The Company Act, 2063 (2006) sets out how foreign companies may register and operate in Nepal — through a branch office or a liaison office. Section 154 provides the core framework, balancing the encouragement of foreign investment with regulatory control. This insight summarises the key provisions.
01Introduction
The Company Act, 2063 (2006) (the “Act”) outlines the regulations and procedures for the registration and operation of foreign companies in Nepal, via a branch office or a liaison office.
Section 154 sets out the regulatory framework — the requirements and procedures for registering branch and liaison offices, the scope of activities a registered foreign company may undertake, and transparency obligations through proper display of information. The Act aims to strike a balance between encouraging foreign investment and ensuring regulatory control over foreign-company activity in Nepal.
02Registration of a foreign company
Under Section 154(1), a foreign company may not conduct business or transactions in Nepal without registering a branch office or establishing a liaison office. Investing in shares, lending money or participating in company operations with approval from the relevant authorities does not, by itself, amount to “conducting business” for this purpose.
Where a foreign company transacts through an office, appoints a person for regular contact, or avails services in Nepal for one month or more, it is treated as conducting a transaction or establishing an office.
Application & documents
A branch or liaison office is registered by applying to the Office of the Company Registrar (OCR) with the prescribed permissions, fees and documents, including:
- permission from the competent authority to conduct business in Nepal (a selection or contract with a competent body may count as permission — though the Act does not clarify whether private entities qualify, which can cause practical difficulty);
- charter, certificate of incorporation, Memorandum and Articles of Association, with Nepalese translations;
- details of the registered office, principal place of business, date of incorporation, paid-up capital and major objectives;
- information on directors, managers, company secretaries or main officers and their citizenship;
- the person authorised to receive summons or notices in Nepal;
- address of the principal place of business and proposed investments and transactions;
- the proposed date for commencing transactions;
- a Power of Attorney executed per the home country’s law, stating that communication to the representative binds the company;
- a declaration confirming the accuracy of the information.
On receiving the application, the OCR must make necessary inquiries and register the company, issuing a certificate within thirty days (s.154(4)); if registration cannot be completed, reasons must be communicated within thirty days (s.154(5)).
03Scope of registered activities
A registered foreign company may carry on the same type of business as it does in its home country or country of incorporation (s.154(8)). It is not permitted to issue shares or debentures within Nepal (s.154(11)).
04Compliance
Registered foreign companies must display a name board at their place of business showing the country of establishment and the Nepalese registration number, and include the same on bills, receipts, invoices and letterheads (s.154(9)).
Financial-reporting obligations include:
- preparing an annual financial statement, balance sheet and profit-and-loss account reflecting transactions in Nepal;
- submitting the financial statement, audit report and directors’ report within six months of the financial year-end, with any documents required under home-country law;
- including particulars such as properties, cash held with Nepalese banks, loans and liabilities, and payments to employees or consultants;
- providing authentic translations of any documents not in Nepali or English.
05Cancellation of registration & winding up
Section 158 governs cancellation and winding up:
- a foreign company may apply to cancel its registration if it ceases operations in Nepal or its activities are prohibited;
- the application must include fees and evidence that the company has no outstanding liabilities in Nepal;
- if liquidation proceedings are initiated abroad, the authorised representative must inform the OCR and the public through a newspaper notice;
- where operations cease due to liquidation, the company must comply with the prevailing insolvency law for its transactions in Nepal.
06Transitional provision
Foreign companies already carrying on business or operating a liaison office in Nepal at the commencement of the Act were required to register within six months of commencement (s.154(12)).