REGISTRATION OF SUBSIDIARY COMPANY IN NEPAL

What is a subsidiary company in Nepal?

A subsidiary company in Nepal is a separate legal entity that is controlled by another company, known as the parent company, where the parent generally owns more than 50 percent of the subsidiary’s voting shares, allowing control while maintaining separate legal status.

Why do companies register a subsidiary company in Nepal?

Companies register a subsidiary in Nepal to establish a lawful business presence, limit liability exposure, access the Nepali market, comply with local regulations, and operate independently while being controlled by the parent company.

Which authority is responsible for registering subsidiary companies in Nepal?

The Office of the Company Registrar (OCR) under the Ministry of Industry, Commerce, and Supplies is the primary authority responsible for subsidiary company registration.

Which other government authorities may be involved in the registration process?

Depending on the nature of the business and foreign investment involvement, the process may require coordination with multiple authorities, including:
• Department of Industry
• Nepal Rastra Bank
• Inland Revenue Department
• Department of Immigration
• Local Ward Office

What laws govern subsidiary company registration in Nepal?

Subsidiary companies are governed by several laws, including the Companies Act, 2063 (2006), Foreign Investment and Technology Transfer Act, 2075 (2019), Industrial Enterprises Act, 2076 (2020), Income Tax Act, 2058 (2002), Labor Act, 2074 (2017), and applicable foreign exchange regulations.

What is the step-by-step process to register a subsidiary company in Nepal?

The registration process generally involves the following steps:
• Reserving the company name with the Office of the Company Registrar
• Preparing the Memorandum and Articles of Association
• Obtaining foreign investment approval where applicable
• Submitting incorporation documents and government fees to the OCR
• Receiving the Certificate of Incorporation upon verification

How long does it take to register a subsidiary company in Nepal?

The registration process usually takes three to four weeks if documentation is complete, though it may extend to six to eight weeks in cases involving foreign investment approvals or regulatory review.

What documents are required for subsidiary company registration in Nepal?

Commonly required documents include:
• Company registration application form
• Name approval letter
• Memorandum and Articles of Association
• Board resolution of the parent company
• Parent company registration certificate
• Identification documents of shareholders and directors
• Registered office address in Nepal
• Bank certificate showing capital deposit
• Foreign investment approval, if applicable

What are the costs involved in registering a subsidiary company in Nepal?

Costs include government registration fees based on authorized capital, name reservation fees, stamp duties, tax registration fees, and legal or professional service fees, with total expenses typically varying depending on business size and investment structure.

What post-registration compliances must a subsidiary company fulfill?

After incorporation, the company must complete several compliance requirements, including:
• Permanent Account Number (PAN) registration
• VAT registration if applicable
• Opening a corporate bank account
• Registration with the Social Security Fund
• Obtaining sector-specific licenses
• Maintaining annual filings, audits, and statutory records

Who is eligible to establish a subsidiary company in Nepal?

Foreign companies, multinational corporations, joint ventures, Nepali companies, and eligible foreign investors may establish subsidiary companies, subject to sectoral restrictions and foreign investment policies.

Are there minimum capital requirements for subsidiary companies in Nepal?

Yes, minimum paid-up capital requirements apply and vary depending on the sector, business nature, and whether foreign investment is involved, as prescribed by applicable laws.

What are the advantages of registering a subsidiary company in Nepal?

Key advantages include limited liability, separate legal identity, lawful profit repatriation subject to regulations, market access, regulatory clarity, brand protection, and long-term business expansion opportunities.

How does a company become a subsidiary of another company?

A company becomes a subsidiary when another company acquires more than 50 percent of its shares, thereby gaining controlling power over management and decision-making.

Does a subsidiary company require additional licenses to operate in Nepal?

Yes, depending on the nature of its business activities, a subsidiary company may require additional sector-specific licenses or approvals from relevant authorities.

Whose approval is mandatory for subsidiary companies in the banking or financial sector?

Subsidiaries operating in banking or financial services must obtain approval from Nepal Rastra Bank, which regulates financial institutions in Nepal.

What are the key requirements for establishing a subsidiary company in Nepal?

Key requirements include majority ownership by the parent company, proper registration with the OCR, compliance with foreign investment laws, tax registration, labor law compliance, and fulfillment of sector-specific regulatory obligations.