Last updated: 5 November 2026. Author: Punya Khanal.
Investment company registration in Nepal is the process of establishing a company that is registered as an industry under Schedule 8, serial number 65 of the Industrial Enterprises Act, 2076 (2019) and that operates under the Investment Company Registration and Operation Guidelines, 2021 (the “Guidelines”), issued by the Ministry of Industry, Commerce and Supplies on 9 August 2021 (Shrawan 25, 2078 B.S.). It involves incorporation at the Office of the Company Registrar (OCR), industry registration at the Department of Industry (DOI), foreign investment approval where there are foreign shareholders and, above set thresholds, anti-money-laundering registration with the Securities Board of Nepal (SEBON).
This guide from Niti Partners & Associates, a law firm in Nepal, is written for Nepali promoters, foreign investors, foreign corporate groups and existing companies deciding whether this structure suits a planned investment and what each stage requires.
Key Takeaways
- Not every company that holds shares is an investment company. The NPR 1 billion minimum and the equity-only rule attach to registration under Schedule 8, serial number 65. In our view, an ordinary company incorporated under the Companies Act, 2063 can hold shares under its objects without that registration, so the choice between the two should be made before incorporation.
- Four separate steps are often confused: incorporation at OCR, industry registration at DOI, anti-money-laundering registration with SEBON and, for foreign investors, investment approval and recording. None replaces another, and SEBON registration is not a securities-market licence.
- Dividends to foreign shareholders bear 5% final withholding tax, and the treaty ceilings are not lower. Under the fifth amendment to the Foreign Investment and Foreign Loan Management Bylaw, 2021, dividends are repatriated through a commercial bank without prior Nepal Rastra Bank (NRB) approval.
What Is an Investment Company Under Nepalese Law?
An investment company in Nepal is a company that holds equity in other Nepali industries and is registered as an industry under Schedule 8, serial number 65 of the Industrial Enterprises Act, 2076, which classifies it as a service industry. The Guidelines require the sectors of investment to be specified before industry registration, a minimum investment of NPR 1 billion, and investment through share capital only. They also bar the company from banking functions.
An investment company is not a bank, a mutual fund, a venture capital or private equity fund, or a securities intermediary such as a broker or merchant banker. Those are regulated under separate regimes. For fund structures, see our page on private equity and venture capital.
The Guidelines were published in the Nepal Gazette on 9 August 2021 (Shrawan 25, 2078 B.S.). A later Gazette notice dated 2 March 2023 restates the conditions and adds a list of permitted sectors.
Do I Need an Investment Company or an Ordinary Holding Company?
You need an investment company only if you want a vehicle registered under Schedule 8, serial number 65. The NPR 1 billion minimum and the equity-only rule apply to that registration. They do not apply to every company that holds shares.
In our view, an ordinary company incorporated under the Companies Act, 2063 may hold shares in other companies if its memorandum so provides, without Schedule 8 registration, and nothing in the Guidelines makes Schedule 8 registration compulsory for every shareholder. The Guidelines do not state the point expressly, so the answer for a particular structure turns on the company’s objects, its principal activity and how it is registered as an industry. Confirm it with a corporate lawyer in Nepal before incorporation.
Feature | Investment company (Schedule 8) | Ordinary holding company | Ordinary FDI operating company |
|---|---|---|---|
Legal basis | Industrial Enterprises Act, 2076 and the Guidelines | Companies Act, 2063 | Companies Act, 2063; FITTA, 2075 |
Minimum capital | NPR 1 billion | No Schedule 8 floor | NPR 20 million for a foreign investor under FITTA |
Permitted activity | Equity investment in specified sectors | Shareholding as set by its objects | Operating a business |
Borrowing | No loans from Nepali banks | Ordinary company law | Ordinary company law |
Regulators | OCR, DOI, NRB, IRD; SEBON above thresholds | OCR, IRD; DOI and NRB if foreign-owned | OCR, DOI, NRB, IRD |
Legal Framework for Investment Companies in Nepal
The Industrial Enterprises Act creates the category, the Guidelines set its terms, and company, foreign investment, exchange control, tax and anti-money-laundering laws apply on top.
