Nepal Accouting

Types of Companies You Can Incorporate in Nepal (Private, Public & More)

Vijay Shrestha Sep 10, 2025 2:08:06 PM 5 min read

Incorporate a company in Nepal — entity types and FDI process flowchart

If you plan to incorporate a company in Nepal, this guide shows the fastest compliant path. You will discover entity choices, FDI approvals, tax registrations, and governance rules. Each step is practical and sequenced. Legal terms are kept simple. The goal is clarity for foreign boards and founders. Use this as your action plan and briefing pack.

Nepal at a glance: how the system fits together

Company registration: Office of the Company Registrar (OCR).
FDI approvals: Department of Industry (DOI) for most projects; Investment Board Nepal (IBN) for large projects.
Tax: Permanent Account Number (PAN) is mandatory. VAT is threshold or sector driven.
Key statutes: Companies Act 2063; FITTA 2019; Income Tax Act; VAT Act.
Common vehicles: Private limited, public limited, non-profit company, branch, and liaison office.

Types of companies you can incorporate in Nepal

Private Limited Company (Pvt. Ltd.)

Ideal for: Subsidiaries and joint ventures.
Key traits:

Shareholder cap applies. The cap is widely recognized as up to 101.
No public share offering.
Flexible board rules via the Articles of Association.
Why choose it: Faster to form. Lower compliance load. Works well for most FDI projects.

Public Limited Company (Ltd.)

Ideal for: Scale, public fundraising, or sectors requiring a public vehicle.
Key traits:

At least seven promoters.
Minimum paid-up capital applies. Baseline is commonly cited as NPR 10 million.
Board size and independent director requirements are stricter.
Why choose it: Access to public investors and higher market credibility.

Company Not Distributing Profits (Non-profit Company)

Ideal for: CSR initiatives, industry associations, and professional bodies.
Key traits:

Profit is reinvested to achieve stated objectives.
Governance defined by the Articles and statute.
Why choose it: Clear mission platform with company status and audit discipline.

Foreign Company Registration — Branch Office

Ideal for: Delivering projects directly under the foreign parent.
Key traits:

Income-earning permitted within approved scope.
Taxable presence in Nepal as a permanent establishment.
Why choose it: Operate without creating a local subsidiary.

Foreign Company Registration — Liaison Office

Ideal for: Market development and coordination.
Key traits:

No income-earning activities permitted.
Costs funded from head office.
Why choose it: Maintain presence without trading while you assess the market.

Side-by-side comparison (original insight)

Dimension	Private Ltd.	Public Ltd.	Non-profit Co.	Branch Office	Liaison Office
Typical use	Subsidiary or JV	Scale and fundraising	Social or sector mission	Direct ops by parent	Representation only
Shareholders	Up to 101	≥ 7 promoters	Members per Articles	N/A	N/A
Public fundraising	Not allowed	Allowed	Not allowed	Not applicable	Not applicable
Board rules	Flexible via Articles	Stricter, with independence	As per Articles	Governed by parent	Governed by parent
Paid-up capital	As per Articles	Baseline NPR 10m common	Mission-aligned	N/A	N/A
Income-earning	Yes	Yes	Yes, not distributed	Yes	No
FDI route	FITTA approval	FITTA + sector rules	Case-by-case	FITTA + branch registration	FITTA + liaison registration
Best when…	You want speed	You need scale	You need mission platform	You need on-ground ops	You need presence only

How to incorporate a company in Nepal — the cleanest path

A) Subsidiary route (Private or Public Company)

High-level sequence:

Select entity type and ownership. Decide private vs public, and the cap table.
Name search and reservation at OCR. Prepare English and Nepali variants.
FDI approval under FITTA 2019. Choose DOI or IBN based on project size.
Draft MOA/AOA. Align objects with approved business scope.
File incorporation at OCR. Submit documents and pay fees.
Tax registrations. Obtain PAN. Register VAT if required by turnover or sector.
Banking and capital inflow. Remit equity through approved channels.
Secondary licences. Apply per sector.
Operational setup. HR, payroll, accounting, and statutory registers.

B) Branch or Liaison route

Register as a foreign company with OCR.
Branch: Operate and bill within the approved scope.
Liaison: Do not trade. Focus on communications and research.
Tax footprint: Branch is taxable as a permanent establishment. Liaison is cost centre only.

