Company registration in Nepal is often the first strategic decision a foreign investor makes when entering the Nepali market. The type of company you choose affects everything. Ownership rights. Tax exposure. Repatriation of profits. Compliance workload. Long-term scalability.
Nepal welcomes foreign investment under a clear legal framework. However, many international founders struggle to identify which company structure best fits their goals. This guide solves that problem.
By the end of this article, you will understand every legally recognised company type in Nepal. You will also know exactly which structure works best for your business model.
When foreign companies register in Nepal, the legal structure determines:
Eligibility for foreign direct investment approval
Minimum capital thresholds
Shareholding flexibility
Regulatory approvals required
Tax and compliance obligations
Exit and repatriation options
Under the Companies Act, 2006, Foreign Investment and Technology Transfer Act (FITTA) 2019, and Industrial Enterprises Act, 2020, Nepal recognises multiple company forms. Each serves a distinct purpose.
Choosing the wrong one leads to delays, restructuring costs, and regulatory risk.
Nepal legally recognises the following business entities:
Private Limited Company
Public Limited Company
Branch Office
Liaison Office
Partnership Firm
Sole Proprietorship
Non-Profit Company
Not all are suitable for foreign companies. Let’s break them down clearly.
A Private Limited Company is the most common structure for company registration in Nepal by foreign investors. It is a separate legal entity with limited liability.
Minimum shareholders: 1
Maximum shareholders: 101
Foreign ownership: Up to 100% (subject to sector approval)
Liability limited to share capital
Profit repatriation permitted
A Private Limited Company allows full commercial operations. It is ideal for long-term investment and hiring local employees.
Common use cases:
IT and software development
Outsourcing and shared services
Consulting and professional services
Manufacturing and trading
Companies Act, 2006
FITTA, 2019
Industrial Enterprises Act, 2020
A Public Limited Company can offer shares to the public and list on the Nepal Stock Exchange.
Minimum shareholders: 7
No maximum shareholder limit
Higher compliance burden
Mandatory public disclosures
This structure is rarely used for initial market entry. It suits large-scale infrastructure, banking, insurance, or hydropower projects.
Foreign investment is allowed but closely regulated by sector-specific laws.
A Branch Office is an extension of a foreign parent company. It is not a separate legal entity.
100% owned by the foreign parent
Allowed to generate revenue
Parent company bears full liability
Requires industry-specific approval
Branch offices are suitable for:
Engineering and construction contracts
Infrastructure projects
Short-to-medium-term operations
However, compliance oversight is strict, and exit flexibility is limited.
A Liaison Office acts as a non-commercial presence. It cannot earn income in Nepal.
No revenue-generating activities allowed
Funded entirely by the parent company
Limited operational scope
Market research
Partner coordination
Brand presence
Regulatory liaison
Liaison offices are ideal for testing the market before full company registration in Nepal.
A Partnership Firm is governed by the Partnership Act, 2020 (Nepal).
Foreign investment is generally not permitted
Partners have unlimited liability
Not recognised under FITTA for FDI
This structure is not recommended for foreign companies.
A Sole Proprietorship is owned by one individual.
Foreign nationals cannot register sole proprietorships
Unlimited personal liability
No FDI recognition
This option is unsuitable for company registration in Nepal by foreigners.
A Non-Profit Company is registered under Section 166 of the Companies Act, 2006.
Cannot distribute profits
Suitable for NGOs and social enterprises
Requires Social Welfare Council approval
Foreign NGOs commonly use this structure but it is not meant for commercial activity.
| Company Type | Foreign Ownership | Revenue Allowed | Liability | Best For |
|---|---|---|---|---|
| Private Limited | Up to 100% | Yes | Limited | Long-term business |
| Public Limited | Allowed | Yes | Limited | Large projects |
| Branch Office | 100% parent | Yes | Parent liable | Project execution |
| Liaison Office | 100% parent | No | Parent liable | Market entry |
| Partnership | Not allowed | Yes | Unlimited | Local firms |
| Sole Proprietorship | Not allowed | Yes | Unlimited | Individuals |
| Non-Profit | Restricted | No | Limited | NGOs |
When advising foreign investors on company registration in Nepal, we use a simple framework.
Will you generate revenue in Nepal?
Do you need limited liability protection?
Is this a long-term or short-term presence?
Will you hire local employees?
Do you plan to repatriate profits?
Choose Private Limited Company for most commercial activities
Choose Liaison Office for market exploration
Choose Branch Office for contract-based operations
Under FITTA 2019, the minimum foreign investment threshold is:
NPR 20 million per foreign investor
This applies to Private Limited Companies with foreign ownership.
There is no statutory minimum capital for liaison offices, but operational budgets must be justified.
Standard corporate tax rate: 25%
Certain industries enjoy concessional rates
Dividends: 5%
Interest and service fees: Varies
Annual tax filing
Audit by a registered Nepali auditor
Company renewals
FDI reporting to Nepal Rastra Bank
Choosing a liaison office when revenue is required
Underestimating compliance workload
Ignoring sector-specific FDI restrictions
Structuring without exit planning
Avoiding these mistakes saves months of rework.
Here is a simplified view of the process:
Company name reservation
FDI approval from Department of Industry
Company incorporation at OCR
PAN and VAT registration
Bank account and capital injection
Industry-specific licenses
Each step varies by company type.
Nepal’s regulatory ecosystem involves multiple authorities:
Office of Company Registrar
Department of Industry
Nepal Rastra Bank
Inland Revenue Department
Misalignment between approvals causes delays. A coordinated approach ensures smooth company registration in Nepal.
Choosing the right structure is the foundation of successful market entry.
If you are planning company registration in Nepal, speak with specialists who understand foreign investment, compliance, and long-term structuring.
👉 Book a free consultation to evaluate the best company type for your business goals.
Yes. Foreigners can own up to 100% of a Private Limited Company, subject to sector approval under FITTA 2019.
A Private Limited Company is the most flexible and widely used structure for foreign investors.
A branch office suits short-term projects. A subsidiary offers limited liability and easier scaling.
No. Liaison offices are strictly non-commercial and cannot generate revenue.
The minimum foreign investment is NPR 20 million per investor for FDI-approved companies.
Company registration in Nepal is not one-size-fits-all. The right company type depends on your investment horizon, risk appetite, and operational needs.
For most foreign companies, a Private Limited Company delivers the best balance of control, compliance, and growth potential.
Make the decision strategically. Get it right from day one.