If you are researching how to register a company in Nepal, you are already ahead of many foreign investors. Nepal offers competitive labour costs, a growing services sector, and access to South Asian markets. Yet company registration can quickly become expensive and slow if early decisions are wrong.
This guide breaks down the top 10 mistakes foreign companies make when registering a company in Nepal and shows you how to avoid them. It is written for founders, CFOs, and expansion leaders who want clarity, compliance, and speed.
Nepal’s legal system blends company law, foreign investment rules, labour regulations, and tax compliance. Many issues arise because investors:
Rely on outdated online advice
Assume Nepal works like India or Singapore
Register first and plan compliance later
Understanding these mistakes upfront saves months of rework and unnecessary costs.
One of the biggest errors when learning how to register a company in Nepal is picking the wrong entity type.
Foreign companies usually have four options:
Private Limited Company
Branch Office
Liaison (Representative) Office
Employer of Record (EOR) model
Each has different implications for tax, hiring, and repatriation.
A liaison office cannot generate revenue. A branch office is fully taxable. A private limited company requires foreign investment approval. Choosing wrong can block operations later.
Best practice: Decide based on revenue intent, headcount, and long-term presence.
Foreign shareholders must comply with Nepal’s foreign investment framework before company registration is complete.
Common assumptions include:
“We can inject capital later”
“Minimum investment rules are flexible”
They are not.
Foreign investment approval is mandatory before incorporation
Capital thresholds apply to most sectors
Funds must be remitted through approved banking channels
Skipping this step leads to rejected registrations or frozen bank accounts.
Many foreign founders copy templates without adapting them to Nepal.
This creates issues with:
Business scope limitations
Future capital increases
Share transfers and exits
Nepal’s registrar reviews objects clauses carefully. Overly narrow scopes restrict future activities. Overly broad scopes trigger objections.
Solution: Customise documents for both current operations and future expansion.
Registering a company does not automatically grant permission to operate.
Some sectors require additional approvals, such as:
IT and software exports
Financial services and fintech
Education and training
Recruitment and outsourcing
Inability to invoice clients
Bank account restrictions
Compliance penalties
This is a frequent oversight when companies rush through how to register a company in Nepal.
Nepal allows foreign ownership, but governance rules still apply.
Typical errors include:
Appointing directors without local presence planning
Not defining reserved matters
Ignoring quorum and signing authority rules
Poor structuring creates deadlock, banking delays, and audit complications.
Tip: Draft board and shareholder structures that work across time zones.
Company registration triggers tax obligations immediately.
Foreign companies often assume:
Taxes start only after revenue
Payroll compliance can wait
VAT applies only to local sales
All three assumptions are risky.
Permanent Account Number (PAN) registration
Withholding tax obligations
VAT registration thresholds
Failing to plan tax at registration leads to penalties within the first year.
Many foreign companies focus only on incorporation and forget employment rules.
Nepal mandates:
Written employment contracts
Social Security Fund contributions
Statutory leave and benefits
Hiring even one employee triggers compliance. Non-compliance risks fines and employee disputes.
This mistake is especially common for companies exploring how to register a company in Nepal for remote teams.
Company registration does not guarantee a functioning bank account.
Banks conduct strict due diligence on:
Shareholders
Source of funds
Business activity
Missing foreign investment approvals
Poorly drafted business descriptions
Incomplete KYC documentation
Plan banking in parallel with registration.
Foreign investors often think about exits too late.
Mistakes include:
No dividend policy
No exit clauses in shareholder agreements
Ignoring capital repatriation rules
Nepal allows repatriation, but documentation must align from day one. Fixing this later is costly.
Trying to navigate registration without experienced local support is risky.
Common DIY failures include:
Multiple rejections from the registrar
Conflicting advice from different sources
Missed compliance deadlines
The cost of expert support is often far lower than fixing mistakes later.
| Area | Common Mistake | Best Practice |
|---|---|---|
| Legal structure | Choosing cheapest option | Choosing scalable structure |
| FDI approval | Applying after registration | Approving before incorporation |
| Documents | Generic templates | Tailored MoA/AoA |
| Licensing | Ignored | Checked upfront |
| Tax planning | Reactive | Pre-registration planning |
| Employment | Informal hiring | Labour-law-compliant setup |
When planning how to register a company in Nepal, follow this order:
Define business model and revenue flow
Select the correct legal structure
Secure foreign investment approval
Draft customised incorporation documents
Identify licensing requirements
Plan tax and payroll compliance
Open compliant bank accounts
Hire under Nepal labour laws
Document repatriation and exit strategy
No, but the process is regulated. Foreign companies must follow foreign investment approval, tax, and labour compliance steps carefully.
A private limited company usually takes 3–6 weeks if approvals and documents are prepared correctly.
Yes, in most sectors. Some industries have ownership restrictions and licensing requirements.
Not always. With proper authorisation, most steps can be completed remotely.
Minimum foreign investment thresholds apply depending on the sector and structure.
Understanding how to register a company in Nepal is not just about filing forms. It is about structuring your entry correctly from day one.
Avoiding these ten mistakes saves time, protects capital, and ensures compliance. The most successful foreign companies treat registration as a strategic foundation, not an administrative task.
If you are planning to register a company in Nepal, get expert guidance before you commit capital.
Speak with a Nepal market-entry specialist to avoid costly mistakes and launch with confidence.