Instrument | What it governs | Official source |
|---|---|---|
Industrial Enterprises Act, 2076 (2019), Schedule 8, serial no. 65 | Creates the investment company category | |
Guidelines of 9 August 2021 (Shrawan 25, 2078 B.S.) | Capital, equity-only rule, prohibitions, foreign investment conditions | |
Gazette notice dated 2 March 2023 | Restated conditions and permitted-sector list | Nepal Gazette |
Companies Act, 2063 (2006) | Incorporation, dividends, annual filings | |
Foreign Investment and Technology Transfer Act, 2075 (2019) (FITTA) | Approval, capital infusion, repatriation | |
Foreign Investment and Foreign Loan Management Bylaw, 2021 | Recording and repatriation procedures | |
Assets (Money) Laundering Prevention Act, 2064, section 7(2) | Designation of SEBON as regulator for larger investment companies | |
Income Tax Act, 2058 (2002) | Corporate tax, withholding, treaties |
What Is the Minimum Capital for an Investment Company in Nepal?
The minimum capital is NPR 1 billion. The Guidelines require a minimum investment of NPR 1,00,00,00,000 for registration as an industry, and require that investment be made through share capital only. Bonds, debentures, credit facilities and loans are excluded, and activities permitted to banks and financial institutions are prohibited. Because an investment company may not borrow from Nepali banks, the whole amount must come from shareholders.
The NPR 1 billion figure is unrelated to the general FITTA minimum of NPR 20 million for foreign investors. That lower figure applies to ordinary foreign direct investment, not to this category.
How Do You Register an Investment Company in Nepal? Step by Step
Registration runs in seven steps: settle the structure, obtain foreign investment approval if there are foreign shareholders, incorporate at OCR, register for tax, register the industry at the DOI, infuse and record capital, and register with SEBON if the thresholds are met. The Guidelines require the sectors, currency and beneficial ownership details to be settled before industry registration. The “Basis” column separates what a legal instrument requires from what the authorities require in practice.
Step | Authority | What happens | Basis |
|---|---|---|---|
1. Structure | Promoters and counsel | Fix sectors, currency of investment, beneficial owners and funding for NPR 1 billion | Guidelines |
2. Foreign investment approval | DOI up to NPR 6 billion; Investment Board Nepal above | Application with investor documents, project proposal and financial credibility certificate | FITTA; sequencing before incorporation is administrative practice |
3. Incorporation | OCR | Name approval, memorandum and articles stating investment objects, certificate of incorporation | Companies Act, 2063 |
4. Tax registration | Inland Revenue Department | PAN registration | Income Tax Act, 2058 |
5. Industry registration | DOI | Registration under Schedule 8, serial no. 65, showing capital, sectors, currency and beneficial ownership | Industrial Enterprises Act, 2076; Guidelines |
6. Capital infusion and recording | Commercial bank; NRB | Inward remittance through banking channels and recording of the foreign investment | FITTA; Bylaw, 2021 |
7. SEBON registration | SEBON | Only if the thresholds in the SEBON section below are met | Government decision of 2 January 2025 |
For a domestic company the outline is the same without steps 2 and 6. Local business registration may also be required where a local government demands it.
How long does investment company registration take?
No statutory period applies. The time depends on the approval queue, how complete the beneficial ownership documents are, and bank procedures for capital infusion. Promoters should treat any fixed timeline offered to them with caution and should build the schedule around the DOI’s written position on capital.
What Documents Are Required to Register an Investment Company?
The Guidelines expressly require beneficial ownership details for foreign-invested investment companies. The other items reflect statutory forms and administrative practice; the DOI and OCR set the current checklists, and the checklists should be obtained from each office before filing.
Document | Purpose | Basis | FDI only? |
|---|---|---|---|
Notarised passport or citizenship copies of shareholders and directors | Identity | Practice | No |
Notarised incorporation documents of a corporate investor | Establishes the investor | Practice | Yes |
Project proposal and schedule of investment | Basis for approval | Practice | Yes |
Financial credibility certificate | Evidence of investor funds | Practice | Yes |
Ultimate beneficiary details | Required for foreign-invested investment companies | Guidelines | Yes |
Investor board resolution to invest in Nepal | Authority to invest | Practice | Yes |
Draft memorandum and articles with investment objects and sectors | Incorporation and sector specification | Companies Act; Guidelines | No |
PAN certificate and proof of paid-up capital | Industry registration and SEBON registration | Practice | No |
Can Foreigners Own an Investment Company in Nepal?
Yes. Foreign investors may own an investment company, subject to foreign investment approval under the Foreign Investment and Technology Transfer Act, 2075 (FITTA), sector eligibility, and the additional conditions the Guidelines set for foreign-invested investment companies.
