Joint Venture Registration

Nepal allows foreign companies and individuals to team up with Nepali partners and do business together. This partnership is commonly called a joint venture, or JV. But many investors are confused about one important point: there is no single law called the “Joint Venture Act” in Nepal. Instead, a joint venture takes its legal shape from the Companies Act, 2063, the Foreign Investment and Technology Transfer Act, 2075 (FITTA), the Public Procurement Act, 2063, and the tax laws.

This guide explains the two practical routes used in Nepal to set up a joint venture, the documents required, the approving authorities, and the compliance duties that follow.

What Is a Joint Venture Company in Nepal and Which Laws Apply?

What does a joint venture actually mean under Nepali law?

A joint venture is an arrangement where two or more parties, usually one foreign party and one Nepali party, combine capital, technology, or expertise for a shared business purpose. In Nepal, a JV can exist in two forms:

As an incorporated company, where the foreign and Nepali partners hold shares in a private limited company registered with the Office of the Company Registrar.
As an unincorporated, contract-based joint venture, formed by a joint venture agreement for a specific project, most often a government contract.

The Income Tax Act, 2058 supports the second form directly. Its definition of “entity” includes a joint venture, which means an unincorporated JV can obtain its own Permanent Account Number and file its own tax returns.

Which laws and authorities govern joint ventures?

Companies Act, 2063 – incorporation of private and public companies, and registration of foreign companies and branch offices.
Foreign Investment and Technology Transfer Act, 2075 – foreign investment approval, permitted and restricted sectors, and repatriation rights.
Foreign Investment and Technology Transfer Rules, 2077 – forms, procedures, and application formats.
Industrial Enterprises Act, 2076 – registration and classification of industries.
Public Procurement Act, 2063 and Public Procurement Regulations, 2064 – JV bidding for government contracts.
Local Government Operation Act, 2074 – business registration and business tax at the ward or municipality level.

The main regulators are the Department of Industry, the Office of the Company Registrar, the Inland Revenue Department, and Nepal Rastra Bank for foreign exchange approvals.

What are the two ways to register a joint venture?

Route one is the foreign direct investment route. The foreign and Nepali partners sign a JV agreement, obtain foreign investment approval, and then register a joint venture company. From that point onward, the process is the same as ordinary FDI company registration.

Route two is the contract-based route. A foreign company wins or expects to win a contract in Nepal, forms a JV with a Nepali firm through a JV agreement, registers that JV at the local ward office and with the tax office, and the foreign partner separately registers a branch office under the Companies Act.

How Is a Joint Venture Registered Through Foreign Direct Investment?

Who can invest and how much is required?

Under FITTA, a foreign individual, foreign company, non-resident Nepali, or foreign institutional investor may invest in Nepal. Foreign investment may be made by:

Subscribing shares in a new joint venture company;
Purchasing shares of an existing Nepali company, which converts it into a JV;
Reinvesting earnings, or investing through technology transfer and lease investment.

The Government of Nepal has fixed a minimum foreign investment threshold by notice in the Nepal Gazette, currently NPR 20 million per foreign investor, with relaxations announced for the information technology sector. Because this figure is fixed by gazette notice and can change, always confirm the current threshold on the Department of Industry website before signing a JV agreement.

Which sectors are closed or restricted for foreign joint ventures?

Schedule 1 of FITTA contains the negative list. Foreign investment is not allowed in areas such as:

Primary agriculture, poultry, fisheries, and beekeeping;
Cottage and small industries;
Personal service businesses such as hair cutting, tailoring, and driving training;
Retail trade, except chain retail operating in two or more countries;
Real estate business, arms and ammunition, and radioactive materials;
Travel agency, trekking agency, tour guide and Sherpa services;
Money transfer, remittance, and foreign exchange dealing;
Mass media in the Nepali language, and certain consultancy services beyond fifty-one percent foreign shareholding.

The consultancy restriction is the reason many management, engineering, accounting, and legal service providers must enter Nepal through a joint venture rather than a wholly owned subsidiary.

What should the joint venture agreement contain?

