How to Register a Startup in Nepal and Get Legally Compliant

How to register a company in Nepal is one of the most common questions foreign founders ask when exploring South Asia. Nepal offers competitive labour costs, a growing tech and services ecosystem, and government-backed foreign investment protections.

Yet, startup registration can feel complex if you are unfamiliar with Nepali laws, approval authorities, and compliance steps.

This guide gives foreign startups a clear, legally accurate, and practical roadmap. It explains registration, foreign investment approvals, tax, HR, and post-incorporation compliance so you can operate with confidence from day one.

Why Nepal Is Attracting Foreign Startups

Nepal has quietly become a strategic base for international startups in IT, SaaS, fintech support, engineering, and professional services.

Key drivers include:

• Young, English-speaking workforce

• Lower operating costs than India or Southeast Asia

• Liberalised foreign investment regime

• Strong IP and profit repatriation protections

Foreign companies can own 100 percent equity in most service-based sectors.

Legal Framework Governing Startup Registration in Nepal

Understanding the legal foundation is critical before you register.

Startup registration is governed mainly by:

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act (FITTA), 2019

• Income Tax Act, 2002

• Labour Act, 2017

• Social Security Act, 2018

Regulatory oversight comes from the Office of Company Registrar, Department of Industry, and Nepal Rastra Bank.

Business Structures Available for Startups in Nepal

Foreign founders usually choose one of the following structures.

Private Limited Company (Most Common)

This is the preferred structure for startups.

Features:

• Separate legal entity

• Limited liability

• 100 percent foreign ownership allowed

• Eligible for FDI approval

Branch Office

Suitable for revenue-generating extensions of overseas companies.

Limitations:

• Cannot perform activities beyond parent scope

• Heavily regulated profit repatriation

Liaison Office

Used only for market research or coordination.

Restrictions:

• No commercial activity

• No local revenue generation

Best Structure for Foreign Startups

For scalability, funding, and long-term compliance, Private Limited Company is the most flexible and investor-friendly option.

How to Register a Company in Nepal: Step-by-Step Process

Step 1: Company Name Reservation

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

Guidelines:

• Avoid restricted or sensitive words

• Avoid similarity with existing entities

• Include “Private Limited” at the end

Approval usually takes one to two working days.

Step 2: Prepare Incorporation Documents

Required documents include:

• Memorandum of Association

• Articles of Association

• Shareholder and director details

• Passport copies of foreign shareholders

• Board resolution from parent company

Step 3: Company Registration at OCR

Documents are filed electronically and physically.

Once approved, the OCR issues:

• Certificate of Incorporation

• Company Registration Number

This legally creates your startup in Nepal.

Step 4: Foreign Investment Approval (FDI)

Foreign founders must obtain approval under FITTA 2019.

The approving authority is usually the Department of Industry.

FDI approval includes:

• Sector eligibility confirmation

• Minimum investment threshold compliance

• Investment structure validation

Step 5: Capital Injection and Bank Account

After FDI approval:

1. Open a local bank account

2. Inject foreign capital through approved channels

3. Obtain investment confirmation from the bank

Capital must be routed through Nepal Rastra Bank-approved banks.

Step 6: Tax and VAT Registration

You must register with the Inland Revenue Department.

You will receive:

• Permanent Account Number (PAN)

• VAT registration (if applicable)

Step 7: Local Level Registration

Depending on your office location, register with:

• Ward office or municipality

• Local business tax authority

Timeline to Register a Startup in Nepal

A realistic timeline for foreign startups is shown below.

Total expected timeline: 4–6 weeks

Cost to Register a Startup in Nepal

Costs vary based on capital and sector.

Typical cost components include:

• Government registration fees

• FDI approval fees

• Legal drafting and advisory

• Bank compliance charges

There is no statutory minimum capital for most service startups, but regulators expect realistic capitalization.

Compliance Requirements After Registration

Startup compliance does not end at incorporation.

Mandatory Ongoing Compliance

Foreign-owned startups must comply with:

• Annual company filings

• Tax returns and audits

• Withholding tax deductions

• Labour law compliance

Employment and HR Compliance

If you hire staff, you must comply with:

• Labour contracts under Labour Act 2017

• Social Security Fund registration

• Leave and termination rules

Comparison: DIY Registration vs Professional Support

For foreign startups, professional support significantly reduces regulatory risk.

Common Mistakes Foreign Startups Make

Avoid these costly errors:

• Injecting capital before FDI approval

• Choosing the wrong business structure

• Ignoring labour and SSF compliance

• Using incorrect shareholder resolutions

• Under-capitalising the company

These mistakes delay operations and trigger penalties.

Why Nepal Is Startup-Friendly for Foreigners

Nepal actively encourages foreign entrepreneurship.

Key incentives include:

• 100 percent profit repatriation (after tax)

• Legal protection for foreign investors

• Technology transfer recognition

• No local shareholder requirement

Government policy increasingly supports digital and export-oriented startups.

How to Register a Company in Nepal Without Delays

To speed up registration:

1. Prepare documents upfront

2. Align capital with business plan

3. Choose a compliant sector

4. Use experienced local advisors

Preparation saves weeks.

When an Employer of Record (EOR) Makes Sense

If you want to hire quickly without entity setup, an EOR model can be a temporary solution.

EOR allows:

• Legal employment without incorporation

• Payroll and tax compliance

• Fast market entry

However, it is not a substitute for long-term operations.

Frequently Asked Questions

Can foreigners own 100 percent of a startup in Nepal?

Yes. Most service-based sectors allow 100 percent foreign ownership under FITTA 2019.

How long does it take to register a startup in Nepal?

Typically four to six weeks, including FDI approval and capital injection.

Is a local director required?

No. Foreign nationals can act as directors. A local authorised representative is recommended.

What is the minimum investment required?

There is no fixed statutory minimum for most startups, but authorities assess commercial viability.

Can profits be repatriated?

Yes. Profits, dividends, and capital can be repatriated after tax and regulatory approvals.

Call to Action: Get Expert Help

Registering a startup in Nepal is straightforward when done correctly.

If you want clarity on structure, FDI approval, compliance, and timelines, talk to a Nepal-based incorporation specialist before you invest.

Book a consultation today and get a compliant, future-ready setup from day one.

Conclusion

Understanding how to register a company in Nepal is essential for foreign startups entering the market. With the right structure, approvals, and compliance framework, Nepal offers a secure and scalable base for growth.

A compliant start saves time, protects capital, and builds investor confidence.