How to Start a Private Limited Company in Nepal

If you are planning to start a business in Nepal, setting up a Private Limited Company is the most trusted and scalable option for foreign companies. Nepal offers competitive labour costs, a growing digital economy, and full foreign ownership in many sectors. With the right structure, foreign investors can operate, repatriate profits, and scale safely.

This guide explains how foreign companies can start a business in Nepal through a Private Limited Company, covering eligibility, legal steps, costs, timelines, and compliance. It is written for founders, CFOs, and expansion leaders who want clarity without legal jargon.

Why Foreign Companies Choose a Private Limited Company in Nepal

A Private Limited Company is the preferred structure for foreign investors because it provides legal certainty and long-term flexibility.

Key advantages

• Separate legal identity from shareholders

• Limited liability protection

• Eligibility for Foreign Direct Investment (FDI)

• Ability to hire local staff directly

• Easier profit repatriation compared to informal structures

Unlike liaison or branch offices, a Private Limited Company can generate revenue inside Nepal and contract with clients locally and internationally.

Legal Framework for Starting a Business in Nepal

Foreign investors are governed by a clear statutory framework.

Core laws you must comply with

• Companies Act, 2006

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

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

• Labour Act, 2017

• Social Security Act, 2018

Together, these laws define how a foreign company can start a business in Nepal, inject capital, hire employees, and repatriate earnings.

Who Can Start a Private Limited Company in Nepal?

Foreign individuals, companies, and NRNs can all invest, subject to sector rules.

Eligibility criteria

• Minimum one shareholder and one director

• Shareholders can be 100% foreign nationals

• Registered office address in Nepal

• Sector must not fall under the restricted or negative list

Most service sectors such as IT, consulting, outsourcing, engineering, and software are fully open to foreign ownership.

Step-by-Step Process to Start a Business in Nepal (Private Limited Company)

1. Company name reservation

You must reserve a unique name with the Office of the Company Registrar (OCR).
Names are checked for duplication and prohibited terms.

Timeline: 1–2 working days

2. Draft constitutional documents

Two core documents are required:

• Memorandum of Association (MOA)

• Articles of Association (AOA)

These define business activities, capital structure, director powers, and shareholder rights.

3. Foreign investment approval (FDI approval)

Foreign investors must obtain approval before injecting capital.

Approval authority depends on investment size:

• Department of Industry (DOI)

• Investment Board Nepal (IBN) for large projects

This step legally authorises you to start a business in Nepal as a foreign investor.

4. Company registration with OCR

Once FDI approval is granted, the company is incorporated with OCR.

You receive:

• Certificate of Incorporation

• Company registration number

The company now legally exists in Nepal.

5. Capital injection via local bank

Foreign capital must be remitted through a Nepal-licensed bank.

Requirements include:

• FDI approval letter

• Share subscription details

• Source of funds declaration

Funds are converted to NPR upon receipt.

6. PAN and tax registration

The company must register for:

• Permanent Account Number (PAN)

• VAT (if applicable)

This enables invoicing, payroll, and tax filings.

7. Local compliance registrations

Before operations begin, you must complete:

• Social Security Fund (SSF) registration

• Labour office registration

• Municipal business registration

Typical Timeline to Start a Business in Nepal

Total: approximately 4–6 weeks with proper documentation.

Cost Breakdown for a Private Limited Company in Nepal

Costs vary by investment size and complexity.

Typical cost heads

• Government registration fees

• Legal and compliance drafting

• Bank charges for capital remittance

• Ongoing accounting and tax filings

Foreign investors should budget for both setup costs and annual compliance costs.

Private Limited Company vs Other Entry Models

For most foreign companies planning scale, a Private Limited Company is the most future-proof way to start a business in Nepal.

Employment and Payroll Obligations

Once operational, companies must comply with Nepal’s labour laws.

Employer obligations include

• Minimum wage compliance

• Social Security Fund contributions

• Paid leave and public holidays

• Payroll tax withholding

Foreign-owned companies are treated the same as local employers.

Profit Repatriation for Foreign Investors

Nepal allows legal repatriation of:

• Dividends

• Royalty and technical fees

• Loan repayments

• Sale proceeds of shares

Repatriation requires tax clearance and bank approval but is fully lawful under FITTA 2019.

Common Mistakes When Foreigners Start a Business in Nepal

1. Choosing the wrong business activity classification

2. Delaying bank capital injection

3. Underestimating labour compliance

4. Using generic MOA/AOA templates

5. Ignoring annual filing deadlines

Avoiding these mistakes saves months of delay.

Compliance After You Start a Business in Nepal

Ongoing requirements

• Annual financial statements

• Annual returns to OCR

• Monthly tax filings

• SSF contributions

• Audit by licensed auditor

Compliance is not optional and affects repatriation rights.

When a Private Limited Company Is the Right Choice

A Private Limited Company is ideal if you plan to:

• Operate long-term in Nepal

• Hire full-time local staff

• Invoice clients globally

• Protect intellectual property

• Repatriate profits legally

If speed matters more than structure, EOR may work initially. For ownership and control, incorporation is better.

Call to Action

If you are planning to start a business in Nepal, professional structuring makes the difference between smooth approval and costly delays.
Book a consultation to receive a tailored incorporation roadmap, cost estimate, and compliance checklist for your sector.

Conclusion

To start a business in Nepal, a Private Limited Company offers the strongest legal foundation for foreign companies. It enables ownership, revenue generation, employment, and profit repatriation under a clear regulatory framework. With the right guidance, Nepal can be a strategic and cost-efficient expansion destination.

Frequently Asked Questions (People Also Ask)

Can foreigners own 100% of a company in Nepal?

Yes. Most service sectors allow 100% foreign ownership under FDI laws.

What is the minimum investment to start a business in Nepal?

Generally NPR 20 million for foreign investors, subject to sector rules.

How long does company registration take in Nepal?

Usually 4–6 weeks including FDI approval and bank formalities.

Can profits be repatriated outside Nepal?

Yes. Dividends and capital can be repatriated after tax clearance.

Is a local director required?

No. Foreign nationals can act as directors.