Foreign companies that want a legal presence in Nepal without setting up a new Nepali company usually choose one of two routes: a branch office or a representative (liaison/contact) office. Both are registered with the Office of the Company Registrar (OCR) under Chapter 14 of the Companies Act, 2063 (2006), which deals with foreign companies.
What Is a Branch Office and What Is a Representative Office in Nepal?
What does the Companies Act, 2063 say about foreign companies?
The Companies Act, 2063 defines a foreign company as a body corporate incorporated outside Nepal. Under Section 154 of the Act, a foreign company cannot carry on any transaction or establish a place of business in Nepal unless it is first registered with the Office of the Company Registrar. Registration of a foreign company is therefore not optional; it is a statutory duty, and carrying on business without registration exposes the company and its officers to penalties and to cancellation of registration under the Act.
The full text of the Act is published by the Nepal Law Commission at lawcommission.gov.np, and registration is administered by the OCR at ocr.gov.np.
How is a branch office different from a liaison or representative office?
The key legal difference is income. A branch office is allowed to carry out the specific business or transaction for which permission has been granted in Nepal, and it may earn income here. A representative office, also called a liaison office or contact office, is permitted only for non-income activities such as market study, coordination with the head office, communication with clients, quality supervision and promotional support. It cannot invoice customers in Nepal, and its running costs are met by remittances from the parent company.
| Point | Branch office | Representative (liaison) office |
|---|---|---|
| Income earning in Nepal | Allowed within the scope of the approval | Not allowed |
| Usual trigger | Contract, project award or sectoral approval | Head office decision to maintain a presence |
| Tax status | Normally a permanent establishment | Normally no taxable income, but records are required |
| Registering authority | Office of the Company Registrar | Office of the Company Registrar |
Is a branch office a separate legal entity?
No. Both a branch office and a representative office are extensions of the foreign parent company. They do not have separate share capital, separate shareholders or limited liability of their own. The parent company remains liable for the acts, contracts, debts and taxes of its Nepal office. If a foreign investor wants a separate legal entity with limited liability, the correct route is incorporation of a private limited company with foreign direct investment approval, which CompanyNP explains on its company registration in Nepal service pages.
Who Can Register and What Approvals Come First?
What prior permission is needed before OCR registration?
Section 154 of the Companies Act, 2063 links registration to permission. A foreign company must first obtain permission from the competent Nepali authority under the prevailing law to carry on its business or transaction in Nepal, and only then apply to the OCR. In practice, this prior permission may be:
- a contract or letter of award from a public body, such as a ministry, department, public utility or municipality, for construction, consultancy, supply or turnkey works;
- an approval from the Department of Industry for an industry or foreign investment matter under the Foreign Investment and Technology Transfer Act, 2075 (2019) and the Industrial Enterprises Act, 2076;
- a sector licence from a regulator, for example Nepal Rastra Bank for financial services, the Nepal Telecommunications Authority for telecom services, or the Civil Aviation Authority of Nepal for aviation-related services;
- an approval from the Investment Board Nepal for very large projects that fall within its statutory threshold under the Investment Board Act, 2068.
For a representative office that will not earn income, the OCR filing is normally supported by the parent company’s board decision and a written undertaking that no income-generating transaction will be carried out in Nepal.
Does FITTA, 2019 apply to a branch or representative office?
FITTA, 2075 (2019) governs foreign investment made in shares of a Nepali company, reinvestment, technology transfer, lease investment, venture capital and similar equity-type investment. A branch office set up to perform a contract is not an equity investment, so it is registered mainly under the Companies Act. However, if the foreign company intends to operate an industry or a regulated business in Nepal, FITTA and the approval system of the Department of Industry become relevant. Official procedures, forms, the automatic approval route and sector information are available at doind.gov.np.
