Nepal provides several business forms for investors, of which the main forms include:
- Company (Private Limited Liability Company or Public Limited Liability Company)
- Joint Venture
- Partnership (General Partnership)
- Sole Proprietorship
- Foreign Business (Subsidiary or Branch or Representative Office)
Company
Companies can be formed as Limited Liability Companies ('LLCs') which can be private or public.
The key aspects of a Private LLC include:
- Shareholders' liability is limited to their contribution in the company
- Minimum capital requirement is equivalent of USD 1
- Minimum 1 shareholder and 1 director (individual) are required
- Shareholders and directors can be of any nationality and need not be resident in the country
- Shareholder can be an individual or a company
- Statutory audit is mandatory
The key aspects of a Public LLC include:
- Shareholders' liability is limited to their contribution in the company
- Minimum capital requirement is NPR 10 million
- Minimum 7 shareholders and 3 directors (individual), of any nationality, are required
- Shareholders can be of any nationality and need not be resident in the country
- Shareholder can be an individual or a company
- Statutory audit is mandatory
- Mandatory to appoint a resident company secretary
- Shares can be offered to the public
Joint Venture
Joint ventures can be formed in Nepal between natural persons or legal entities by agreement to pursue a common business goal. A foreign entity can also be a party to a joint venture, subject to certain restrictions. A joint venture may be set up either as a Partnership or a Private or Public LLC.
Partnership
A partnership is formed when two or more persons agree to carry on a business for profit as co-owners. Partnerships can only be formed as general partnerships. Under general partnership, the partners are jointly and severally liable for the obligations of the partnership firm.
Sole Proprietorship
A sole proprietorship is formed by an individual who is liable for all the debts and obligations of the company.
Foreign Business (Subsidiary, Branch, Representative Office)
Foreign companies can conduct their operations in Nepal through the constitution of a Subsidiary or Branch Office or a Representative Office. A Subsidiary can be formed as a private or public LLC with 100% foreign holding, subject to certain restrictions.
Branch is not considered as a separate legal entity in Nepal. Its operations are pre-defined by the foreign parent company. Branch Office is required have a registered office and appoint a resident representative, on behalf of the foreign parent company, in Nepal.
Representative Office is not regarded as separate legal entity in the country. It is not permitted to carry out business or commercial activities in the country. It is only permitted to conduct market research and to promote products and services of the parent company within Nepal.