Understanding the types of companies in Nepal is the first and most critical step for any foreign company planning market entry. Nepal’s legal framework offers multiple incorporation and presence options. Each serves a distinct business objective, risk profile, and compliance burden. Choosing the wrong structure can delay approvals, restrict profit repatriation, or increase regulatory exposure.
This guide provides the most comprehensive and practical overview of all company types in Nepal under the prevailing Company Act. It is written specifically for foreign companies, investors, and founders evaluating Nepal as an expansion destination.
All company structures in Nepal are governed primarily by:
Companies Act, 2006 (with amendments)
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
Labour Act, 2017
Social Security Act, 2018
The Office of the Company Registrar (OCR) administers company incorporation and compliance. Foreign investment approvals are overseen by the Department of Industry (DOI) or Investment Board Nepal (IBN) depending on project size.
Selecting the correct structure affects:
Eligibility for foreign direct investment (FDI)
Ability to generate revenue locally
Profit repatriation and dividend remittance
Tax exposure and withholding obligations
Hiring, payroll, and social security compliance
Exit flexibility and future restructuring
For foreign companies, structure selection is not just a legal formality. It is a strategic decision.
Under Nepalese law, companies and business presences fall into the following broad categories:
Private Limited Company
Public Limited Company
Non-Profit (Not-for-Profit) Company
Branch Office
Liaison (Representative) Office
Foreign Company Registration (Cross-Border Presence)
Each is explained in depth below.
A private limited company is the most common and flexible structure for foreign investors. It is a separate legal entity with limited liability and perpetual succession.
Minimum 1 shareholder, maximum 101
Can be 100% foreign-owned (sector permitting)
Shares are not publicly tradable
Suitable for commercial and revenue-generating activities
Full operational control
Eligible for FDI under FITTA
Can hire local and expatriate staff
Can repatriate dividends and capital
Favoured by banks, regulators, and clients
IT and software companies
Outsourcing and shared service centres
Manufacturing and trading entities
Consulting and professional services firms
A public limited company is designed for large-scale enterprises intending to raise capital from the public.
Minimum 7 shareholders
No maximum shareholder limit
Mandatory 3 directors
Shares may be listed on the stock exchange
Higher disclosure and governance standards
This structure is usually appropriate only when:
Significant capital mobilisation is required
Public share issuance is planned
The business is regulated or infrastructure-heavy
Most foreign companies do not start with a public company. They typically convert from private to public once scale is achieved.
A non-profit company is incorporated for social, educational, charitable, or research purposes. Profits cannot be distributed to members.
No dividend distribution
Income must be reinvested in objectives
Often eligible for tax exemptions
Subject to strict oversight
International NGOs
Foundations
Social enterprises without profit motive
Educational and research institutions
Foreign involvement is permitted but requires additional approvals and reporting obligations.
A branch office is an extension of a foreign parent company. It is not a separate legal entity in Nepal.
100% owned by the foreign parent
Can conduct commercial activities
Profits are taxable in Nepal
Parent company bears full liability
Short- to medium-term projects
Contract-based operations
Engineering, EPC, or infrastructure work
A branch office is closely regulated and often viewed as less flexible than a private limited company.
A liaison office is a non-commercial presence established solely for coordination and market research.
Market research
Promotion and relationship management
Parent company coordination
Generate revenue
Sign commercial contracts
Issue invoices locally
Foreign companies exploring Nepal before committing to full investment.
Certain foreign companies operate in Nepal without incorporating a local entity, typically through:
Cross-border service provision
Short-term contracts
Government or donor-funded projects
This model is highly restricted and usually requires:
Project-specific approval
Tax registration
Withholding tax compliance
It is not suitable for long-term operations.
| Company Type | Legal Entity | Revenue Allowed | FDI Eligible | Profit Repatriation | Best For |
|---|---|---|---|---|---|
| Private Limited | Yes | Yes | Yes | Yes | Most foreign businesses |
| Public Limited | Yes | Yes | Yes | Yes | Large-scale enterprises |
| Non-Profit | Yes | Limited | Conditional | No | NGOs, foundations |
| Branch Office | No | Yes | Yes | Yes | Project-based work |
| Liaison Office | No | No | Yes | N/A | Market entry research |
| Foreign Registration | No | Limited | Case-based | Case-based | Short-term projects |
Consider the following factors:
Nature of activities
Investment size
Sector restrictions
Timeline
Exit and scalability plans
Long-term commercial operations → Private Limited Company
Market testing only → Liaison Office
Contractual project work → Branch Office
Foreign-owned entities must comply with:
Annual filings with OCR
Tax filings and audits
Labour and social security registration
FDI reporting and renewals
Dividend and royalty remittance approvals
Professional support is strongly recommended.
Choosing a liaison office when revenue is required
Underestimating FDI approval timelines
Ignoring sectoral restrictions
Poor tax and payroll structuring
Avoiding these mistakes saves months and significant cost.
Yes. Foreigners can own up to 100% of a private limited company, subject to sector eligibility under FDI regulations.
A private limited company is the most widely used and flexible option for foreign companies in Nepal.
Not usually. Branch offices are suitable for temporary or project-based work. Private companies offer more flexibility and long-term stability.
No. A liaison office is strictly prohibited from conducting revenue-generating activities.
Incorporation typically takes 7–14 working days, excluding FDI approval timelines.
Choosing the correct types of companies in Nepal is foundational to a successful market entry. Nepal’s legal framework offers flexibility, but each structure carries distinct legal, tax, and operational implications. For most foreign companies, a private limited company provides the optimal balance of control, compliance, and scalability.
Expert guidance ensures your structure aligns with your business goals from day one.
Planning to enter Nepal?
Speak with our Nepal incorporation and FDI specialists to identify the right company structure, manage approvals, and stay fully compliant from incorporation to operations.