Single Person Private Limited Company Registration in Nepal: Is It Allowed?

Foreign investors often wonder: can a single person register a private limited company in Nepal? When you start exploring the rules, the answers online may seem confusing or contradictory. You might have local brokers promising quick solutions, but without clear guidance it is easy to get lost. Imagine being ready to invest but overwhelmed by unfamiliar paperwork and laws. You may have paid fees to middlemen, yet still have questions. This guide will cut through the confusion and explain the facts.

We cover Nepal’s company registration process from start to finish. You will learn about ownership rules, required documents, capital requirements, and the roles of government bodies. We also explain taxes, ongoing filings, and compliance so your business stays legal. By the end, you will know exactly how to proceed with private limited company registration in Nepal, even as a single foreign founder. Nepal is improving its business environment. Recent reforms have streamlined company registration and tax filing processes, making it easier for foreign investors to enter the market. Let’s begin with the basics of what a private limited company is in Nepal.

What is a Private Limited Company in Nepal?

A private limited company in Nepal is a common legal structure for doing business. It is a separate legal entity that can sign contracts, own property, and incur debt in its own name. Under the Companies Act, a private company must have at least one shareholder and can have up to 101 shareholders. It must include “Private Limited” in its name. Shares cannot be sold to the general public, so ownership stays within a private group.

These companies offer important benefits:

• Limited Liability: Shareholders are only responsible for company debts up to the amount they invested. This protects personal assets.

• Perpetual Existence: The company continues even if owners change or one shareholder leaves. It is a stable structure.

• Credibility: Nepalese customers and suppliers often trust registered companies more than individuals. Banks and investors are also more willing to work with incorporated businesses.

• Ease of Transfer: Ownership can be transferred by selling shares, making it easier to add new investors or heirs.

Many startups and foreign investors choose a private limited company because it balances formality with flexibility. It is similar to a corporation or LLC in other countries. The minimum capital requirement is modest (around NPR 100,000), so the barrier to starting is low for most new businesses. Nepal’s Office of Company Registrar (OCR) in Kathmandu manages company registration, and in recent years registration is also available in district offices across Nepal.

Ownership Rules for Foreign Investors

Nepal generally welcomes foreign investment, allowing up to 100% ownership in most industries. However, there are key exceptions. Foreigners cannot invest in certain sensitive sectors like banking, aviation, and media. Other sectors have partial limits. For example, foreign consulting firms can own up to 51% in management or legal consulting, and many real estate projects require at least 51% Nepali ownership. It is important to check the latest restrictions for your industry.

Under Nepal’s Foreign Investment and Technology Transfer Act, foreign investment must be made through a Nepali entity. In other words, you cannot simply operate as a sole proprietor; instead, you must form a private limited company or joint venture in Nepal. This law allows a single foreign national or foreign company to hold 100% of the shares in a Nepali private company (subject to sector rules). In practice, some foreign entrepreneurs include a nominal local shareholder for convenience, but this is not legally required.

Key points for foreign ownership:

• Minimum Investment: Each foreign investor generally needs to commit at least NPR 5 million (around USD 40,000) to a project. This ensures serious investment.

• Capital Remittance: Funds must be brought into Nepal via an authorized bank. Typically, the foreign investor opens an FDR (Fixed Deposit Receipt) account in Nepal. The capital is deposited there, and later a bank letter (called a Letter of Credit) confirms the transfer.

• Central Bank Approval: After the company is registered, you report the foreign capital to Nepal Rastra Bank. They verify the investment. This approval is generally routine if documentation is correct.

• Pre-Approval (if needed): For large projects or strategic sectors, you may need pre-approval from the Department of Industry or the Investment Board. For example, hydropower plants above a certain capacity or high-tech projects may need prior clearance before incorporation.

Foreign shareholders have the same rights as local shareholders once the company is formed. You can appoint any person as a director. Each Nepal company must have at least two directors, and at least one director must be a Nepal resident. Many foreign business owners name themselves and another colleague as directors, or hire a Nepali nominee if needed.

Registration Process Overview

Registering a private limited company in Nepal involves several steps. Here’s an outline of the typical process:

1. Company Name Reservation: Choose a unique company name and reserve it with the Company Registrar (OCR). This can be done online through the OCR portal or in person. The name must not duplicate existing names and should include “Private Limited” at the end. You will receive approval (or a request to change the name) in a few days.

2. Prepare Documentation: Gather all required documents. This includes copies of passports for foreign shareholders and citizenship certificates for Nepali shareholders. You need address proof (such as a rental agreement) for the company’s local address. Foreign documents must be notarized or apostilled. Also get photographs of directors, bank reference letters, and any joint venture agreements ready.

