If you are considering company registration in Nepal, understanding the Company Act of Nepal, 2063 (2006) is non-negotiable. This law governs how businesses are formed, operated, regulated, and dissolved in Nepal.
For foreign companies, the Company Act works alongside FDI laws, tax rules, and labor regulations. Together, they determine whether your Nepal entry is smooth or frustrating.
In this guide, I will break down the Company Act in plain English. You will learn what it allows, what it restricts, and how it affects foreign investors planning company registration in Nepal.
The Company Act, 2063 (2006) is the primary legislation that regulates:
Incorporation of companies
Corporate governance and management
Shareholding and capital structure
Compliance, reporting, and penalties
Mergers, liquidation, and closure
It applies to both local and foreign-owned companies registered with the Office of the Company Registrar (OCR).
Foreign investors often assume that FDI approval alone is enough. It is not.
The Company Act directly impacts:
Ownership structure
Director responsibilities
Capital requirements
Compliance timelines
Legal exposure of shareholders
Ignoring it can delay or even invalidate company registration in Nepal.
The Company Act allows several business forms. However, only some are practical for foreign companies.
This is the most common structure for company registration in Nepal by foreign investors.
Key features:
Minimum 1 shareholder
Maximum 101 shareholders
No public share offering
Limited liability
Suitable for large-scale ventures.
Key features:
Minimum 7 shareholders
Mandatory public disclosure
Higher compliance burden
Allowed under specific approvals.
Key features:
Not a separate legal entity
Parent company bears liability
Limited scope of activities
Used only for market research and coordination.
Key features:
No income-generating activity
Strict reporting rules
Under the Company Act, a company can be registered if:
The proposed name is unique
The objectives are lawful
The capital structure is clearly defined
Required documents are submitted to OCR
For foreign shareholders, additional FDI approvals are required. However, the company itself is still governed by the Company Act.
The Company Act allows:
Individual or corporate shareholders
100 percent foreign ownership in permitted sectors
Shares to be held in foreign currency value
Under the Company Act:
Minimum 1 director for private companies
Directors can be foreign nationals
Directors owe fiduciary duties to the company
Directors are personally liable for serious non-compliance.
The Company Act does not fix a minimum capital for all companies. However:
OCR reviews whether capital matches business objectives
FDI regulations may impose sector-specific thresholds
Capital must be declared in the Memorandum of Association
This is a critical area where company registration in Nepal often gets delayed.
Below is a simplified process flow governed by the Company Act.
Name reservation at OCR
Drafting Memorandum and Articles of Association
Submission of incorporation application
Payment of registration fees
Issuance of company registration certificate
FDI approval and tax registration follow this step.
You must prepare the following:
Memorandum of Association
Articles of Association
Shareholder details
Director consent letters
Registered office address
| Feature | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Foreign ownership | Allowed | Allowed |
| Compliance burden | Moderate | High |
| Public share issue | Not allowed | Mandatory |
| Best for foreign investors | Yes | Rarely |
This comparison helps foreign founders choose the right structure for company registration in Nepal.
Under the Company Act, every company must:
Maintain statutory registers
File annual returns with OCR
Notify changes in directors or shareholders
Keep proper accounting records
Failure can result in fines or deregistration.
The Company Act empowers OCR to:
Impose monetary penalties
Suspend company operations
Cancel company registration
Hold directors personally liable
This makes compliance a serious business issue, not paperwork.
Company registration in Nepal is not governed by one law alone.
The Company Act works alongside:
Foreign Investment and Technology Transfer Act (FITTA)
Income Tax Act
Labor Act
Social Security Act
A compliant structure must align with all of them.
Avoid these frequent errors:
Assuming FDI approval equals registration
Using generic MOA templates
Underestimating compliance timelines
Ignoring director liability
Choosing the wrong company type
Each mistake can delay company registration in Nepal by months.
The Company Act is clear, but its application is not always straightforward.
Local interpretation, OCR practice, and sector-specific rules matter. Professional structuring reduces risk and speeds up approval.
Successful company registration in Nepal starts with mastering the Company Act. It defines your company’s legal existence, governance, and long-term compliance.
Foreign companies that align their structure with the Company Act from day one save time, money, and legal exposure.
Planning company registration in Nepal?
Speak with our Nepal market-entry specialists for end-to-end support on company incorporation, FDI approval, compliance, and ongoing governance.
Yes. Every company registered in Nepal, including foreign-owned entities, must comply with the Company Act.
Yes. The Company Act allows foreign nationals to serve as directors without residency requirements.
No. The Act itself does not, but FDI rules may impose sector-specific minimum capital thresholds.
A private limited company is usually best due to flexibility and lower compliance requirements.
The Office of the Company Registrar enforces the Company Act in Nepal.
Company Act, 2063 (2006), Government of Nepal
Office of the Company Registrar (OCR), Nepal
Foreign Investment and Technology Transfer Act (FITTA), 2019