If you are a foreign company planning to enter Nepal, the Company Act Nepal is the first law you must understand. It governs how companies are formed, operated, regulated, and closed in Nepal.
In simple terms, the Company Act Nepal sets the ground rules for doing business legally. It defines company types, shareholder rights, director duties, compliance obligations, and penalties. This guide explains everything in clear language so you can make confident, low-risk decisions before investing.
The Company Act Nepal (formally the Companies Act 2063) is the primary corporate law of Nepal. It applies to both domestic and foreign-owned companies.
The Act ensures:
Transparency in company formation
Protection of shareholders and creditors
Accountability of directors
Orderly regulation by government authorities
For foreign investors, this law works alongside Nepal’s foreign investment regulations. However, company incorporation itself is governed by the Company Act Nepal.
Foreign companies often underestimate the importance of local company law. In Nepal, non-compliance can delay operations, freeze bank accounts, or block profit repatriation.
The Company Act Nepal matters because it:
Determines which company structures foreigners can use
Defines ownership and capital rules
Sets annual filing and audit obligations
Regulates director appointments and powers
Understanding it early reduces legal risk and speeds up market entry.
All company registrations and compliance filings are handled by the Office of the Company Registrar (OCR) under the Ministry of Industry, Commerce and Supplies.
The OCR:
Incorporates companies
Maintains public company records
Enforces compliance and penalties
Approves structural changes
Foreign companies must interact with the OCR throughout their lifecycle in Nepal.
The Company Act Nepal recognizes several company structures. For foreign investors, only some are practical.
Private Limited Company (Pvt. Ltd.)
Public Limited Company
Non-profit company
Branch Office (via separate laws)
Liaison Office (via separate laws)
In over 90% of cases, foreign companies choose a Private Limited Company due to flexibility and control.
Under the Company Act Nepal, a private limited company:
Can have 1–101 shareholders
Restricts share transfer
Limits liability to share capital
Operates as a separate legal entity
Foreign shareholders can own up to 100%, subject to foreign investment approval under applicable laws.
Here is what the law requires at incorporation.
Unique company name approval
Memorandum of Association (MOA)
Articles of Association (AOA)
Registered office address in Nepal
Minimum share capital declaration
Appointment of directors
The Company Act Nepal does not mandate a fixed minimum capital for most sectors. However, foreign investment laws may impose thresholds.
The Company Act Nepal clearly separates ownership and management.
Minimum one director required
Directors can be foreign nationals
Duties include fiduciary responsibility and compliance
Can be individuals or corporate entities
Foreign shareholders allowed
Liability limited to unpaid shares
Directors are personally liable for fraud and statutory violations.
The Act imposes clear responsibilities on companies.
Maintain statutory registers
File annual returns with OCR
Appoint an auditor
Conduct annual general meetings
Update OCR on changes
Failure to comply leads to monetary penalties and potential deregistration.
Foreign companies often struggle here. The Company Act Nepal requires:
Annual financial statements
Auditor’s report
Annual return filing
Updates on directors and shareholders
Compliance is annual, not optional.
The Act includes strict enforcement provisions.
Late filing penalties
Fines on directors
Suspension of company operations
Blacklisting for repeat non-compliance
Penalties increase with duration of default.
The law provides strong investor safeguards.
Legal recognition of shareholding
Court-enforceable rights
Transparency through public records
Defined exit and liquidation processes
These protections increase investor confidence and legal certainty.
| Aspect | Company Act Nepal | Foreign Investment Laws | Labor Laws |
|---|---|---|---|
| Governs incorporation | Yes | No | No |
| Regulates ownership | Partially | Yes | No |
| Covers employment | No | No | Yes |
| Applies to all companies | Yes | No | Yes |
Insight: The Company Act Nepal is the foundation. Other laws build on it.
Choose company structure
Draft MOA and AOA under the Act
Obtain name approval
File incorporation application
Receive company registration certificate
Complete post-registration compliance
This sequence ensures legal validity.
Avoid these frequent errors:
Using generic MOA templates
Ignoring annual filing deadlines
Appointing nominee directors without clarity
Confusing Company Act compliance with tax compliance
Each mistake can delay operations.
While the Company Act Nepal is public, interpretation matters. Local advisors ensure:
Correct structuring
OCR-accepted documentation
Timely compliance
Lower legal risk
This is especially critical for foreign-owned entities.
Yes. Any company incorporated in Nepal must comply with the Company Act Nepal, regardless of foreign ownership.
Yes, the Act allows full foreign ownership. However, sectoral rules under foreign investment laws may apply.
No. The Act does not mandate a Nepali director, though banks or regulators may request local representation.
Penalties include fines, late fees, director liability, and potential deregistration for serious breaches.
It enables incorporation. Additional licenses, tax registration, and sector approvals may be required.
The Company Act Nepal is the backbone of corporate operations in Nepal. For foreign companies, understanding it early reduces risk, saves time, and ensures smooth expansion. When combined with proper advisory support, it creates a clear and secure entry path into the Nepali market.
Planning to register a company in Nepal?
Speak with our Nepal corporate compliance experts for end-to-end support, from incorporation to ongoing compliance under the Company Act Nepal.