Nepal allows foreign citizens, foreign companies and non-resident Nepalis to own a company in Nepal, provided the investment is approved under the Foreign Investment and Technology Transfer Act, 2075 (2019), commonly called FITTA, and the company is incorporated under the Companies Act, 2063 (2006). This guide, prepared by the corporate team at CompanyNP, answers the questions foreign investors ask most often about private limited (FDI) company registration in Nepal. All answers are drawn from Nepali statutes and from official government sources such as the Office of the Company Registrar, the Department of Industry and Nepal Rastra Bank.
What Is a Pvt. Ltd. (FDI) Company in Nepal and Which Laws Apply?
What does “Pvt. Ltd. (FDI) company” mean?
A Pvt. Ltd. (FDI) company is an ordinary private limited company registered in Nepal under the Companies Act, 2063, in which part or all of the share capital is held by a foreign investor with prior approval of the competent authority under FITTA. The company itself is a Nepali legal person with limited liability, its own name, its own registered office and perpetual succession. The foreign element is the shareholding, not the nationality of the company.
Which laws and rules govern FDI company registration in Nepal?
Several laws apply together:
- Companies Act, 2063 (2006) and the Companies Regulation, 2064 – incorporation, shares, directors, records and annual filings.
- Foreign Investment and Technology Transfer Act, 2075 (2019) and the Foreign Investment and Technology Transfer Rules, 2077 – foreign investment approval, permitted modes of investment, repatriation and visas.
- Industrial Enterprises Act, 2076 (2020) – classification and registration of industries.
- Income Tax Act, 2058 and Value Added Tax Act, 2052 – PAN registration, VAT registration and tax rates.
- Foreign Exchange (Regulation) Act, 2019 and Nepal Rastra Bank bylaws on foreign investment and foreign loan management – inflow of capital and outward remittance.
- Investment Board Act, 2068 – approval of very large projects.
The official Nepali and English texts of these laws are published by the Nepal Law Commission at lawcommission.gov.np.
Why do most foreign investors choose a private limited company?
A private limited company is the most common vehicle because liability is limited to the unpaid amount on shares, one hundred percent foreign shareholding is possible in most sectors, and shares can later be transferred or sold to new investors. Compared to a branch office of a foreign company (registered under the Companies Act), a private limited company can freely carry on its own approved business in Nepal without depending on a contract awarded in Nepal.
How many shareholders and directors are required?
Under the Companies Act, a private company may have from one up to one hundred and one shareholders and cannot offer shares or debentures to the public. At least one director is required, and foreign nationals may be directors. A company whose paid-up capital is ten million rupees or more must also appoint a company secretary. The company must maintain a registered office in Nepal and notify its address to the Office of the Company Registrar.
Who Can Invest, How Much, and In Which Sectors?
Who counts as a foreign investor under FITTA?
FITTA defines a foreign investor to include a foreign individual, a firm, a company or body corporate incorporated abroad, a foreign institutional investor, a non-resident Nepali and a foreign government or international agency making investment in Nepal. Both wholly foreign-owned companies and joint venture companies with Nepali partners are permitted.
What forms of foreign investment are recognised?
FITTA recognises equity share investment in convertible foreign currency, reinvestment of earnings or dividends, investment in shares or assets of an existing Nepali company, lease investment, investment through a venture capital fund, investment made by a foreign institutional investor, and investment linked to technology transfer. Technology transfer agreements covering trademarks, patents, technical know-how, franchising or management services must also be approved and recorded.
What is the minimum foreign investment amount?
Section 9 of FITTA empowers the Government of Nepal to fix a minimum limit of foreign investment by notice in the Nepal Gazette. By notice published in 2079 (2022), that minimum was set at twenty million rupees per foreign investor, and the Government has since issued further notices relaxing or removing the threshold for certain information technology related industries. Because these thresholds are set by Gazette notice rather than by the Act itself, investors should confirm the current figure with the Department of Industry before committing funds. This minimum applies to the foreign investor’s share capital contribution; it is separate from the authorized capital figure stated in the memorandum of association.
Which sectors are closed to foreign investment?