FDI essentials for foreign founders

Which authority: DOI handles most FDI. IBN oversees large or strategic projects.
Minimum foreign investment: Commonly cited threshold is NPR 20 million per investor.
Repatriation: FITTA 2019 allows repatriation of dividends, capital gains, principal, interest, and approved fees.
Banking path: Use formal remittance channels. Keep bank advices and approvals.
Best practice: Align MOA/AOA with approval terms and sector licences to avoid re-filings.

Governance rules that actually matter

Private companies: Use the Articles to hard-code quorum, veto rights, and board size.
Public companies: Board size and independence rules apply. Promoter minimum is seven.
Meetings and minutes: Keep accurate notices and minutes to support audits.
Registers and filings: Maintain share register, beneficial ownership, and annual returns.

Taxes, PAN, VAT, and routine compliance

PAN: Mandatory for all entities. Apply immediately after incorporation.
VAT: Register when you cross the legal threshold or if your sector mandates it.
Corporate income tax: Plan provisions, advance tax, and final returns.
Withholding tax: Apply on specified payments, including cross-border services.
Repatriation checklist: Tax clearance, audited financials, board approvals, and banking evidence.

The step-by-step playbook (detailed)

Follow this numbered checklist for a frictionless launch:

Choose your vehicle. Private, public, non-profit, branch, or liaison.
Confirm sector openness. Ensure your activities are permitted.
Model capitalization. Meet the minimum foreign investment baseline where applicable.
Reserve your name. Check conflicts before brand rollout.
Collect promoter documents. Passports, board resolutions, and power of attorney.
Draft MOA/AOA. Align objects with licences and FDI approval terms.
File for FDI approval. Prepare a complete, consistent pack to avoid queries.
File incorporation at OCR. Upload documents. Pay fees.
Open bank accounts. Prepare KYC and board consents.
Obtain PAN. Map tax periods and responsible officers.
Register VAT if needed. Set correct effective date.
Remit capital. Use approved channels and document subscriptions.
Set up payroll and HR. Contracts, social security, and withholding.
Create a compliance calendar. Board meetings, filings, tax returns, FX approvals.
Prepare for repatriation. Keep clean records from day one.

Documents you will need (master list)

Memorandum of Association and Articles of Association.
Passports and verified KYC for promoters and directors.
Parent company board resolutions and power of attorney.
Share subscription terms and capitalization plan.
Lease or office address proof for registered office.
FDI approval letter and supporting annexures.
Bank letters and financial credibility statements.
Tax registrations: PAN, and VAT where required.

Costs, timing, and what boards usually ask

Government fees: Scale with authorized capital and document count.
Professional fees: Depend on sector, urgency, and translation needs.
Timing bands:

FDI approval: two to six weeks for complete files.
OCR incorporation: three to seven working days after acceptance.
PAN: a few days post-filing. VAT can add verification time.
Board concerns: Repatriation certainty, governance rights, and tax planning.

Common pitfalls (and how to avoid them)

Objects mismatch: MOA objects do not match the approval or licence. Align early.
Name conflicts: Skipping full name search. Reserve before marketing.
Incomplete FDI pack: Missing board approvals or bank letters. Use a checklist.
VAT timing errors: Wrong effective date causes filing issues. Plan ahead.
Repatriation evidence gaps: Keep tax clearances and bank advices organized.

Decision aide — which vehicle should you choose?

Ask these questions first:

Will you earn income in year one? If not, a liaison may suffice.
Do you need public fundraising soon? Consider a public company.
Is your project large-scale? You may fall under IBN oversight.
Do you need flexible veto rights? Private company Articles can deliver this.
Is your initiative mission-driven? Consider a non-profit company.

Sector notes in brief

Financial services and insurance: Expect sector licences and higher capital.
Energy and infrastructure: Larger approvals and environmental assessments.
IT and professional services: Lighter sector licensing; confirm export billing rules.
Manufacturing and logistics: Site, environmental, and industry registrations may apply.
Education and health: Regulator approvals and stricter governance.

Compliance note

This article summarizes procedures under the Companies Act 2063, FITTA 2019, Income Tax Act, and VAT Act, plus regulator process notes. Policies and thresholds can change. Confirm current forms, fees, and sector rules before filing.

Vijay Shrestha

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