3. Draft MOA/AOA: Prepare the Memorandum of Association (MOA) and Articles of Association (AOA). The MOA outlines your company’s objectives, share capital, and shareholders. The AOA details governance rules (board structure, meeting procedures). Nepal provides templates, but you may hire a lawyer to tailor them. Both documents must be signed by shareholders and stamped at a Nepalese revenue office.

4. Foreign Investment Approval (if required): If your project requires government approval first, apply for FDI approval. Submit your project report to the Department of Industry or the Investment Board. Only start incorporation after you get this approval.

5. Company Registration Filing: Submit Form 10 (the main incorporation form) and other required forms to the OCR. Attach the MOA, AOA, identity documents, and the bank letter or fixed deposit receipt for the capital. Translate any foreign-language documents into Nepali.

6. Pay Fees: Deposit the registration fee into a Nepal Rastra Bank account. The fee is based on authorized capital. For example, up to NPR 100,000 costs about NPR 1,000, and NPR 100,001–500,000 costs around NPR 4,500. Higher capitals pay higher fees, but these remain modest.

7. Tax Registration (PAN): After registering, apply for a Permanent Account Number (PAN) with the Inland Revenue Department. This is required for tax filings and can often be done online using your company certificate.

8. VAT Registration (if applicable): If you expect to exceed the VAT turnover threshold (currently NPR 5 million), register for VAT (13%) at the tax office. Charge VAT on sales once registered.

9. Local Permits (Ward Registration): Register your company at the local Ward (municipal) office. Submit your lease agreement for the office space, company incorporation certificate, PAN, and landlord’s ID. The ward will issue a local business license. This step is mandatory to legally operate at your address.

10. Company Seal & Bank Account: Obtain an official company seal (stamp). Then open a corporate bank account in Nepal. Banks will require your Certificate of Incorporation, PAN certificate, share register, and a board resolution authorizing the account. They may also want to see the identity of signatories.

Once submitted, the OCR will review your application. If all documents are in order, you will receive the Certificate of Incorporation in about 5–10 business days. Complex cases may take longer, so ensure accuracy to avoid delays.

Required Documents (Bullet List):

• Identification: Passport copies of foreign directors, Nepali citizenship copies of any local directors.

• Application Forms: Filled-out OCR forms (Form 10, etc.).

• Bank Letter: A Nepalese bank’s letter or fixed deposit receipt showing your initial paid-up capital.

• Local Address: Rental or ownership document for your registered office space.

• MOA & AOA: The company’s Memorandum and Articles of Association (signed by all shareholders).

• Director Info: Photographs and signatures of all directors.

• Share Register: Initial share ledger listing all shareholders and share classes (often required by banks).

• Other: Board resolution (if a foreign company is investing) and any project report or feasibility study (especially for large investments).

Key Considerations and Requirements

When preparing to register, keep the following in mind:

• Capital Details: You will declare an authorized capital and deposit a paid-up capital. While NPR 100,000 is the minimum, you can choose a higher amount to signal stability. Additional capital can be added later through a board resolution.

• Share Register: After incorporation, maintain a share register (ledger) listing all shareholders and their shares. Banks will ask for this when you open an account.

• Board of Directors: Nepal requires at least two directors for a private company, with one resident director. Directors can be of any nationality.

• Nominee Directors: If your foreign directors are not present in Nepal, you can appoint nominee directors to meet the resident director requirement. Ensure these nominees are trusted individuals and clearly define their roles in writing.

• Local Address: You must have a physical address in Nepal (office or residential). This address appears on official documents. If needed, you can use a virtual office or a lawyer’s address temporarily.

• Business Objectives: State your company’s activities clearly in the MOA. You can include multiple lines of business (for example, trading, manufacturing, IT services) to allow flexibility. Deviating from these stated purposes without amending the MOA is not allowed.

• Industry License: Manufacturing or industrial businesses must register under the Industrial Enterprises Act and obtain an industrial license. This classifies your enterprise by investment size (micro/small/medium/large).

• Promoter Information: All promoters (shareholders and directors) must provide identification numbers. For Nepalis, use citizenship numbers; for foreigners, passport numbers. If a foreign company is investing, include its incorporation certificate and a board resolution authorizing the investment.

• Translation: All foreign-language documents must be officially translated into Nepali. This includes MOA/AOA if they were not originally in Nepali.

• Online vs. Offline Filing: Nepal offers online company registration via the OCR portal. This can speed up name reservation and form submission. You may still need to submit some documents in person, especially at district offices.

• Different Share Classes: You can issue different classes of shares (voting vs. non-voting, for example). Foreign investors usually stick to one simple class. Consult an expert if you want any special share rights.

