Legal Requirements for the Company Registration Process in Nepal

The company registration process in Nepal is more than filing forms and paying government fees.
For foreign companies, it is a legal gateway that determines ownership rights, profit repatriation, tax exposure, and long-term compliance.

Nepal actively welcomes foreign investment under the Foreign Investment and Technology Transfer Act (FITTA) 2019.
However, the regulatory framework is layered, documentation-heavy, and unforgiving of errors.

This guide explains every legal requirement foreign companies must satisfy when navigating the company registration process in Nepal.
It is written to help founders, CFOs, and legal teams avoid costly mistakes and move forward with confidence.

Why Legal Compliance Matters in the Company Registration Process in Nepal

Many foreign founders underestimate Nepal’s legal depth.
The risk is not rejection alone. The real risk is future non-compliance.

Legal compliance affects:

• Shareholder rights and capital protection

• Eligibility for foreign investment approvals

• Tax registration and withholding obligations

• Employment and labor compliance

• Profit repatriation approvals by Nepal Rastra Bank

A correctly structured company at registration stage prevents years of downstream issues.

Key Laws Governing the Company Registration Process in Nepal

Foreign companies must comply with multiple laws simultaneously.
Understanding their interaction is essential.

1. Companies Act, 2006

This is the foundation of the company registration process in Nepal.
It governs:

• Company incorporation

• Shareholding structure

• Director duties

• Capital requirements

• Corporate governance

All companies are registered with the Office of the Company Registrar (OCR) under this Act.

2. Foreign Investment and Technology Transfer Act (FITTA) 2019

FITTA regulates foreign ownership.
It defines:

• Eligible sectors for foreign investment

• Minimum investment thresholds

• Approval mechanisms

• Investor protections and guarantees

Foreign companies cannot register without FITTA compliance.

3. Industrial Enterprises Act, 2020

This Act classifies businesses and determines:

• Industry registration requirements

• Licensing obligations

• Eligibility for incentives

Many service and technology companies fall under this Act.

4. Income Tax Act, 2002

Tax registration is a mandatory legal step.
It governs:

• Permanent Account Number (PAN)

• Corporate tax rates

• Withholding tax obligations

• Transfer pricing exposure

5. Labour Act, 2017 and Social Security Fund Act, 2018

Once employees are hired, labor laws apply automatically.
Non-compliance attracts penalties and reputational risk.

Types of Legal Entities Available to Foreign Companies in Nepal

Foreign companies must choose the correct structure at registration stage.

Private Limited Company (Most Common)

This is the preferred structure under the company registration process in Nepal.

Key features:

• Separate legal entity

• Limited liability

• Up to 101 shareholders

• Suitable for foreign investment

Branch Office

A branch is an extension of the foreign parent.

Limitations include:

• No independent legal personality

• Restricted business scope

• Higher compliance scrutiny

Liaison Office

This structure is non-commercial.

It can only:

• Conduct market research

• Coordinate with partners

• Promote the parent company

Revenue generation is prohibited.

Minimum Legal Requirements for Foreign Shareholding

Foreign ownership is permitted, but regulated.

Minimum Investment Threshold

Under FITTA 2019:

• Minimum foreign investment is NPR 20 million

• Applies per foreign investor

• Must be brought through formal banking channels

Shareholding Documentation

Foreign shareholders must submit:

• Passport or incorporation documents

• Board resolution approving investment

• Share subscription agreement

• Power of attorney

Step-by-Step Legal Requirements in the Company Registration Process in Nepal

Below is a simplified but legally accurate sequence.

1. Name Reservation at OCR

The proposed company name must:

• Be unique

• Not conflict with trademarks

• Reflect permitted activities

Name approval is mandatory before proceeding.

2. Drafting Constitutional Documents

Two documents form the legal backbone.

• Memorandum of Association (MOA)

• Articles of Association (AOA)

These define:

• Business objectives

• Capital structure

• Share transfer rules

• Director powers

Errors here are difficult to fix later.