The Schedule to FITTA contains the restricted list, often called the negative list. It includes, among others, primary agriculture and livestock activities such as poultry, fisheries and bee keeping, personal service businesses, arms and ammunition, explosives and radioactive materials, real estate trading other than construction, retail trade with limited exceptions, internal courier service, money changer and remittance services, travel and trekking agencies, guide services and rural home stay, local restaurants other than those with star classification, and certain consultancy services including management, accounting, engineering and legal consultancy, where foreign investment is capped at fifty-one percent. Small and cottage industries are also reserved for Nepali investors. Sector-specific caps may also apply under laws governing banking, insurance, telecommunications, aviation and media.
Which authority approves the foreign investment?
The Department of Industry, under the Ministry of Industry, Commerce and Supplies, approves foreign investment up to the limit prescribed in the FITTA Rules, currently six billion rupees. Investment above that limit, and specified large projects such as major hydropower and infrastructure projects, is approved by the Investment Board Nepal under the Investment Board Act. FITTA and the Rules also provide for an automatic approval route for prescribed sectors and amounts, which reduces documentation for smaller investments. Applications are filed through the Department of Industry’s online foreign investment system.
What Is the Step-by-Step Registration Process?
Step one: how is the company name reserved?
The proposed name is reserved online through the Office of the Company Registrar portal at ocr.gov.np. The name must not be identical or misleadingly similar to an existing company, must not injure public morality or the reputation of the nation, and must end with the words “Private Limited”. Name reservation is normally decided within a few working days and remains valid for a limited period.
Step two: how is foreign investment approval obtained from the Department of Industry?
An application is submitted to the Department of Industry with the project report or business plan, details of the proposed shareholding, the investment amount, the identity and financial credibility documents of the investor, and a joint venture agreement where there is a Nepali partner. Where a technology transfer agreement is involved, a draft agreement is submitted for approval. The Department issues a foreign investment approval letter specifying the approved amount, the sector and the time frame within which the investment must be brought into Nepal. This approval must be obtained before the shares are allotted to the foreign investor.
Step three: how is the company incorporated?
With the approval letter in hand, the incorporation application is filed with the Office of the Company Registrar along with the memorandum of association and articles of association, details of shareholders and directors, and the corporate or personal documents of the investor. The Registrar reviews the file and issues the certificate of incorporation, after which the company legally exists and can open a bank account and hold property in its own name. Our team explains the drafting choices in more detail on our company registration in Nepal page.
Step four: how are PAN and VAT registration completed?
Every company must obtain a Permanent Account Number from the Inland Revenue Department through ird.gov.np. Value Added Tax registration at the rate of thirteen percent is required once the turnover thresholds prescribed in the Value Added Tax Act and Rules are crossed, and is compulsory from the start for businesses listed in the Rules. Excise or other licences may also apply depending on the product.
Step five: how is the industry or business registered?
If the approved activity is an industry under the Industrial Enterprises Act, it must be registered with the Department of Industry or the concerned provincial industry office before starting operations, and an industry registration certificate is issued. Businesses that are not industries register with the concerned ward or municipality, and regulated activities require a separate sectoral licence, for example from Nepal Rastra Bank, the Nepal Telecommunications Authority, the Department of Tourism or the Department of Drug Administration.
Step six: what role does Nepal Rastra Bank play?
Foreign investment must enter Nepal through the formal banking channel in convertible foreign currency. Under the Foreign Exchange (Regulation) Act and the foreign investment bylaws of Nepal Rastra Bank, the company applies to the central bank for approval and recording of the inbound investment. The record issued by Nepal Rastra Bank is the document that later supports repatriation of dividends, sale proceeds and loan repayment, so this step must never be skipped.
Step seven: how is the capital brought in and shares issued?
After the bank account is opened, the investor remits the approved amount from abroad. The bank issues a foreign currency inflow certificate, the company allots shares to the investor, updates its share register and files the shareholder details with the Office of the Company Registrar. The investment must be brought in within the time limit stated in the approval letter, and extension must be requested from the approving authority if that is not possible.
What Are the Documents, Costs, Taxes and Post-Registration Duties?
Which documents does a foreign investor normally need?
For a corporate investor: certificate of incorporation, memorandum and articles, board resolution approving the investment, latest audited financial statement, bank reference or credibility letter, power of attorney for the authorised representative, and passport copies of directors. For an individual investor: passport copy, bio-data, bank statement or financial credibility document and a citizenship or residency proof. Foreign documents are generally required to be notarised and authenticated by a Nepali diplomatic mission or otherwise legalised, and translations into Nepali or English may be required.
What are the government costs?