Approval. The DOI approves foreign investment up to NPR 6 billion; Investment Board Nepal approves larger investments. A faster online route for a listed set of industries applies from 16 February 2026. For the general procedure see our foreign direct investment service page.
Which structure to use. A Nepali investment company with foreign shareholders is a local vehicle: the shareholders’ investment is approved and recorded, and the company itself must observe the Guidelines. An offshore holding company that invests directly in a Nepali operating company does not use the investment company category at all, so the Schedule 8 conditions do not apply to it. In our view, the approvals and tax consequences of the two routes differ materially and should be compared before a structure is chosen.
Beneficial ownership, territory and currency. The Guidelines require a foreign-invested investment company to state its ultimate beneficiaries, to state that it will invest only within Nepal, and to state whether the investment will be in foreign or Nepali currency.
Capital infusion and recording. Foreign capital must enter through banking channels and the investment must then be recorded with Nepal Rastra Bank under the Foreign Investment and Foreign Loan Management Bylaw, 2021. The recording certificate is needed for any later repatriation. The application for recording must be made within six months from receipt of the funds.
Downstream investments. The Guidelines require a foreign-invested investment company to follow the foreign investment approval process for investment in each sector. Check each acquisition for approval before signing, even where the investment company itself is already approved.
Does an Investment Company Need SEBON Registration?
Only if it meets a size threshold. By a Government of Nepal decision dated 2 January 2025 (Poush 18, 2081 B.S.) made under section 7(2) of the Assets (Money) Laundering Prevention Act, 2064, SEBON became the anti-money-laundering regulator for investment companies with paid-up capital of NPR 5 crore or annual transaction volume of NPR 10 crore. The thresholds are alternatives, so meeting either one triggers registration.
Registration is made under Rule 20 of the Assets (Money) Laundering Prevention Regulations, 2081, and calls for:
- an application, board and shareholder details, the updated memorandum and articles, the PAN certificate and chief executive details
- a certified board resolution and an authorisation letter
- audited financial statements with a report on annual transactions
- proof of paid-up capital
A company that has paid up the NPR 1 billion minimum already exceeds the NPR 5 crore paid-up threshold. A company with only part of its capital paid up should test its annual transactions against NPR 10 crore. Our article on SEBON registration requirements for investment companies in Nepal sets out the procedure and documents in more detail.
What is the difference between incorporation, industry registration, FDI approval and SEBON registration?
The four registrations do different jobs and are not interchangeable.
Registration | Authority | Function | Needed by every investment company? |
|---|---|---|---|
Incorporation | OCR | Creates the company under the Companies Act, 2063 | Yes |
Industry registration | DOI | Registers the company as a Schedule 8 industry | Yes |
Foreign investment approval | DOI or Investment Board Nepal | Approves foreign shareholding | Only with foreign investment |
AML/CFT registration | SEBON | Supervises money-laundering compliance | Only above the thresholds |
SEBON AML/CFT registration does not authorise any securities-market activity. A securities intermediary such as a broker or merchant banker is licensed under separate securities legislation, and an investment company that wished to carry on such an activity would need that licence. There is no general “investment company licence” beyond industry registration and, where it applies, SEBON registration.
What Can an Investment Company in Nepal Invest In, and What Is Prohibited?
An investment company may take equity in private companies in the permitted sectors. It may not buy listed shares on the secondary market, invest in real estate, lend, or borrow from Nepali banks. The table attributes each position to its instrument.
Activity | Position | Instrument |
|---|---|---|
Equity in private companies | Permitted in the specified sectors, through share capital only | Guidelines; the 2023 notice refers to promoter shares |
Listed shares bought on the secondary market | Prohibited | Guidelines |
IPO participation | Possible as a qualified institutional investor with SEBON’s prior approval | SEBON approval requirement |
Real estate, stock brokerage and market making | Investment in these sectors is prohibited | Guidelines |
Loans, bonds, debentures | Not a permitted mode of investment; no lending | Guidelines |
Borrowing | No loans from Nepali banks and financial institutions, and none backed by foreign bank guarantees | Guidelines |
Cooperatives, shell companies and shell banks | Prohibited | Guidelines |
Investment outside Nepal | A foreign-invested investment company must state that it will invest only in Nepal | Guidelines |
Permitted sectors | Sectors classified under the Industrial Enterprises Act and open under FITTA; the 2023 notice lists energy, transportation, communication, agriculture, tourism, manufacturing and processing, information technology and mineral extraction | 2023 notice; FITTA |
How Are Investment Companies Taxed, and How Are Dividends Repatriated?