• Annual Compliance: After incorporation, hold an Annual General Meeting, and file annual returns with the OCR, including audited financial statements. You must also update the Registrar on any changes to shareholders, directors, or address.

• Bank Reference: Banks often require an introduction letter or minimum balance for foreigners. You may need to establish a local banking relationship first.

Private Company vs Branch vs Liaison Office

Foreign businesses can enter Nepal through different vehicles. The table below compares a private limited company to a branch office and a liaison office:

For full market entry and operational flexibility, most foreign investors prefer establishing a private limited company. Branch and liaison offices serve niche purposes. Choose the structure that best fits your business plan.

Tax and Compliance Obligations

Once your company is registered, Nepalese law imposes ongoing obligations:

• Fiscal Year & Accounting: Nepal’s fiscal year runs from mid-July to mid-July. Companies prepare annual financial statements and tax returns accordingly. All companies must maintain accurate books of account; smaller firms may not need a formal audit unless they exceed certain thresholds.

• Corporate Income Tax: Private companies pay corporate tax on profits (usually around 25%). Special rates or rebates may apply for priority sectors (like manufacturing or hydropower) or for companies in certain zones.

• Value Added Tax (VAT): If your annual turnover exceeds the threshold (currently NPR 5 million), you must register for VAT (13%). You will charge VAT on eligible sales and file regular VAT returns.

• Withholding Taxes: Employers withhold income tax on employee salaries. Companies also withhold tax on dividends, interest, royalties, and fees paid to service providers (rates vary by type of payment).

• Social Security: Nepal’s laws require employers and employees to contribute to the Social Security Fund for health insurance and employment insurance. Register your workforce if applicable.

• Annual Return Filing: Each year, the company must file an annual return and audited financial statements with the OCR. This typically happens after the company’s financial year-end, and late filing incurs penalties.

• Other Taxes: Depending on the business, you may owe customs duties on imports, excise duties on certain goods, or local municipal taxes. These vary by product and location.

• Nepal Rastra Bank Reporting: If the company has foreign shareholders, you must report to Nepal Rastra Bank annually on the use of foreign investment funds.

• Double Tax Treaties: Nepal has tax treaties with countries like India, China, the UK, Australia, and others. These agreements can lower withholding tax rates on cross-border payments. Consult a tax advisor to leverage any treaty benefits.

• Online Services: Most tax filings and payments can be done online via the Inland Revenue portal. VAT, payroll tax, and income tax filings can be submitted electronically for convenience.

• Tax Incentives: Many investors qualify for tax incentives. For example, export-oriented businesses and certain industries get tax holidays for a number of years, depending on investment size and location.

• Compliance Calendar: It is wise to create a calendar of filing deadlines (tax returns, GST, annual meeting, etc.) to ensure you meet all important dates. A local accountant can help manage this schedule.

• CSR Requirements: Companies exceeding certain size thresholds must allocate funds for corporate social responsibility initiatives. Plan for these contributions as part of your budget.

• Regional Incentives: Businesses set up in remote or priority areas may qualify for additional tax holidays or subsidies. Check with local authorities to see if your location offers such benefits.

• Profit Repatriation: After paying the required taxes, profits and dividends can be sent abroad. Nepal Rastra Bank may require documentation (like tax clearance) and often imposes a small margin (commonly 5%) on repatriated funds. Plan accordingly.

• Currency: All official filings and accounts are denominated in Nepali Rupees (NPR). If you earn foreign currency abroad, be aware of Nepal’s foreign exchange rules and the need to convert funds at authorized banks.

Adhering to these obligations keeps your company in good standing. Non-compliance can lead to fines. Working with a local tax professional will ensure you meet all requirements on time and take advantage of any benefits.

Why Expert Guidance Matters

Nepal’s laws and procedures may differ from what you are used to. Expert guidance can make the process seamless:

• Regulatory Knowledge: Lawyers and consultants keep track of the latest rules (company law, tax law, etc.). They know if a new amendment changes processing fees or tax rates.

• Forecasting Changes: Experienced advisors often know about upcoming law changes or incentives. They can help you adapt early and benefit from new regulations.

• Accuracy: A small mistake in your application can cause delays. Professionals double-check forms, ensure correct stamp duty payment, and verify translations, reducing the chance of rejection.

• Speed: Advisors often have established channels with government offices (OCR, tax authority, etc.), which can expedite your filings. They also know the current processing times and any potential bottlenecks.

• Paperwork: Consultants handle all the paperwork for you, name reservation, drafting MOA/AOA, liaising with the bank, and securing approvals. This lets you focus on business strategy rather than bureaucracy.

• Problem Resolution: If something goes wrong (a query on your application or a delay), consultants quickly respond. They interpret official notices and guide you on corrective steps.