Two FITTA points matter for planning. First, the Government of Nepal fixes a minimum foreign investment threshold per foreign investor by notice in the Nepal Gazette, and this threshold has been changed from time to time, including relaxations announced for the information technology sector. Second, FITTA contains a schedule of restricted sectors, commonly called the negative list, where foreign investment is not permitted. Applicants should confirm the current threshold and the current negative list on the Department of Industry website before committing.
Which sectors are closed to foreign investors?
The FITTA schedule restricts foreign investment in areas such as primary agriculture, small and cottage industries, personal service businesses, arms and ammunition, real estate trading, retail businesses below the prescribed size, and certain media and consultancy services beyond a fixed foreign shareholding cap. Because the schedule is amended by government notice, CompanyNP always verifies the current list before filing.
How Does the Registration Process Work at the Office of the Company Registrar?
Which documents must be submitted to the Office of the Company Registrar?
Section 155 of the Companies Act, 2063 lists the particulars and documents required with the application for registration of a foreign company. The usual document set is:
- the prescribed application form for foreign company registration;
- the certificate of incorporation or registration of the parent company;
- the memorandum of association and articles of association, or equivalent constitutional documents;
- a board resolution of the parent company approving the opening of a branch or representative office in Nepal and appointing the authorised representative;
- a power of attorney in favour of the local authorised representative;
- names, addresses, nationality and designations of the directors and officers of the parent company;
- the address of the registered office abroad and the proposed principal place of business in Nepal;
- a copy of the contract, licence or approval letter issued by the Nepali authority;
- the latest audited financial statements of the parent company;
- passport copy of the authorised representative, or citizenship certificate if the representative is Nepali;
- a description of the business to be carried on in Nepal and, for a liaison office, an undertaking of no income-generating activity.
Documents executed abroad must be notarised and authenticated according to OCR practice, usually through a Nepali diplomatic mission or through consular legalisation, and documents not in Nepali or English must be accompanied by a certified translation.
What is the step-by-step registration process?
- Obtain the underlying contract, licence or approval from the concerned Nepali authority.
- Prepare and legalise the parent company documents abroad.
- Reserve or confirm the name of the foreign company in the OCR system.
- File the application with the OCR within the statutory time limit set by Section 155, counted from the date the permission was obtained, so filing should not be delayed.
- Pay the registration fee prescribed under the Companies Regulations, 2064 and the OCR fee schedule.
- Respond to any OCR query and collect the certificate of registration of the foreign company.
- Complete post-registration steps: tax registration, bank account, local ward records and, where relevant, industry registration.
How long does registration take and what does it cost?
Where the permission letter and legalised documents are in order, OCR registration is usually completed within a few weeks. The government fee is fixed by the Companies Regulations, 2064 and the current OCR schedule, and it should be confirmed on the OCR website at the time of filing, since fee notices are updated periodically. Realistic timelines also depend on the sector regulator, because the prior approval stage is often longer than the OCR stage itself. CompanyNP provides a written timeline and fee estimate before engagement through its contact page.
Who must be appointed as the local authorised representative?
The Act requires the foreign company to name a person resident in Nepal who is authorised to accept notices, summons and documents on behalf of the company. This person may be a Nepali citizen or a foreign national residing in Nepal, and the appointment is made by board resolution and power of attorney. Any change in the representative, the office address, the directors or the constitutional documents of the parent company must be notified to the OCR within the time limit fixed by the Act.
What Are the Post-Registration, Tax and Closure Obligations?
Does a branch office pay income tax in Nepal?
Yes. A branch that carries on business in Nepal is generally treated as a foreign permanent establishment under the Income Tax Act, 2058 (2002). It must obtain a Permanent Account Number from the Inland Revenue Department, maintain books of account, deduct and deposit withholding tax, and file annual income tax returns. Business income is taxed at the applicable corporate rate, and the Income Tax Act also imposes a separate tax on income repatriated by a foreign permanent establishment. Value added tax registration under the Value Added Tax Act, 2052 applies if the office crosses the turnover threshold or falls in a compulsory registration category. Rates, forms and taxpayer portals are published at ird.gov.np.
