Incorporate a company in Nepal: FITTA 2019 and NRB approvals for foreign investors in Nepal

If you plan to incorporate a company in Nepal, you will meet two gatekeepers. The Department of Industry under FITTA 2019 regulates foreign investment approvals. The Nepal Rastra Bank manages foreign currency flows, loan registrations, and repatriation. You need both tracks to align. This guide explains the full path, documents, timelines, and practical tips so you launch with confidence.

How FITTA 2019 and NRB fit together

Goal: make policy and currency rules work in sync for a smooth incorporation.

• FITTA 2019 sets what foreign investment is allowed, how to approve it, and what documents are required.

• NRB confirms funds come through banking channels, registers foreign loans, approves royalty remittances, and clears dividend repatriation.

• Approval order matters. FITTA approval typically comes before full capital inflow and share registration. NRB touchpoints happen during remittance, loan registration, and repatriation.

Key takeaway: Treat FITTA as the permit to invest and NRB as the permit to move money in and out.

Who needs approvals and when

Before incorporation

• New (greenfield) company with foreign shareholders: FITTA approval required.

• Acquiring shares in an existing company: FITTA approval for share purchase or transfer.

• Sectors requiring extra consent: seek nods from sector regulators before or alongside FITTA.

After incorporation

• Capital remittance evidence: NRB confirmation via your commercial bank.

• Share registration: record paid-up capital and issue share certificates.

• Foreign loan or guarantee: prior NRB registration and approval.

• Royalty or technical service fee: register the agreement and obtain NRB remittance approval.

• Dividend or disinvestment: NRB approval with supporting board minutes and tax clearances.

The incorporation pathway for foreign investors 

1) Name reservation at OCR

Reserve an available name. Prepare at least two options. Use a clean, descriptive name to avoid rejections.

2) Draft the investment structure

Confirm shareholders, ultimate beneficial owners, and percentage holdings. Identify directors and authorized signatories.

3) Prepare FITTA application dossier

Include business plan, financial projections, draft Memorandum and Articles, identification documents, and source-of-funds declarations.

4) Sectoral alignment

Check if your business needs extra approvals. Examples include telecom, banking, insurance, hydropower, education, and health. Obtain letters where applicable.

5) Submit to DOI or IBN as applicable

Small and medium investments usually go to DOI. Large or strategic projects may route through IBN.

6) Receive FITTA approval

This is your formal investment permission. It allows you to proceed with company registration and capital inflow.

7) Company incorporation at OCR

File the Memorandum and Articles, director details, and registered office information. Obtain the certificate of incorporation.

8) Permanent Account Number (PAN) at IRD

Register for tax immediately after incorporation. PAN is needed for banking and invoicing.

9) Open bank accounts

Open an NPR operating account. Coordinate with your bank for inward remittance of capital through proper SWIFT channels.

10) Bring in capital through banking channels

Send funds from the foreign investor’s account. Ensure the SWIFT message states purpose as capital subscription.

11) NRB confirmation and share registration

Your bank issues a foreign exchange inward remittance confirmation. Record paid-up capital and issue share certificates.

12) Post-incorporation registrations

Register for VAT if required, labor and social security if hiring, and any sector licenses. Establish accounting and payroll controls.

NRB touchpoints you cannot miss

Inward remittance and share registration

• Use the bank’s inward remittance form with purpose code for share capital.

• Keep SWIFT copy, bank credit advice, and NRB-equivalent confirmation issued via your bank.

• Without proper evidence, dividend repatriation becomes difficult later.

Foreign loans and guarantees

• Prior NRB approval is required for foreign loans, including shareholder loans.

• Submit loan agreement, interest rate details, repayment schedule, and rationale.

• Register the loan so interest and principal can be serviced lawfully.

Technology transfer and royalty fees

• Register royalty or technical service agreements.

• NRB will examine the fee basis, comparables, and withholding tax treatment.

• Keep invoices, board approvals, and tax withholdings in order.

Dividend, disinvestment, and exit

• Obtain NRB approval before remitting dividends or sale proceeds.

• Provide audited financial statements, tax clearance, and proof of original capital inflow.

• Timely compliance shortens review cycles.

Document checklist for FITTA and NRB

• Incorporation documents: draft Memorandum and Articles, board resolutions, director consents

• Shareholder KYC: passports, addresses, and beneficial ownership declarations

• Business plan: model, market, CAPEX and OPEX, foreign exchange needs

• Sector approvals: if required by the line ministry or regulator

• Banking documents: SWIFT copy, credit advice, inward remittance evidence

• Agreements: loan, technology transfer, management services

• Financials and tax: audited statements (post-year-end), tax clearance certificates

• Governance: board minutes authorizing capital calls, dividends, or loans

Sectors and investment conditions

Some sectors are restricted or conditional for foreign investment. Always check the latest negative list and sector caps. Activities touching national security, primary agriculture, or micro-retail often face limits. Regulated domains like finance, insurance, and telecom follow separate capital and fit-and-proper tests. Energy, ICT, manufacturing, tourism, and services are generally open with standard compliance.