The main official costs are the Office of the Company Registrar incorporation fee, which is fixed by the Companies Regulation on a sliding scale according to authorized capital, the Department of Industry service fees for foreign investment approval and industry registration, notarisation and translation charges, and local level business registration fees. The current fee schedules are published on the Company Registrar and Department of Industry websites.
How long does the process take?
In practice, name reservation takes a few working days, foreign investment approval from the Department of Industry commonly takes two to four weeks depending on the completeness of the file and the sector, incorporation at the Company Registrar takes about a week, and tax registration takes a few days. Most straightforward projects complete registration and central bank recording within about one to two months.
What taxes apply after registration?
Corporate income tax under the Income Tax Act, 2058 is generally twenty-five percent, with a reduced rate for certain special industries such as manufacturing and a higher rate of thirty percent for banks, financial institutions, insurance, telecommunications, and tobacco and liquor businesses. Dividend distribution attracts a final withholding tax of five percent. Value Added Tax is thirteen percent, and customs duty applies to imported plant and machinery, subject to exemptions available under the Industrial Enterprises Act and the annual Finance Act.
What are the annual compliance duties?
The company must maintain statutory registers, get its accounts audited by a licensed auditor, hold shareholder meetings as required by its articles, and file audited financial statements and annual returns with the Office of the Company Registrar within the time prescribed in the Companies Act. Income tax returns are filed with the Inland Revenue Department after the end of each fiscal year. Registered industries file progress details with the Department of Industry, and companies with foreign investment report to Nepal Rastra Bank as required. Employers must also enrol staff in the Social Security Fund and obtain approval for foreign employees under the Labour Act, 2074.
How can profits and invested capital be taken out of Nepal?
Section 20 of FITTA allows a foreign investor to repatriate, in convertible foreign currency, the dividend received, the proceeds from the sale of shares or the sale of the whole industry, the amount received from capital reduction or liquidation, royalty or fees under an approved technology transfer agreement, lease rent, and the principal and interest of an approved foreign loan. Repatriation requires the approval or recommendation of the approving authority, the record from Nepal Rastra Bank, audited accounts and evidence that Nepali taxes have been paid.
What visa facilities are available to foreign investors?
FITTA provides that a foreign investor or the authorised representative and their dependent family may obtain a business visa for the period the investment is retained, and a non-tourist visa for a limited period to study or research investment opportunities. An investor who invests one million United States dollars or more, or the equivalent, may obtain a residential visa for as long as the investment is maintained. Our business visa support page explains the documents involved.
Why work with CompanyNP?
CompanyNP is a Kathmandu based consulting firm that handles foreign investment approval, incorporation, tax registration, central bank recording and ongoing compliance for foreign clients. Because thresholds, negative list entries and fees are periodically changed by Gazette notice or by the annual Finance Act, we verify every case against the current text of the law and the current notices of the Department of Industry before advising. This article is general information and not a substitute for case-specific legal advice.
Frequently Asked Questions
Can a foreigner own one hundred percent of a Nepali private limited company?
Yes. Full foreign ownership is allowed in most sectors after approval under FITTA. Some sectors are closed under the negative list, and a few, including specified consultancy services, cap foreign shareholding at fifty-one percent.
Is a local Nepali partner compulsory for FDI registration?
No. A Nepali partner is not compulsory except where the negative list or a sectoral law limits foreign shareholding. Many investors still choose a joint venture company for market access, local licensing knowledge and easier day-to-day administration.
What is the current minimum foreign investment in Nepal?
The minimum fixed by Gazette notice is twenty million rupees per foreign investor, with relaxations announced for certain information technology industries. Because the figure is set by notice, always confirm the latest position with the Department of Industry.
Must the foreign investor visit Nepal to register the company?
Not necessarily. Registration can be completed through a duly notarised and authenticated power of attorney given to an authorised representative in Nepal, although bank account opening procedures may require the investor’s presence or video verification.
Can an existing Nepali company receive foreign investment later?
Yes. A foreign investor may purchase shares of an existing Nepali company or subscribe to new shares, but prior approval under FITTA, share transfer approval, tax clearance and recording with Nepal Rastra Bank are all required before completion.
How long does an FDI company registration take in Nepal?
Most complete files finish in about one to two months, covering name reservation, Department of Industry approval, incorporation at the Company Registrar, PAN registration, industry registration and Nepal Rastra Bank recording of the inbound investment.