Pre-Incorporation Checklist: Before You Start the Registration Process in Nepal

The company registration process in Nepal looks simple on paper. In practice, foreign companies face delays, compliance risks, and hidden costs when pre-incorporation planning is weak.

Before filing any application with the Office of the Company Registrar (OCR), investors must complete a structured pre-incorporation checklist. This stage determines whether your Nepal entry is smooth or legally exposed.

This guide is written for foreign founders, CFOs, and expansion leaders who want clarity, compliance, and speed. It reflects Nepal’s current regulatory framework, including the Companies Act 2006, FITTA 2019, Labour Act 2017, and Income Tax Act 2002.

Why Pre-Incorporation Planning Matters in the Company Registration Process in Nepal

Pre-incorporation is not paperwork. It is risk management.

Many foreign companies fail or stall because they register first and plan later. Nepal’s regulators do not allow casual corrections once filings are approved.

What happens when pre-incorporation is ignored?

• Business activities are rejected under FITTA approval

• Capital repatriation is delayed or denied

• Bank accounts remain inactive for months

• Tax exposure increases retroactively

• Employment structures violate labour law

A strong pre-incorporation checklist prevents these outcomes.

Step 1: Confirm the Right Investment Entry Model

Choosing the correct entry model is the foundation of the company registration process in Nepal.

Common entry options for foreign companies

1. Foreign-owned Private Limited Company (FDI Subsidiary)

2. Joint Venture Company with Nepali partner

3. Branch Office

4. Liaison Office (non-revenue)

5. Employer of Record (EOR) → FDI later strategy

Each model has different compliance, tax, and repatriation rules.

Key decision factors

• Revenue generation plans

• Timeline to market

• Capital commitment

• Exit and repatriation strategy

• Local hiring requirements

Many foreign companies now adopt a phased entry strategy, starting with EOR and transitioning into FDI once operations stabilize.

Step 2: Verify Sector Eligibility Under FITTA 2019

Not all industries are open to foreign investment in Nepal.

Before initiating the company registration process in Nepal, confirm sector eligibility under the Foreign Investment and Technology Transfer Act, 2019 (FITTA).

Restricted or prohibited sectors include

• Retail trading without export focus

• Personal service businesses

• Certain agricultural activities

• Small-scale domestic trading

What to check before incorporation

• Is 100 percent foreign ownership allowed?

• Are minimum capital thresholds applicable?

• Is prior approval mandatory from DOI or IBN?

Failure here leads to automatic rejection, regardless of document accuracy.

Step 3: Determine Minimum Capital and Funding Structure

Capital planning is a legal requirement, not a financial preference.

Minimum FDI threshold

• NPR 20 million per foreign investor
  (as prescribed by current Government of Nepal notifications)

Capital structuring decisions to finalize early

• Paid-up capital vs committed capital

• Single or multiple foreign shareholders

• Equity vs shareholder loan components

Improper structuring can restrict future capital injection and dividend repatriation.

Step 4: Finalize Shareholding and Ownership Structure

Nepal’s company registration process requires full transparency of beneficial ownership.

Required clarity before filing

• Shareholder names and nationalities

• Percentage ownership

• Ultimate beneficial owner declarations

• Board composition

Any later change requires fresh approvals, filings, and tax implications.

Step 5: Reserve Company Name Strategically

Name reservation is often underestimated.

Naming rules under Companies Act 2006

• Must not conflict with existing companies

• Must align with proposed objectives

• Cannot be misleading or restricted

Strategic naming tips

• Avoid activity-specific terms if expansion is planned

• Avoid regulated words unless licensed

• Keep export and regional branding in mind

Rejected names cause weeks of delay.

Step 6: Define Business Objectives with Regulatory Precision

Your Memorandum of Association (MOA) defines your legal boundaries.

Why objectives matter

• Banks assess account approval based on MOA

• DOI reviews FDI approval against objectives

• Tax authorities assess VAT and income tax scope

Overly narrow objectives restrict growth. Overly broad ones raise red flags.

Step 7: Identify Registered Office and Compliance Address

Every company must have a registered address in Nepal at incorporation.

Requirements

• Physical office location

• Lease agreement or ownership proof

• Municipality verification

Virtual offices are not accepted for incorporation.

Step 8: Plan Banking and Capital Inflow Logistics

Foreign capital must enter Nepal through approved banking channels.

Pre-incorporation banking considerations

• Designated commercial bank selection

• FDI capital account opening readiness

• SWIFT documentation alignment

Poor planning here is the number one cause of capital repatriation delays.

Step 9: Employment and HR Compliance Readiness

Hiring starts earlier than expected.

Before completing the company registration process in Nepal, ensure alignment with:

• Labour Act 2017

• Social Security Fund Act 2018

• Bonus Act 1974

Key HR decisions to pre-finalize

• Local vs expatriate staffing

• Work permit eligibility

• Salary structures and SSF obligations

Step 10: Tax and Regulatory Registration Mapping

Company registration triggers multiple downstream registrations.

Mandatory post-incorporation registrations

• PAN with Inland Revenue Department

• VAT (if applicable)

• Local ward registration

• Industry registration

Mapping these early prevents compliance gaps and penalties.

Pre-Incorporation Checklist Summary Table

Common Pre-Incorporation Mistakes Foreign Companies Make

• Registering before FITTA approval

• Underestimating minimum capital requirements

• Using copied MOA templates

• Ignoring repatriation rules

• Hiring staff without SSF planning

Each mistake compounds costs and delays.

Why Expert Support Matters Before Company Registration in Nepal

Nepal’s laws are clear, but procedural interpretation varies by authority.

Experienced advisors help foreign companies:

• Structure entry legally and tax-efficiently

• Secure approvals faster

• Avoid retroactive penalties

• Protect repatriation rights

This is where strategic value lies.

Conclusion: Start the Company Registration Process in Nepal the Right Way

The company registration process in Nepal does not start at the OCR. It starts with preparation.

Foreign companies that invest time in pre-incorporation planning enter Nepal faster, safer, and with full control over capital and operations.

If Nepal is part of your growth strategy, start with clarity, not corrections.

Ready to Enter Nepal with Confidence?

Talk to our Nepal FDI specialists for a free pre-incorporation assessment.
We help foreign companies structure, register, and scale in Nepal with zero compliance surprises.

👉 Book a consultation today.

Frequently Asked Questions (FAQ)

Is pre-approval required before company registration in Nepal?

Yes. Foreign investors must obtain FITTA approval before completing the company registration process in Nepal. OCR registration alone is insufficient for foreign ownership.

What is the minimum capital for foreign investors in Nepal?

The minimum foreign investment threshold is NPR 20 million per investor, as per current Government of Nepal regulations.

Can a foreign company hire staff before incorporation?

No. Employment contracts require a registered legal entity and compliance with Labour and SSF laws.

How long does pre-incorporation planning take?

With proper guidance, pre-incorporation planning typically takes two to three weeks.

Can profits be repatriated freely from Nepal?

Yes, subject to compliance with FITTA, tax clearance, and Nepal Rastra Bank procedures.