Cost and timeline expectations

Actual fees vary by sector, capital, drafting complexity, and translation volume. The biggest time variables are sector approvals and bank documentation quality. With a clean dossier and quick responses, approvals are faster. Complex ownership chains, new sectors, or unusual fee models may extend reviews.

Comparison table: Which route fits your entry plan?

Governance and internal controls to set on day one

• Board calendar: approvals for capital calls, loans, dividends, and agreements

• Banking SOPs: dual signatories, FX documentation, and remittance trackers

• Tax and audit: monthly VAT filings if applicable, TDS controls, annual audit

• Payroll: contracts, social security, and leave policies

• Compliance binder: FITTA approval, share register, NRB letters, SWIFT copies, and sector licenses

• Data room: organize all PDFs for quick retrieval during audits and repatriation reviews

Red flags that slow or stop approvals

• Vague source-of-funds for shareholders

• Royalty or management fees without commercial basis

• Loan terms that exceed arm’s-length norms

• Missing SWIFT or inward remittance evidence

• Inconsistent share registers or unsigned share certificates

• Dividend proposals without audited accounts and tax clearances

Practical timelines 

• Name reservation: fast when names are distinct and compliant

• FITTA approval: depends on dossier quality and sector complexity

• Incorporation: quick once documents are in order

• Bank account and capital inflow: faster with a prepared bank KYC pack

• NRB interactions: quicker when you attach every supporting paper, indexed and signed

Build a Gantt-style checklist with owners and deadlines. Track dependencies like sector approvals before FITTA, or NRB registration before remitting dividends. This reduces idle time.

Frequently used synonyms and search phrases

Use these terms naturally in your content and internal documentation: company registration in Nepal, Nepal FDI approval, foreign investment approval Nepal, Department of Industry, Office of the Company Registrar, NRB approval for foreign loan, royalty remittance Nepal, dividend repatriation Nepal, technology transfer Nepal, FITTA approval process.

Post-incorporation to-do list 

1. Obtain PAN and, if applicable, VAT registration.

2. Appoint auditors and adopt accounting policies.

3. Approve share certificates and update the share register.

4. Set up payroll, contracts, and social security enrollment.

5. Execute bank mandates and signatory matrices.

6. Register royalty or technical service agreements if any.

7. Prepare transfer pricing documentation if intercompany services apply.

8. Schedule the first board meeting and annual calendar.

9. Create compliance binders for FITTA, NRB, tax, and labor.

10. Draft dividend and repatriation policies for investor clarity.

Common questions foreign investors ask

Do I need local shareholders to incorporate?

Generally, 100 percent foreign ownership is allowed in many sectors under FITTA 2019. Some sectors are restricted or conditional. Review the negative list and sectoral rules before filing.

What capital should I commit initially?

Commit capital that matches your year-one plan and sector norms. You can stage capital calls. Ensure each inflow has clear SWIFT and bank advice for future repatriation.

Can I issue shareholder loans instead of equity?

Yes, but NRB approval and registration of foreign loans is required. Keep interest terms at arm’s length and service the loan through registered channels.

How are royalties and service fees treated?

Register the agreement, apply the correct withholding tax, and obtain NRB remittance approval. Show the fee basis and benchmarking to pass review.

How do I repatriate dividends or exit proceeds?

Provide audited accounts, tax clearance, board approvals, and evidence of original inward capital. Your bank coordinates NRB approval and executes the remittance.

FAQ (People Also Ask)

1) Do foreign investors need FITTA approval in Nepal?
Yes. FITTA 2019 requires prior approval for foreign equity and share transfers. This applies to greenfield companies and acquisitions. Obtain the approval before capital inflow and share registration to avoid delays later.

2) Is 100 percent foreign ownership allowed?
Yes in many sectors. Some are restricted or conditional. Always verify the current negative list and any sectoral caps or licensing rules. When in doubt, get a pre-filing check.

3) What are the NRB requirements for foreign loans?
Register the loan with NRB before drawdown. Provide the loan agreement, pricing, repayment plan, and rationale. Service interest and principal through the registered bank route only.

4) How do I remit royalties or technical fees?
Register the agreement, withhold the correct tax, and obtain NRB remittance approval. Keep invoices, board approvals, and benchmarking to support the fee.

5) What documents are needed to repatriate dividends?
Audited financial statements, tax clearance, board minutes, shareholder registry, and original capital inflow evidence. Your bank submits to NRB and executes the remittance upon approval.