Incorporate a Startup in Nepal: Step-by-Step for New Entrepreneurs

If you plan to incorporate a company in Nepal, timing has never been better. Nepal offers competitive operating costs, a young English-speaking workforce, and a clear legal framework for foreign investors. For startups and international founders, Nepal can function as a cost-efficient innovation hub, regional delivery center, or long-term growth market.

This guide is written specifically for foreign companies and startup founders. It explains the legal process, investment rules, timelines, and compliance obligations in plain English. By the end, you will know exactly how to incorporate a startup in Nepal, avoid regulatory mistakes, and structure your entry for growth.

Why Foreign Entrepreneurs Choose to Incorporate a Company in Nepal

Nepal has quietly become attractive for early-stage and scaling startups.

Strategic advantages

• Competitive salary and operating costs

• Large pool of tech, finance, and operations talent

• English widely used in business

• 100 percent foreign ownership allowed in most sectors

• Profit and capital repatriation permitted under law

Government-backed legal certainty

Foreign investment is governed by the Foreign Investment and Technology Transfer Act (FITTA) 2019 and the Companies Act 2006. These laws provide:

• Equal treatment for foreign and domestic investors

• Protection against nationalisation

• Guaranteed repatriation of profits, dividends, and capital

This legal clarity reduces risk for new founders entering Nepal.

What “Incorporate a Company in Nepal” Actually Means

To incorporate a company in Nepal, you formally register a legal entity with the Office of the Company Registrar (OCR) and, where applicable, secure foreign investment approval from the Department of Industry (DOI).

Most foreign startups choose a Private Limited Company, which allows:

• Separate legal identity

• Limited liability

• Full operational freedom

• Employment of local and foreign staff

Types of Business Structures Available in Nepal

Private Limited Company (Most Common)

Best for startups and foreign-owned operating companies.

Key features:

• 1 to 101 shareholders

• Limited liability

• Can be 100 percent foreign-owned

• Requires FDI approval if foreign capital is involved

Branch Office

Suitable for foreign companies executing specific contracts.

Limitations:

• Cannot conduct full commercial activities

• Tied to parent company scope

Liaison Office

Used only for market research or representation.

Limitations:

• No revenue generation

• No commercial transactions

Step-by-Step Process to Incorporate a Startup in Nepal

Step 1: Confirm Sector Eligibility for Foreign Investment

Nepal maintains a Negative List under FITTA 2019. Sectors like defence, retail trade, and small local services may be restricted.

Most startup-friendly sectors are open:

• IT and software

• SaaS and platforms

• Consulting and professional services

• Manufacturing

• Education and training

• Fintech and data services (subject to approvals)

Step 2: Decide Capital Structure and Shareholding

Foreign investors must invest at least NPR 20 million (approx. USD 150,000) per FITTA guidelines.

You will define:

• Authorized capital

• Issued capital

• Paid-up capital

• Shareholding ratios

This structure becomes legally binding.

Step 3: Name Reservation at the Company Registrar

You submit proposed names to the OCR portal.

Approval usually takes:

• 1 to 3 working days

Names must:

• Be unique

• Not infringe trademarks

• Reflect permitted business activities

Step 4: Draft Incorporation Documents

Key documents include:

• Memorandum of Association (MOA)

• Articles of Association (AOA)

• Shareholder details

• Director details

• Registered office address

These documents define governance, voting rights, and control.

Step 5: Obtain Foreign Investment Approval (FDI)

Foreign founders must apply to:

• Department of Industry (DOI) or

• Investment Board Nepal (IBN) for large investments

Approval timeline:

• 15 to 30 working days

This approval is mandatory before capital inflow.

Step 6: Company Registration with OCR

Once FDI approval is granted:

• OCR issues Certificate of Incorporation

• Company becomes a legal entity

This step finalises your decision to incorporate a company in Nepal.

Step 7: Open Bank Account and Inject Capital

You must:

• Open a local bank account

• Bring foreign capital through formal banking channels

• Obtain bank confirmation letters

Capital injection is monitored by Nepal Rastra Bank (NRB).

Step 8: Tax and Regulatory Registrations

Mandatory registrations include:

• Permanent Account Number (PAN)

• VAT registration (if applicable)

• Social Security Fund (SSF) enrollment

• Local ward registration

Typical Timeline to Incorporate a Company in Nepal

Average total: 4 to 6 weeks

Costs Involved in Incorporating a Startup in Nepal

Government costs

• Registration fees (based on capital)

• FDI processing fees

• PAN and VAT registration

Professional costs

• Legal drafting

• FDI advisory

• Compliance structuring

Costs vary by complexity, sector, and capital size.

Compliance Obligations After Incorporation

Foreign-owned companies must maintain ongoing compliance.

Annual requirements

• Financial statements

• Tax filings

• Audit reports

• Company renewals

Monthly obligations

• Payroll tax deductions

• SSF contributions

• VAT filings (if applicable)

Failure to comply can lead to penalties or repatriation delays.

Employment and HR Rules Startups Must Know

Key laws include:

• Labour Act 2017

• Social Security Act 2018

Mandatory employer obligations

• Minimum wages

• Paid leave and holidays

• SSF contributions (31 percent combined)

• Written employment contracts

Nepal’s labor framework strongly protects employees.

Profit Repatriation and Exit Rights for Foreign Founders

Under FITTA 2019, foreign investors may repatriate:

• Dividends

• Profits

• Loan repayments

• Capital on exit

• Royalties and technical fees

Repatriation requires:

• Tax clearance

• NRB approval

• Proper documentation

Common Mistakes When Foreigners Incorporate a Company in Nepal

1. Choosing an incorrect business scope

2. Underestimating compliance requirements

3. Improper capital injection procedures

4. Weak shareholder agreements

5. Ignoring labor law obligations

Professional guidance reduces these risks significantly.

Incorporate a Company in Nepal vs Other South Asian Markets

Nepal offers a balance of flexibility and legal certainty.

When Nepal Makes the Most Sense for Startups

Nepal is ideal if you want:

• A delivery or operations hub

• A development center

• A cost-efficient shared services office

• A long-term South Asian presence

It may not suit purely consumer retail startups.

Frequently Asked Questions (People Also Ask)

Can a foreigner fully own a company in Nepal?

Yes. Nepal allows 100 percent foreign ownership in most sectors under FITTA 2019, except restricted industries listed on the Negative List.

What is the minimum investment to incorporate a company in Nepal?

Foreign investors must invest at least NPR 20 million as paid-up capital for FDI-based companies.

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

The full process usually takes 4 to 6 weeks, including FDI approval, registration, and capital injection.

Can profits be repatriated outside Nepal?

Yes. Profits, dividends, and capital can be repatriated after tax clearance and NRB approval.

Do startups need a local director in Nepal?

No. Foreign nationals can serve as directors, though local compliance support is strongly recommended.

Conclusion

To incorporate a company in Nepal is to gain access to a legally secure, cost-efficient, and fast-growing market. With proper planning, Nepal can support your startup from early traction to regional scale. The key lies in correct structuring, regulatory compliance, and professional execution from day one.

Ready to Incorporate Your Startup in Nepal?

If you are considering Nepal for your next venture, our team supports foreign founders end-to-end.

Book a free consultation to:

• Validate your sector eligibility

• Structure FDI correctly

• Incorporate and become operational faster