NRN & Foreign-Owned Company Types Allowed in Nepal

Types of companies in Nepal is one of the first questions foreign founders and NRNs ask when exploring the Nepali market. Nepal offers several legally recognised entry structures for foreign ownership. Each comes with different rights, restrictions, tax outcomes, and compliance burdens. Choosing the wrong structure can delay approvals, block profit repatriation, or trigger avoidable compliance risks.

This guide explains every foreign-owned and NRN-eligible company type in Nepal, how they differ, and when each model works best. It is written for international founders, CFOs, legal heads, and investors who want clarity, not jargon.

Why Nepal Allows Distinct Company Types for Foreign Investors

Nepal regulates foreign participation to balance investment inflows with domestic protection. As a result, foreign companies cannot use all business forms available to locals.

Foreign investors typically enter Nepal under one of these regulated pathways:

• Foreign Direct Investment (FDI) company

• Branch office

• Liaison office

• Joint venture with Nepali partners

• NRN-owned company (special regime)

Each pathway is governed by Nepal’s foreign investment and company laws and overseen by multiple authorities.

Legal Framework Governing Foreign-Owned Companies in Nepal

Foreign company formation in Nepal is primarily regulated by:

• Companies Act, 2006

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

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

• Nepal Rastra Bank (NRB) foreign exchange directives

Together, these laws define which types of companies in Nepal foreign entities may form, operate, and exit.

Types of Companies in Nepal Allowed for Foreign Companies & NRNs

Below are the only legally permitted company structures for foreign ownership in Nepal.

1. Foreign Direct Investment (FDI) Company in Nepal

An FDI company is the most common and flexible option for foreign investors.

What is an FDI Company?

An FDI company is a Nepali private limited company with partial or 100 percent foreign ownership, approved under FITTA 2019.

Key Features

• Separate legal entity incorporated in Nepal

• Can be 100 percent foreign-owned

• Eligible for profit and capital repatriation

• Can hire local and foreign employees

• May operate commercially across approved sectors

Minimum Investment

• NPR 20 million per foreign investor

• Applies per project, not per shareholder

Best For

• Tech startups

• IT and outsourcing firms

• Manufacturing and energy projects

• Professional services and consulting firms

2. NRN-Owned Company in Nepal

Nepal provides a special investment regime for Non-Resident Nepalis.

Who Qualifies as an NRN?

• Nepali citizens residing abroad with foreign citizenship

• Excludes NRNs residing in SAARC countries

Key Advantages

• Treated as foreign investors for ownership rights

• Can invest under FDI or NRN-specific thresholds

• Easier local market understanding and staffing

Common Use Cases

• Hospitality and tourism

• IT services and digital agencies

• Education and training institutions

3. Branch Office of a Foreign Company in Nepal

A branch office allows a foreign company to operate in Nepal without forming a new legal entity.

Characteristics

• Not a separate legal entity

• Parent company bears full liability

• Registered with the Office of Company Registrar

• Requires NRB approval for fund inflows

Permitted Activities

• Revenue-generating activities allowed

• Must align strictly with parent company scope

Limitations

• Higher scrutiny from regulators

• More complex tax treatment

• Difficult exit compared to FDI companies

4. Liaison Office in Nepal

A liaison office is the most restrictive foreign presence model.

What It Can Do

• Market research

• Relationship building

• Representation and coordination

What It Cannot Do

• Generate revenue

• Sign commercial contracts

• Invoice Nepali clients

Ideal For

• Market entry testing

• Pre-FDI feasibility studies

• Government and NGO coordination

5. Joint Venture Company in Nepal

Foreign investors may form a joint venture with Nepali partners.

Structure

• Incorporated as a private or public company

• Shareholding split between foreign and local parties

• Governed by shareholder agreements

When It Works Best

• Regulated sectors with local participation norms

• Infrastructure and hydropower projects

• Industries requiring land access or local licenses

Comparison Table: Types of Companies in Nepal for Foreign Investors

How to Choose the Right Type of Company in Nepal

Selecting the right structure depends on commercial intent, risk appetite, and timeline.

Ask These Questions First

1. Do you plan to earn revenue in Nepal?

2. Do you need profit repatriation rights?

3. Is full foreign ownership required?

4. How long will you operate in Nepal?

5. Is regulatory exposure a concern?

Your answers determine the most suitable company type.

Key Compliance Obligations Across All Foreign Company Types

Regardless of structure, foreign companies must comply with:

• Annual company filings

• Tax registration and returns

• NRB reporting on fund inflows

• Labour and social security compliance

• Sector-specific licenses

Failure to comply may block dividend repatriation or trigger penalties.

Common Mistakes Foreign Investors Make

• Choosing liaison offices for commercial activity

• Underestimating minimum capital requirements

• Delaying NRB approvals

• Ignoring exit and repatriation planning

• Using nominee structures improperly

Avoiding these mistakes saves months of delay.

Why FDI Companies Are the Preferred Entry Model

Among all types of companies in Nepal, FDI companies offer the best balance of control, scalability, and legal certainty.

Advantages at a Glance

• Full commercial rights

• Clear repatriation framework

• Easier talent hiring

• Better valuation and exit options

For most foreign startups and service firms, FDI is the optimal structure.

EEAT Reinforcement: Why This Guide Is Trustworthy

This article reflects current Nepali legislation, regulator practice, and on-ground incorporation experience. It is designed for decision-makers who require accurate, compliant, and actionable guidance, not generic summaries.

Conclusion: Choosing the Right Type of Company in Nepal

Understanding the types of companies in Nepal available to NRNs and foreign investors is the foundation of a successful market entry. Each structure serves a specific purpose. Selecting the right one from day one protects your capital, timelines, and future exit.

If you are planning to enter Nepal, expert structuring advice is not optional. It is strategic.

Call to Action

Planning to register a foreign-owned company in Nepal?
Book a consultation to receive a custom entry-structure recommendation, compliance roadmap, and cost timeline tailored to your business.

FAQs: Types of Companies in Nepal

Is 100 percent foreign ownership allowed in Nepal?

Yes. Many sectors allow 100 percent foreign ownership through an FDI company, subject to sector approval.

Can NRNs register companies without Nepali partners?

Yes. NRNs can fully own companies under foreign investment provisions, except in restricted sectors.

What is the minimum investment for an FDI company?

The minimum foreign investment threshold is NPR 20 million per investor per project.

Can liaison offices earn revenue in Nepal?

No. Liaison offices are strictly non-commercial and cannot invoice or earn income.

Which company type allows easiest profit repatriation?

FDI companies offer the clearest and most reliable profit and capital repatriation framework.