Step-by-Step Process for Company Incorporation in Nepal

Company incorporation in Nepal has become increasingly attractive for foreign companies seeking South Asian market access, cost-efficient talent, and long-term growth. Nepal offers a young workforce, competitive operating costs, and clear legal pathways for foreign direct investment (FDI).

Yet, the incorporation process can feel complex. Multiple regulators. Specific laws. Local compliance requirements.

This guide simplifies everything. It walks you through the step-by-step process for company incorporation in Nepal, explains legal obligations, highlights common mistakes, and shows how foreign investors can enter Nepal confidently and compliantly.

Overview of Company Incorporation in Nepal for Foreign Investors

Company incorporation in Nepal is governed by a structured legal framework designed to regulate ownership, investment protection, and compliance.

Key authorities involved include:

• Office of the Company Registrar (OCR)

• Department of Industry (DOI)

• Nepal Rastra Bank (NRB)

• Inland Revenue Department (IRD)

Foreign investors usually incorporate under the Foreign Investment and Technology Transfer Act (FITTA) 2019, supported by the Companies Act 2006.

Common entry structures for foreign companies

• Private Limited Company (FDI subsidiary)

• Branch Office

• Liaison Office

• Employer of Record (pre-FDI entry)

Legal Framework Governing Company Incorporation in Nepal

Understanding the laws builds trust and reduces risk.

Core legislation

• Companies Act, 2006 – governs incorporation, shareholding, and governance

• FITTA, 2019 – regulates foreign investment approval and protection

• Industrial Enterprises Act, 2020 – sector classification and thresholds

• Income Tax Act, 2002 – corporate tax and withholding rules

• Labor Act, 2017 & Social Security Act, 2018 – employment compliance

These laws collectively define how foreign companies register, operate, and repatriate profits.

Step-by-Step Process for Company Incorporation in Nepal

This is the exact process most foreign investors follow.

Step 1: Determine the Appropriate Business Structure

Foreign companies must first decide how they want to operate.

Most popular option:
FDI-backed Private Limited Company due to:

• Limited liability

• Full operational control

• Profit repatriation rights

Other structures are suitable for non-revenue or temporary presence.

Step 2: Reserve Company Name at OCR

Name reservation is done online with the Office of the Company Registrar.

Key rules:

• Must be unique

• Cannot conflict with existing trademarks

• Must reflect the business activity

Approval usually takes 1–3 working days.

Step 3: Obtain Foreign Investment Approval (DOI or IBN)

Foreign investors must seek FDI approval before incorporation.

Required submissions include:

• Project proposal

• Shareholding structure

• Source of funds declaration

• Passport and company documents of investors

Approval authority depends on investment size:

• DOI for standard projects

• Investment Board Nepal (IBN) for large investments

Step 4: Capital Inward Remittance via Nepal Rastra Bank

After FDI approval, investors must bring capital into Nepal.

Process:

1. Open a local bank account

2. Remit approved capital amount

3. Obtain NRB inward remittance confirmation

This step is critical for legal validity.

Step 5: Register the Company at Office of Company Registrar

Once capital is verified, incorporation proceeds.

Documents filed include:

• Memorandum of Association (MOA)

• Articles of Association (AOA)

• FDI approval letter

• Bank capital confirmation

• Director details

The OCR issues the Certificate of Incorporation.

Step 6: Tax Registration and PAN/VAT

After incorporation:

• Register for Permanent Account Number (PAN)

• Register for VAT if applicable

This enables invoicing, payroll, and compliance.

Step 7: Post-Incorporation Compliance Setup

This includes:

• Statutory books

• Accounting systems

• Payroll and Social Security Fund (SSF)

• Local employment contracts

Foreign companies often underestimate this stage.

Timeline for Company Incorporation in Nepal

Total estimated time: 4–6 weeks

Minimum Capital Requirement for Foreign Company Incorporation

As per FITTA 2019:

• Minimum FDI threshold: NPR 20 million
  (subject to sector-specific exemptions)

This capital must be fully remitted through formal banking channels.

Costs Involved in Company Incorporation in Nepal

Foreign investors should budget for:

• Government registration fees

• Legal drafting and advisory

• Banking and compliance setup

• Ongoing accounting and tax filings

Costs vary by sector and structure but remain competitive compared to regional alternatives.

Common Mistakes Foreign Companies Make

Avoid these frequent pitfalls:

• Choosing the wrong entry structure

• Delaying capital remittance

• Non-compliant employment contracts

• Ignoring monthly tax filings

• Poor documentation at FDI stage

Professional guidance reduces delays and rejections.

Comparison of Entry Options for Foreign Companies

Ongoing Compliance After Company Incorporation in Nepal

Once incorporated, companies must:

• File annual returns at OCR

• Submit monthly and annual tax filings

• Maintain SSF contributions

• Renew registrations annually

Non-compliance can trigger fines and restrictions on repatriation.

Why Nepal Is Attractive for Foreign Companies

Key advantages include:

• Competitive labor costs

• English-speaking professionals

• Strategic access to India and China

• Improving regulatory transparency

• Strong investor protection under FITTA

How Professional Advisors Add Value

Experienced advisors help with:

• Structuring FDI optimally

• Managing regulator communication

• Ensuring labor and tax compliance

• Supporting profit repatriation

• Scaling operations smoothly

This significantly reduces execution risk.

Conclusion: Is Company Incorporation in Nepal Right for You?

Company incorporation in Nepal offers foreign companies a strategic, cost-efficient gateway to South Asia. With the right structure, compliant execution, and local expertise, Nepal can support long-term growth and regional expansion.

The key is doing it right the first time.

Call to Action

Planning to incorporate a company in Nepal?
Speak with our FDI and incorporation specialists for a free feasibility and compliance consultation. We handle approvals, registration, payroll, and ongoing compliance end-to-end.

FAQs: Company Incorporation in Nepal

1. Can a foreigner fully own a company in Nepal?

Yes. FITTA 2019 allows 100% foreign ownership in most permitted sectors.

2. How long does company incorporation in Nepal take?

Typically 4–6 weeks, depending on FDI approval timelines and documentation readiness.

3. Is physical presence required for incorporation?

No. The entire process can be completed remotely via a local representative.

4. Can profits be repatriated abroad?

Yes. Nepal law allows repatriation of profits, dividends, and capital after tax clearance.

5. What is the minimum capital for foreign investors?

Generally NPR 20 million, subject to sector-specific rules.