The JV agreement is the commercial backbone of the investment and is submitted to the Department of Industry along with the application. A well-drafted JV agreement generally covers:

Names, addresses, and nationality of the partners;
Total project cost, authorized and paid-up capital, and the shareholding ratio;
Timeline and method for bringing in the foreign investment;
Board composition, appointment of directors, and quorum;
Reserved matters requiring unanimous consent;
Technology transfer, royalty, or trademark licensing terms, if any;
Share transfer restrictions, pre-emption rights, and exit provisions;
Dispute settlement, governing law, and arbitration seat.

What is the step-by-step FDI joint venture registration process?

Reserve the proposed company name online through the Office of the Company Registrar system.
Sign the joint venture agreement between the foreign and Nepali partners.
Apply for foreign investment approval. The Department of Industry approves investment up to NPR 6 billion. Larger projects and specified infrastructure, including hydropower above 200 MW, fall under the Investment Board Nepal. An automatic route is also available for eligible sectors up to the limit prescribed in the Foreign Investment (Automatic Route) Procedure, 2078.
Register the joint venture company with the Office of the Company Registrar by filing the memorandum of association, articles of association, and consent of shareholders.
Obtain the Permanent Account Number from the Inland Revenue Office, and register for VAT where required by the Value Added Tax Act, 2052.
Register the industry with the Department of Industry under the Industrial Enterprises Act, 2076, and obtain sector licences where applicable.
Register the business at the local ward office or municipality under the Local Government Operation Act, 2074.
Open a bank account, obtain the foreign investment record and approval process with Nepal Rastra Bank, and bring the capital into Nepal through the banking channel.
Obtain the share certificate, capital verification, and record the inward remittance with the Department of Industry.

You can read our detailed walkthrough of the process at companynp.com.

Which documents are usually required?

Joint venture agreement, duly signed and notarized;
Board resolution of the foreign company approving the investment;
Certificate of incorporation, memorandum, and articles of the foreign company;
Passport copies of foreign individual investors and citizenship of Nepali partners;
Company profile, financial credibility certificate from the investor’s bank;
Project report or business plan with cost breakdown;
Power of attorney to the local representative;
Proposed memorandum and articles of association of the Nepali JV company.

Documents issued abroad should be notarized and, where required, authenticated by the Nepali diplomatic mission.

How Is a Contract-Based Joint Venture Registered With a Branch Office?

Why do government contracts often require a joint venture?

The Public Procurement Act, 2063 and the Public Procurement Regulations, 2064 permit bids by joint ventures. Standard bidding documents issued by the Public Procurement Monitoring Office require the bidders to submit the JV agreement with the bid, to nominate a lead partner authorized to bind all partners, and to accept joint and several liability for performance of the contract. In several categories of works, foreign contractors participate together with Nepali construction firms, which makes the JV structure the practical entry point for donor-funded roads, bridges, tunnels, transmission lines, and building projects.

Importantly, this kind of JV is project-specific. It is not incorporated as a company at the Office of the Company Registrar, and it dissolves when the contract obligations end.

How is the joint venture registered at the ward office?

Under the Local Government Operation Act, 2074, local levels have the power to register local businesses and collect business tax. For a contract JV, the usual sequence is:

Execute the joint venture agreement, stating the project name, partner shares, lead partner, office address, and liability clause;
Apply to the ward office of the municipality or rural municipality where the JV office is located, attaching the JV agreement, registration documents of both partners, tax clearance certificates, photographs, and rent agreement;
Pay the prescribed local business registration fee and obtain the business registration certificate;
Apply to the Inland Revenue Office for a separate PAN in the name of the joint venture, since the Income Tax Act, 2058 treats a joint venture as an entity;
Register for VAT and, for construction works, obtain or extend the construction business licence under the Construction Business Act, 2055.

How does the foreign partner register a branch office?

Section 154 of the Companies Act, 2063 requires a foreign company that intends to carry on business in Nepal to register a branch with the Office of the Company Registrar. The application must be filed within the statutory period after receiving permission or entering into the contract. Documents commonly required are:

Application in the prescribed form with the resolution of the parent company;
Certificate of incorporation, memorandum, and articles of the parent company, with Nepali translation;
Copy of the contract, agreement, or permission granted by the Nepali authority;
Details of the authorized representative in Nepal and a power of attorney;
Audited financial statements of the parent company;
Address of the principal place of business in Nepal.

