Top 5 Mistakes to Avoid When Registering a Company in Nepal

Company registration in Nepal can be a powerful gateway to South Asia. Nepal offers competitive labor costs, a growing digital economy, and favorable foreign investment laws. Yet, many foreign companies face delays, penalties, or failed registrations due to avoidable mistakes.

This guide breaks down the top five mistakes foreign companies make when registering a company in Nepal, why they happen, and how to avoid them. It is written from the perspective of advisors who regularly handle FDI, EOR, branch offices, and private limited company registrations for international clients.

If you want a smooth, compliant, and future-proof market entry, this article is your roadmap.

Why Company Registration in Nepal Requires Careful Planning

Nepal’s company laws are clear, but they are procedural and documentation-heavy. Foreign companies must navigate multiple authorities, including:

• Office of the Company Registrar (OCR)

• Department of Industry (DOI)

• Nepal Rastra Bank (NRB)

• Inland Revenue Department (IRD)

• Ministry of Industry, Commerce and Supplies

Key laws governing company registration in Nepal include:

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act (FITTA), 2019

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

• Labour Act, 2017

Missing one step or misunderstanding the structure can cost months.

The Top 5 Mistakes to Avoid When Registering a Company in Nepal

1. Choosing the Wrong Legal Structure

One of the most common company registration mistakes in Nepal is selecting an incorrect entity type.

Foreign companies usually choose from:

• Private Limited Company

• Branch Office

• Liaison Office

• Employer of Record (EOR) model

Each structure has different legal, tax, and compliance implications.

Why this mistake happens

Many foreign founders assume that a branch office or liaison office is faster and cheaper. In reality, these structures come with restrictions on revenue generation and local hiring.

How to avoid it

Before company registration in Nepal, clearly define:

• Will the entity generate local revenue?

• Will it hire Nepali staff?

• Is long-term market presence planned?

• Is profit repatriation required?

For most foreign companies, a foreign-owned private limited company under FITTA offers the best balance of control and flexibility.

2. Underestimating Minimum Capital and FDI Thresholds

Nepal enforces minimum foreign investment thresholds. Ignoring them can derail the entire registration process.

As per FITTA 2019:

• Minimum FDI amount is NPR 20 million (approx. USD 150,000)

• Capital must be brought through formal banking channels

• Funds must be approved by the Department of Industry

Why this mistake happens

Foreign companies often assume they can start small and inject capital later. Nepal does not allow this for FDI-registered entities.

How to avoid it

Plan capital structure before initiating company registration in Nepal:

• Align share capital with business scale

• Prepare source-of-funds documentation

• Coordinate with an NRB-approved commercial bank

3. Poor Name Reservation and Object Clause Drafting

Company name reservation in Nepal seems simple, but it causes frequent rejections.

Common issues include:

• Names conflicting with existing companies

• Restricted or regulated words without approval

• Overly broad or vague business objectives

Why this mistake happens

Foreign companies often reuse global brand names without checking local availability or regulatory sensitivity.

How to avoid it

When registering a company in Nepal:

• Prepare three alternative names

• Ensure the object clause matches FITTA-approved activities

• Avoid regulated terms like “bank,” “insurance,” or “investment” unless licensed

4. Ignoring Tax, Payroll, and Post-Registration Compliance

Many companies think company registration in Nepal ends with the certificate of incorporation. This is a costly assumption.

Post-registration obligations include:

• PAN and VAT registration

• Monthly tax filings

• Social Security Fund (SSF) enrollment

• Withholding tax compliance

• Annual returns to OCR and IRD

Why this mistake happens

Foreign founders focus on incorporation but overlook operational compliance.

How to avoid it

Set up compliance systems immediately after registration:

• Register employees under SSF (31% contribution split)

• Maintain monthly accounting records

• File tax returns even if revenue is zero

5. Attempting DIY Registration Without Local Expertise

Nepal allows online filing, but foreign company registration is not DIY-friendly.

Issues include:

• Notarization and apostille requirements

• Embassy attestation delays

• Language and procedural nuances

• Back-and-forth with regulators

Why this mistake happens

Foreign companies assume online portals equal automation. In Nepal, human verification still dominates.

How to avoid it

Work with local professionals who understand:

• OCR workflows

• DOI approval processes

• NRB capital repatriation rules

• Practical timelines

Common Mistakes vs Best Practices in Company Registration in Nepal

Key Documents Required for Company Registration in Nepal

Foreign companies should prepare the following:

• Passport copies of shareholders and directors

• Board resolution approving Nepal investment

• Apostilled incorporation documents

• Proposed Memorandum and Articles of Association

• Bank reference letter

• FDI application to DOI

Having these ready can reduce timelines by weeks.

How Long Does Company Registration in Nepal Take?

For foreign companies, realistic timelines are:

1. Name reservation: 2–3 working days

2. DOI approval: 2–4 weeks

3. Company incorporation at OCR: 3–5 working days

4. PAN and local registrations: 1 week

Total timeline: 4–6 weeks, assuming no rejections.

Strategic Tips for Foreign Companies Entering Nepal

• Align entity structure with exit strategy

• Design compliance for audit readiness

• Plan profit repatriation from day one

• Budget for professional fees and taxes

• Use EOR if testing the market first

These steps reduce risk and improve long-term returns.

Frequently Asked Questions (People Also Ask)

Can foreigners fully own a company in Nepal?

Yes. Foreigners can own up to 100% equity in many sectors under FITTA 2019, subject to approval.

What is the minimum capital for company registration in Nepal?

Foreign investors must bring at least NPR 20 million as foreign direct investment.

Is online company registration in Nepal available for foreigners?

Partially. While filings are online, foreign investors still require physical approvals and attestations.

Can profits be repatriated outside Nepal?

Yes. Profit, dividends, and capital can be repatriated with NRB approval and tax clearance.

Is Nepal good for outsourcing and shared service centers?

Yes. Nepal is popular for IT, accounting, mortgage processing, and back-office outsourcing.

Conclusion: Get Company Registration in Nepal Right the First Time

Company registration in Nepal is not difficult, but it is procedural. Most failures happen due to poor planning, incorrect structures, or lack of local expertise.

Avoiding these five mistakes can save months of delays, regulatory stress, and unexpected costs. With the right guidance, Nepal can become a stable and scalable base for your regional operations.

Call to Action

If you are planning company registration in Nepal and want a compliant, fast, and investor-ready setup, speak with our specialists.

We help foreign companies with:

• FDI-approved company registration

• Branch and liaison office setup

• Employer of Record (EOR) services

• Tax, payroll, and compliance management

Book a free consultation and enter Nepal with confidence.