Business entities in Nepal
Healy Consultants will assist our Clients with Nepal business setup after advising them on the optimum corporate structure. There are several ways of doing business in Nepal, the most common being the setting up of a limited liability company. Foreign entrepreneurs may also opt to set up a public limited company, a branch office or a representative office.
Nepal limited liability company (LLC)
- A Nepalese LLC is commonly used by entrepreneurs to setup an SME. An LLC must appoint at least 1 director and 1 shareholder who can be of any nationality. The minimum paid-up share capital required to complete the incorporation process is US$1;
- An LLC in Nepal must maintain its books of accounts either in English or Nepali at its registered office in Nepal. The accounts must be maintained according to the double entry system of accounting in accordance with the Nepal Accounting Standards issued by the Institute of Chartered Accountants of Nepal (ICAN). Annual financial statements must be prepared and an audit must be submitted every year. A Nepal LLC must appoint an auditor from the list of auditors provided by ICAN.
Nepal public limited company (PLC)
- This business entity requires a minimum capital of US$100,500 for incorporation. The minimum paid-up capital can be higher for companies in the business of banking and financial services. Furthermore, at least 7 shareholders and 3 directors must be appointed, who can be of any nationality. A Nepal PLC must also appoint a resident company secretary. Healy Consultants will provide this service to our Client if required;
- The Nepal PLC must hold its first annual general meeting within one year of incorporation and subsequently every year within six months after the close of its financial year. The board of directors must meet at least six times a year;
- Similar to an LLC, PLCs in Nepal must also submit annual financial statements and an auditor’s report every year.
Nepal branch office
A Nepal branch office can be 100% foreign owned. The scope of operations for this entity will be defined by the parent company. Also, the branch office must have a registered office in Nepal as well as a resident agent appointed by the company to receive summons, notices etc. on behalf of the company.
The Nepal representative office (liaison office)
While the Nepal representative office can be 100% foreign owned, it is not allowed to carry out any income generating activities in Nepal. All expenses of the representative office are required to be met through inward foreign currency remittances. Consequently, this entity can only engage in i) market research and ii) promoting the business of the parent company.
Table of comparison between Nepal entities
|How long to set the company up?||4 weeks||5 weeks||6 weeks||6 weeks|
|How long to open company bank account?||4 weeks||4 weeks||4 weeks||4 weeks|
|Wholly foreign owned?||Yes||Yes||Yes||Yes|
|Minimum paid - up share capital?||US$1||US$100,500||US$1||US$1|
|File annual tax return?||Yes||Yes||Yes||No|
|Tax registration certificate required?||Yes||Yes||Yes||No|
|Recommended corporate bank account?||Standard Chartered Bank Nepal Ltd||Nepal Bank Limited||Rastriya Banijya Bank Limited||Himalayan Bank Limited|
|Does our Client need to travel?||No||No||No||No|
|Resident director required?||No||No||No||No|
|Resident shareholder required?||No||No||No||No|
|Minimum directors allowed?||1||3||1||1|
|Tax identification code needed?||Yes||Yes||Yes||Yes|
|Nepal resident company secretary required?||No||Yes||No||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed?||No||No||No||Yes|
|Statutory audit required?||Yes||Yes||Yes||No|
|Nepal corporate tax rate?||20%-30%||20%-30%||20%-30%||0%|
|Annual financial statements required?||Yes||Yes||Yes||No|
|Regulated by?||Department of Industry Nepal||Department of Industry Nepal||Department of Industry Nepal||Department of Industry Nepal|
|Allowed to issue sales invoices?||Yes||Yes||Yes||No|
|Allowed to sign contracts?||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||No|
|Can rent an office space in Nepal?||Yes||Yes||Yes||Yes|
|Can buy Nepal property?||Yes||Yes||Yes||No|
|Total Nepal business setup costs in yr. 1?||US$14,500||US$15,500||US$16,800||US$17,200|
|Subsequent annual costs (incl. accounting and tax fee)?||US$3,400||US$3,400||US$3,400||US$3,400|
|Sample engagement invoice?|
Frequently asked questions
As a foreign company, what is the best option to enter the Nepalese market? Should I setup an LLC in Nepal or a branch office?Healy Consultants recommends setting up an LLC as a subsidiary of your foreign company, because this entity enjoys limited liability whereas the parent company would be fully liable for a branch office. A branch office also requires a resident agent whereas an LLC does not require resident directors.
Following Nepal company setup, can Healy Consultants help me fulfill all my accounting and reporting obligations in Nepal?Certainly. To support our Clients’ Nepal business setup, Healy Consultants will fulfill all your accounting and annual reporting duties. We also provide additional support services including finding physical office space, legal support and finding partners for your business.