A branch may only carry out the business permitted by the contract or approval. Section 155 makes clear that a liaison office cannot carry out any income-generating transaction in Nepal. Section 156 requires the foreign company to file annual accounts and returns with the Registrar.

What are the tax duties of a contract joint venture?

The JV files its own income tax return for the project, deducts tax at source on payments, and issues VAT invoices. The branch of the foreign company is taxed in Nepal on its Nepal-source income at the applicable corporate rate, and profits repatriated by a branch attract the prescribed withholding. Both the JV and the branch must renew local business registration and pay municipal business tax each fiscal year.

What Comes After Registration and Which Route Fits Your Project?

What are the ongoing compliance duties?

Hold the annual general meeting and file the annual return with the Office of the Company Registrar within the time fixed by the Companies Act, 2063.
File changes in directors, address, capital, and shareholding in the prescribed forms.
File income tax returns and audited financial statements with the Inland Revenue Department, and submit monthly or four-monthly VAT returns.
Submit annual progress and production details to the Department of Industry as required by the Industrial Enterprises Act, 2076.
Renew ward or municipality business registration and pay local taxes.
Maintain records of foreign currency inflow with the concerned bank and Nepal Rastra Bank.

How can profits and invested capital be taken out of Nepal?

FITTA guarantees repatriation of dividends, the proceeds of sale of shares, royalty received under a technology transfer agreement, lease rentals, and compensation received under law. Repatriation is done in the currency in which the investment was brought in, after obtaining approval from the Department of Industry and completing the foreign exchange facility process at Nepal Rastra Bank. Tax clearance and audited accounts are always required.

What visa facilities are available?

Foreign investors and their authorized representatives may obtain a business visa for the period the investment is retained, along with visas for dependent family members. A non-tourist visa may be issued while the investment is being made, and investors meeting the higher investment amount prescribed by FITTA may apply for a residential visa. Foreign employees require work permits and labour approval from the Department of Labour.

Which route should you choose?

Choose the FDI joint venture company route if you want a permanent presence, multiple projects, local hiring, brand building, and the ability to hold assets in Nepal. Choose the contract-based JV with branch registration if your work is tied to one government contract, has a fixed duration, and does not need share capital in Nepal.

CompanyNP assists foreign investors with name reservation, JV agreement drafting, Department of Industry approval, company and branch registration, PAN and VAT, ward registration, and repatriation support. Reach our team through companynp.com for a project-specific assessment.

Frequently Asked Questions

Can a foreigner hold 100 percent shares in a Nepali company?

Yes, in most open sectors full foreign ownership is allowed under FITTA. However, restricted sectors such as certain consultancy services cap foreign holding at fifty-one percent, which makes a joint venture with a Nepali partner necessary.

Is a joint venture agreement mandatory for FDI approval?

Yes, when two or more investors are involved, the Department of Industry requires the signed joint venture agreement showing shareholding, capital contribution, management rights, and dispute resolution, along with the standard foreign investment approval application documents.

Does an unincorporated joint venture need a PAN?

Yes. The Income Tax Act, 2058 treats a joint venture as an entity, so the JV obtains its own Permanent Account Number, files returns, deducts tax at source, and registers for VAT where the law requires it.

How long does joint venture registration take in Nepal?

Timelines depend on the sector and completeness of documents. Foreign investment approval and company registration together commonly take a few weeks, while industry registration, tax registration, ward registration, and capital inflow add further time.

Can a branch office do business beyond its contract?

No. Under the Companies Act, 2063, a registered branch may only carry out the business allowed by the permission or contract it registered with. A liaison office cannot conduct any income-generating transaction in Nepal.

Can foreign investors repatriate profits freely?

Repatriation is a statutory right under FITTA, but it is procedural. The investor must submit audited accounts, tax clearance, and board decisions, obtain Department of Industry approval, and complete the Nepal Rastra Bank foreign exchange process.