Types of Companies in Nepal: A Complete Guide (2026 Update)

Understanding the types of companies in Nepal is the first and most important decision for any foreign business planning to enter the Nepali market. Nepal offers multiple legal structures, each with distinct ownership rules, compliance requirements, tax implications, and foreign investment thresholds.

This 2026-updated guide is written specifically for foreign companies, founders, and international groups. It explains every legally recognised company type in Nepal in clear, practical language. You will learn which structure fits your expansion strategy, budget, and long-term goals.

If you want certainty, compliance, and speed, this guide will save you months of confusion.

Legal Framework Governing Company Types in Nepal

Company formation and classification in Nepal are governed primarily by:

• Companies Act 2006

• Foreign Investment and Technology Transfer Act 2019

• Industrial Enterprises Act 2020

• Income Tax Act 2002 and NRB foreign exchange directives

All companies are registered with the Office of Company Registrar (OCR) through Nepal’s online registration portal.

Why Choosing the Right Company Type Matters

Selecting the wrong structure can result in:

• Delays in approvals

• Rejection of foreign investment

• Restrictions on profit repatriation

• Unexpected tax exposure

• Non-compliance penalties

Choosing the correct type of company in Nepal ensures regulatory approval, operational flexibility, and investor confidence.

Main Types of Companies in Nepal

Under the Companies Act, Nepal recognises several distinct company types. These fall into commercial, non-profit, and foreign entity categories.

1. Private Limited Company in Nepal

Key features

• Minimum shareholders: 1

• Maximum shareholders: 101

• Foreign ownership: Allowed up to 100% (FDI sectors permitting)

• Separate legal entity

• Limited liability

Ideal for

• Foreign startups

• IT and outsourcing firms

• Professional services companies

• Subsidiaries of overseas corporations

Advantages

• Full operational control

• Eligible for FDI and profit repatriation

• Scalable structure

Limitations

• Cannot invite public share subscriptions

This is the most commonly recommended option for foreign companies entering Nepal.

2. Public Limited Company in Nepal

Key features

• Minimum shareholders: 7

• No maximum shareholder limit

• Minimum paid-up capital as prescribed

• Can issue shares publicly

Ideal for

• Banks and financial institutions

• Hydropower and infrastructure projects

• Large manufacturing entities

Advantages

• Access to public capital

• Enhanced corporate credibility

Limitations

• High compliance burden

• Mandatory disclosures and audits

3. Single Shareholder Company

A Single Shareholder Company allows one individual or entity to own 100% of a private company.

Key features

• One shareholder only

• Can be foreign-owned

• Same legal status as Pvt. Ltd.

Ideal for

• Solo foreign founders

• Holding companies

• Asset-owning entities

This structure is increasingly popular with foreign consultants and digital entrepreneurs.

4. Foreign Company Branch Office

Key features

• Not a separate legal entity

• Parent company bears full liability

• Allowed only in approved sectors

Permitted activities

• Project execution

• Technical support

• Contract-based operations

Limitations

• Cannot conduct unrestricted commercial trading

• Strict regulatory oversight

5. Liaison (Representative) Office

A Liaison Office is used strictly for non-commercial activities.

Allowed activities

• Market research

• Brand promotion

• Coordination and communication

Prohibited activities

• Revenue generation

• Contract signing

• Invoicing

This option is suitable for companies testing the Nepali market before committing capital.

6. Non-Profit Company in Nepal

A Non-Profit Company is established for social, educational, research, or charitable objectives.

Key features

• No dividend distribution

• Profits reinvested into objectives

• Foreign participation allowed with approvals

Ideal for

• NGOs and INGOs

• Research organisations

• Educational institutions

7. Company Limited by Guarantee

This structure is used where members guarantee a fixed amount instead of contributing share capital.

Common use cases

• Industry associations

• Chambers of commerce

• Professional bodies

It is rarely used for commercial foreign investment.

Comparison Table: Types of Companies in Nepal (Foreign Investor View)

Which Type of Company Is Best for Foreign Companies in Nepal?

For most foreign investors, the answer is clear.

Private Limited Company with FDI approval is the most efficient, compliant, and scalable structure.

Choose alternatives only if:

• You cannot generate revenue yet (liaison office)

• You operate under a specific government project (branch office)

• You require public capital (public company)

Compliance and Post-Registration Obligations

All company types in Nepal must comply with:

• Annual filings with OCR

• Tax registration and filings

• Audit requirements

• Labour and Social Security Fund registration

• Foreign exchange reporting (for FDI entities)

Failure to comply can result in fines, blacklisting, or investment restrictions.

Common Mistakes Foreign Companies Make

Avoid these frequent errors:

• Choosing a liaison office for revenue activities

• Underestimating minimum capital requirements

• Ignoring sector-specific FDI restrictions

• Delaying post-registration compliance

• Structuring without repatriation planning

Professional guidance prevents these issues.

Conclusion

Understanding the types of companies in Nepal is essential for successful and compliant market entry. Nepal’s legal framework is investor-friendly when navigated correctly, but unforgiving when misunderstood.

For most foreign companies in 2026, a Private Limited Company with FDI approval remains the gold standard. The right structure protects your investment, simplifies compliance, and enables long-term growth.

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Frequently Asked Questions (People Also Ask)

What is the best type of company in Nepal for foreigners?

For most foreigners, a Private Limited Company with FDI approval offers maximum control, limited liability, and profit repatriation.

Can a foreigner own 100% of a Nepali company?

Yes. Foreigners can own 100% shares in permitted sectors under FITTA 2019.

What is the minimum capital for foreign companies in Nepal?

FDI companies generally require a minimum foreign investment threshold as prescribed by law, depending on sector.

Can a foreign company operate without registering a company?

Only limited activities are allowed via a liaison office. Commercial operations require registration.

How long does company registration take in Nepal?

With proper documentation, registration typically takes 2–4 weeks, excluding FDI approvals.