporate entities
100 percent foreign ownership allowed in permitted sectors
Share transfers must follow Company Act procedures
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.
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.
| Legal Provision | Practical Insight |
|---|---|
| 100% foreign ownership allowed | Sector clearance still critical |
| Fast incorporation process | Approvals drive timelines |
| Simple governance rules | Ongoing compliance essential |
| Director flexibility | Immigration rules apply |
This gap is where expert guidance matters.
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.
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.
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.
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.
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.
Yes. The Company Act Nepal governs all incorporated companies, including foreign-owned entities, with additional approvals required for foreign investment.
Yes, in permitted sectors. Full foreign ownership is allowed, subject to investment approval and sectoral regulations.
Typically 4–6 weeks for foreign-owned companies, depending on investment approval timelines.
No. Directors can be foreign nationals. However, immigration compliance applies for active roles.
Penalties apply, and continued non-compliance can lead to deregistration under the Company Act Nepal.