Does a representative office need a PAN?
Yes. Even though a liaison office does not earn income in Nepal, it pays salaries, rent and service fees, so it must register for a PAN, deduct withholding tax at source, deposit it, and file the required statements and returns. Failing to register for tax is one of the most common compliance errors made by liaison offices.
What annual filings must be made to the Office of the Company Registrar?
Chapter 14 of the Companies Act, 2063 requires a registered foreign company to file, once every financial year, the audited accounts and reports of the parent company along with details of the transactions and financial position of its Nepal office, in the format the OCR prescribes. Changes in the parent company’s memorandum, articles, directors, registered office or authorised representative must also be reported. Non-filing can lead to fines and, ultimately, cancellation of registration.
What about foreign exchange, staff, visas and social security?
Funds are brought in and taken out through the banking channel in accordance with the Foreign Exchange (Regulation) Act, 2019 and the directives of Nepal Rastra Bank, published at nrb.org.np. Repatriation of profit, contract proceeds or liaison office surplus requires supporting tax clearance and bank documentation. Employment is governed by the Labour Act, 2074 and the Labour Rules, 2075, so employment contracts, minimum wage rules and Social Security Fund contributions apply to staff hired in Nepal. Foreign employees require a work permit from the labour authority and a non-tourist visa from the Department of Immigration.
How is a branch or representative office closed?
When the contract or approval ends, or the parent company decides to withdraw, the registration is cancelled under the foreign company provisions of the Companies Act, 2063. The company applies to the OCR with the board decision, evidence of completion or termination of the underlying permission, tax clearance from the Inland Revenue Department, settlement of employee dues, and closure of the local bank account. Registration may also be cancelled by the Registrar if the company stops business in Nepal, is dissolved abroad or repeatedly fails to file.
What mistakes should foreign companies avoid?
Common problems include applying to the OCR before obtaining the required sectoral permission, submitting documents without proper consular legalisation, letting a liaison office issue invoices, ignoring annual OCR and tax filings, and appointing an authorised representative who is not actually available in Nepal. Each of these can delay approval or trigger penalties.
Frequently Asked Questions
Can a representative office in Nepal sign contracts with customers?
No. A representative or liaison office may only conduct non-income activities such as coordination, market study and promotion. Contracts producing income in Nepal must be signed by the parent company through an approved branch or a registered Nepali company.
Is a minimum capital required for a branch office in Nepal?
The Companies Act, 2063 does not fix branch capital in the way FITTA fixes a minimum foreign investment threshold for equity investment. However, the concerned regulator or the contract awarding body may set financial capacity requirements before granting the underlying permission.
How long does branch office registration at OCR take?
Once the sectoral permission and legalised parent company documents are ready, the Office of the Company Registrar file is usually completed within a few weeks. Total project time depends mainly on the regulator issuing the prior approval or contract award.
Can a branch office open a bank account and hire staff?
Yes. After registration and PAN allocation, a branch office may open a Nepali bank account, hire local employees under the Labour Act, 2074, enrol them in the Social Security Fund, and sponsor work permits and non-tourist visas for approved foreign employees.
Does a foreign company need Department of Industry approval for a branch?
Only when the activity amounts to operating an industry or a business covered by the Foreign Investment and Technology Transfer Act, 2075. Contract-based branches usually rely on the awarding authority’s permission instead of Department of Industry approval.
Which is better, a branch office or a subsidiary company?
A branch suits time-bound contracts and keeps liability with the parent company. A subsidiary private limited company suits long-term operations, offers limited liability, and allows equity foreign direct investment with profit repatriation under FITTA and Nepal Rastra Bank rules.
This article is general legal information based on Nepali statutes and official government sources. Laws, thresholds and fees are amended from time to time, so confirm current requirements with the relevant authority or seek advice from CompanyNP before filing.