When foreign investors explore types of companies in Nepal, one structure stands out.
The Private Limited Company (Pvt. Ltd.) is the most popular legal vehicle for foreign-owned businesses. It offers flexibility, limited liability, and strong credibility with regulators, banks, and partners.
If you are planning market entry, outsourcing, or foreign direct investment, this guide explains what a Private Limited Company in Nepal is, how it works, and why it is often the smartest choice.
This article is written for foreign founders, CFOs, and expansion leaders who want clarity, not jargon.
Nepal’s corporate framework recognises several legal entities. Each serves a different business objective.
Private Limited Company
Public Limited Company
Non-Profit Company
Foreign Company (Branch or Liaison Office)
Among these, the Private Limited Company is the most widely used by foreign investors seeking operational control and scalability.
A Private Limited Company in Nepal is a separate legal entity formed under Nepalese company law.
It limits the liability of shareholders to their capital contribution.
This structure is suitable for:
Foreign Direct Investment projects
Subsidiaries of overseas companies
Startups and joint ventures
Outsourcing and shared service centres
Once incorporated, the company becomes a Nepal-registered corporate citizen.
Private companies in Nepal operate under:
Companies Act, 2006
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
Labour Act, 2017
Incorporation and filings are handled by the Office of the Company Registrar (OCR) in Nepal.
These laws ensure investor protection, governance standards, and compliance clarity.
Minimum 1 shareholder
Maximum 50 shareholders
100% foreign ownership allowed in approved sectors
Can be wholly foreign-owned or jointly owned with Nepali partners
Minimum 1 director
Directors may be foreign nationals
No local director requirement in most sectors
No fixed minimum capital for most service sectors
Higher thresholds apply for regulated industries
Capital must align with approved FDI amount
One of the strongest benefits of a Private Limited Company is limited liability.
Shareholders are not personally responsible for:
Company debts
Legal claims
Operational losses
This protection is essential for foreign investors entering a new jurisdiction.
Foreign investors consistently prefer this structure because it balances control, credibility, and compliance.
Full operational freedom
Strong legal recognition
Easier banking and tax registration
Eligibility for work visas and expatriate staff
Scalable for long-term growth
| Feature | Private Limited Company | Branch Office | Liaison Office |
|---|---|---|---|
| Legal entity | Separate | Extension of parent | Extension of parent |
| Revenue generation | Allowed | Allowed | Not allowed |
| Liability | Limited | Parent company liable | Parent company liable |
| Local hiring | Allowed | Allowed | Limited |
| Best for | Long-term operations | Project-based work | Market research |
Insight:
If you want sustainable operations and asset protection, the Private Limited Company is the most robust choice.
Name reservation with OCR
Drafting Memorandum and Articles of Association
FDI approval (for foreign shareholders)
Company registration certificate issuance
Tax and VAT registration
Bank account opening and capital injection
With proper preparation, incorporation typically takes 3–5 weeks.
A Private Limited Company must meet ongoing compliance standards.
Annual general meeting
Annual financial statements
Tax filings and audits
Employee social security contributions
Renewal of business licences
Professional compliance management is strongly recommended for foreign-owned entities.
Understanding taxation is critical for financial planning.
Corporate income tax typically 25%
Withholding taxes on services and dividends
VAT registration required once thresholds are met
Double taxation treaties available with select countries
Tax structuring should be done early to avoid inefficiencies.
This structure allows direct hiring of local and expatriate employees.
Full compliance with Labour Act
Ability to sponsor work visas
Payroll and benefits under local law
Social Security Fund registration
This makes it ideal for outsourcing hubs and regional service centres.
Many investors hesitate due to myths.
“You need a local partner” – not always true
“Capital must be huge” – sector dependent
“Compliance is impossible” – manageable with experts
Clear guidance eliminates these barriers.
Despite its advantages, it may not suit everyone.
It may not be optimal if:
You only want market research
You need no local revenue
You are testing the market short-term
In such cases, a liaison office may suffice.
Among all types of companies in Nepal, the Private Limited Company offers the best balance of:
Legal certainty
Operational freedom
Investor protection
Long-term scalability
This is why it dominates foreign investment structures.
A European SaaS company wants a development centre.
They choose a Private Limited Company because it allows:
100% foreign ownership
Direct hiring of engineers
IP protection under company law
Profit repatriation
This structure supports growth without regulatory friction.
No. But it is the most common structure for revenue-generating operations and long-term presence.
Yes. A single foreign shareholder can own 100% of a Private Limited Company in approved sectors.
Typically three to five weeks, depending on approvals and documentation quality.
Yes. Profits, dividends, and capital can be repatriated after tax compliance.
For long-term operations, liability protection, and scalability, yes.
For foreign investors evaluating types of companies in Nepal, the Private Limited Company remains the gold standard.
It offers:
Legal protection
Business credibility
Hiring and visa flexibility
Clear exit and repatriation pathways
When set up correctly, it becomes a powerful foundation for success in Nepal.
Planning to register a Private Limited Company in Nepal?
Speak with an expert who understands foreign investment, compliance, and growth strategy.
👉 Book a consultation today and get a clear roadmap for your Nepal expansion.