3. Foreign Investment Approval

Foreign investors must obtain approval from:

• Department of Industry, or

• Investment Board Nepal (for large projects)

Approval is sector-dependent.

4. Company Registration with OCR

Once approvals are secured, OCR issues:

• Certificate of Incorporation

• Company Registration Number

The company legally exists at this point.

5. PAN and Tax Registration

Tax registration is compulsory.

The company must obtain:

• Permanent Account Number

• VAT registration (if applicable)

Documents Required for the Company Registration Process in Nepal

Foreign companies must prepare documents carefully.

Core documents include:

• Approved company name

• MOA and AOA

• Passport or incorporation certificate of shareholders

• Board resolution

• Foreign investment approval letter

• Lease agreement for registered office

• Director consent letters

Missing documents cause delays.

Legal Compliance After Company Registration

Registration is only the beginning.

Foreign companies must maintain ongoing compliance.

Annual Compliance Obligations

• Annual General Meeting

• Financial statement filing

• Income tax returns

• Audit submission

Employment and Labor Compliance

Once staff are hired, companies must:

• Register with Social Security Fund

• Deduct payroll taxes

• Maintain statutory leave records

Common Legal Mistakes Foreign Companies Make

Foreign founders repeat the same errors.

Most frequent issues include:

• Choosing the wrong entity structure

• Drafting generic MOA and AOA

• Underestimating minimum capital rules

• Ignoring labor law obligations

• Failing to plan repatriation compliance

These mistakes increase cost and risk.

Original Insight: Compliance Risk Comparison Table

Sector-Specific Legal Restrictions in Nepal

Not all sectors are open.

Foreign investment is restricted or prohibited in areas such as:

• Small retail trading

• Personal service businesses

• Certain agriculture activities

Sector eligibility must be verified before registration.

Repatriation Rights Under FITTA 2019

Foreign investors are legally protected.

FITTA guarantees:

• Repatriation of dividends

• Repatriation of capital

• Repatriation of loan repayments

However, Nepal Rastra Bank approvals are mandatory.

How Long Does the Company Registration Process in Nepal Take?

Legally compliant registration typically takes:

1. Name approval: 1–3 days

2. Investment approval: 2–4 weeks

3. OCR registration: 3–5 working days

4. Tax registration: 2–3 days

Total timeline depends on preparation quality.

When to Use Professional Assistance

The company registration process in Nepal involves multiple authorities.
Professional advisors help by:

• Structuring investment compliantly

• Drafting legally sound documents

• Managing approvals efficiently

• Ensuring tax and labor alignment

For foreign companies, this is often a cost-saving decision.

Call to Action

If you are planning to enter Nepal, do not rely on fragmented advice.
A single legal error can delay operations for months.

Speak with a Nepal incorporation specialist today to ensure your company registration process in Nepal is compliant, efficient, and future-proof.

Frequently Asked Questions (People Also Ask)

Is foreign ownership allowed during the company registration process in Nepal?

Yes. Foreign ownership is permitted under FITTA 2019, subject to sector eligibility and minimum investment requirements.

What is the minimum capital required for foreign investors in Nepal?

The minimum foreign investment threshold is NPR 20 million per foreign investor, brought through formal banking channels.

Can a foreign company own 100 percent of a Nepal company?

Yes. One hundred percent foreign ownership is allowed in many sectors, subject to approval.

Is physical presence required for company registration in Nepal?

No. Registration can be completed through a local power of attorney.

How long does company registration in Nepal take for foreigners?

Typically four to six weeks, depending on approvals and documentation readiness.

Conclusion

The company registration process in Nepal is legally robust but manageable with the right approach.
Foreign companies that understand the legal requirements gain a stable platform for growth.

Proper compliance at registration stage protects investment, simplifies operations, and enables smooth repatriation.

With expert guidance, Nepal can be one of South Asia’s most efficient markets to enter.