• Tax Planning: A tax expert helps structure your finances efficiently, maximizing deductions and complying with withholding obligations. They also handle your VAT registration and filings.

• Visa and Work Permits: If you or your staff need visas, legal firms coordinate with the Department of Immigration, ensuring you meet the requirements linked to company registration.

• Local Representation: Some regulators or banks may insist on a local representative. Having a trusted advisor or local nominee satisfies this and ensures someone is always available.

• Networking: Consultants often have local business networks. They can introduce you to banks, service providers, and potential partners, making market entry smoother.

• Local Knowledge: Advisors understand regional differences. What works in Kathmandu may differ in other provinces. They can advise on local office registration and municipal regulations.

Investing in proper legal and tax advice is often one of the best business decisions for foreign companies. Don’t tackle Nepal’s regulations alone when experienced professionals can guide you at each step.

Common Challenges and Solutions

Foreign entrepreneurs often encounter these hurdles:

• Bank Requirements: Many banks require multiple reference letters for foreign applicants. Solution: Use a service provider’s recommendations or choose a bank known for working with foreigners (e.g. Standard Chartered, Nabil Bank).

• Name Availability: If your proposed name conflicts with an existing one, you must pick another. Solution: Have several backup names ready and ensure they follow naming rules (no restricted words, etc.).

• Documentation Issues: Missing or improperly filled forms will delay registration. Solution: Double-check all paperwork with a checklist or hire a consultant to review everything before submission.

• Local Office Setup: Even if you register quickly, setting up a physical office (for address and VAT purposes) takes time. Solution: Arrange temporary office space or a coworking desk before registration if possible.

• Visa Logistics: To obtain a business or work visa, you need company registration first, but you may want to start travel earlier. Solution: Plan travel timing accordingly, or enter on a short-term visa and switch to a work/business visa once the company is registered.

• Regional Differences: Since 2019, company registration is available at District Offices. This is convenient outside Kathmandu but can be slower or require more paperwork. Solution: If registering outside the capital, work with local agents familiar with that district’s procedures.

• Policy Changes: Government may update rules unexpectedly. Solution: Stay in touch with your advisor for immediate updates on any regulatory changes affecting your business.

• Language Barriers: Official communication is often in Nepali. Solution: Have a bilingual consultant translate and interpret any official notices to avoid misunderstandings.

Preparing for these challenges in advance will make your company setup smoother.

Frequently Asked Questions

Q: Can foreign nationals register a company in Nepal?
A: Yes. Foreigners cannot operate as sole proprietorships, but they can incorporate a Nepalese private limited company. By forming such a company, a foreign national or foreign company can legally invest and run a business in Nepal (subject to industry limits).

Q: Is a single-shareholder private limited company allowed in Nepal?
A: Yes. Nepal’s law permits a private limited company to have one shareholder. A foreign person or entity can own 100% of the shares. The company must still have at least two directors (one can be the shareholder) and a Nepal address, but it is fully legal to form a one-person company.

Q: What is the minimum capital to start a private limited company?
A: The legal minimum paid-up capital is NPR 100,000 (around USD 750). This is sufficient to register a small company. Some sectors require higher capital, but generally this is the basic requirement. You can increase the capital later if needed.

Q: How long does the registration process take?
A: If all documents are in order, the Company Registrar usually completes the registration within 5–10 business days. If foreign investment approval is needed first, allow additional weeks. Overall, plan on about 3–4 weeks from start to finish, depending on complexity. Using local experts often reduces this time by avoiding common mistakes.

Q: What taxes will my company pay in Nepal?
A: A Nepalese private company pays corporate income tax on its profits (about 25%). If annual sales exceed the VAT threshold, it must also register for VAT (13%) and collect VAT on sales. The company will withhold tax on salaries (payroll tax) and on payments like dividends (5%) or interest (15%). A local tax advisor can help you calculate and file all required taxes correctly.

Registering a private limited company in Nepal can open new opportunities for your business in a fast-growing economy. Nepal’s laws do allow a single person to set up a private company in most sectors, making it practical for individual entrepreneurs. The process involves clear steps and relatively low costs, but you must follow each requirement carefully.

With our guidance, navigating Nepal’s company registration is straightforward. Our team of corporate and tax experts can assist you at every stage, from choosing the right structure to completing all filings and tax registrations. We make sure all paperwork is done correctly and efficiently, so you can focus on your core business goals rather than bureaucracy.

For personalized support and a hassle-free setup, reach out to our Nepal business law team today. We will help turn your Nepal business plan into reality with confidence. Our Nepal business advisory team is ready to help you secure your spot in Nepal’s growing economy. Contact us when you are ready to make the leap into the Nepal market.