An investment company pays corporate income tax at the general rate of 25%, and a dividend it pays bears 5% final withholding tax. A foreign shareholder can repatriate dividends through a commercial bank once the investment is recorded and tax is cleared; prior Nepal Rastra Bank approval is no longer required.
Corporate income tax
Schedule 1 of the Income Tax Act, 2002 fixes the general corporate rate at 25%, with 30% for certain financial businesses. Whether an investment company falls within the 30% category is not settled by the text of the Guidelines. In our view, the classification should be confirmed in writing with the Inland Revenue Department before incorporation. Dividends received from a Nepali company have already borne 5% final withholding at source, and the onward distribution of dividends derived after final withholding is not taxed again. Gains on the sale of shares follow separate rules that depend on listing status, holding period and the type of taxpayer. Our taxation service covers the wider rules.
Dividend withholding tax
A resident company distributing a dividend withholds 5% as final tax, for resident and non-resident shareholders alike. Because the tax is final, the shareholder does not add the dividend to its taxable income in Nepal.
Can a double taxation treaty reduce the withholding rate?
Rarely below 5%. Section 73 of the Income Tax Act, 2002 allows treaty terms to prevail where they are more favourable. The dividend ceilings in Nepal’s treaties, such as up to 10% for China and 5% or 10% for India depending on shareholding, are not lower than the domestic 5% rate. The value of a treaty lies instead in residence certification, the allocation of taxing rights, and credit for Nepalese tax in the investor’s home country, which depends on that country’s law. A treaty does not remove Nepalese tax automatically, and eligibility depends on tax residence and beneficial ownership.
Is prior NRB approval needed to repatriate dividends?
No. The fifth amendment to the Foreign Investment and Foreign Loan Management Bylaw, 2021 removes the requirement of prior NRB approval for repatriating dividends and share-sale proceeds. The investor applies to its commercial bank with supporting documents.
In practice, banks ask for evidence of the approved and recorded investment, the dividend resolution, audited accounts, proof of tax payment and a tax clearance certificate. Repatriation to a country other than the source country of the investment still requires NRB approval. A dividend may be declared only out of distributable profits and with the approvals the Companies Act, 2063 requires. Return of capital and sale proceeds are different from dividends and carry their own tax clearance and documents.
Issue | Position |
|---|---|
Corporate income tax | 25% general rate; classification to be confirmed |
Dividend withholding | 5% final tax, resident and non-resident |
Double taxation treaty | Ceilings are not below 5%; relief depends on residence and beneficial ownership |
Double taxation | Company tax, then withholding; home-country credit varies |
Dividend repatriation | Tax compliance, recorded investment, application to a commercial bank |
What Ongoing Compliance Does an Investment Company Have?
An investment company carries the obligations of any Nepali company: audited accounts, shareholder meetings and annual filings with OCR under the Companies Act, 2063, income tax returns, and withholding on dividends it pays. A foreign-invested company must also keep its records consistent with the DOI approval and the NRB recording, and report changes in beneficial ownership. A company above the SEBON thresholds must maintain its AML/CFT registration. Our company compliance service covers the annual renewal and update. Confirm current filing dates and forms with each authority.
What Are the Most Common Structuring and Registration Mistakes?
Mistake | Practical consequence |
|---|---|
Choosing Schedule 8 when a holding company would do | An unnecessary NPR 1 billion floor and equity-only restrictions |
Assuming every shareholder must be an investment company | Registering, funding and reporting for a category that did not apply |
Treating NPR 1 billion as committed capital without confirming | Registration stalls if the DOI expects paid-up capital |
Treating OCR registration as sufficient | No industry registration, so no lawful operation as an investment company |
Omitting foreign investment approval | Capital cannot be recorded and repatriation is exposed |
Missing SEBON registration above the thresholds | Non-compliance with anti-money-laundering rules |
Buying listed shares on the market or lending | A prohibited activity under the Guidelines |
Ignoring downstream approval | An acquisition made without the sector approval the Guidelines require |
Overlooking tax classification and repatriation steps | Unexpected tax cost or delayed remittance to the investor |
Frequently Asked Questions
Can an investment company buy listed shares, invest in real estate or lend?
It cannot buy listed shares on the secondary market, invest in real estate, or lend. It may invest only through share capital. See the table of permitted and prohibited activities above for the IPO position.
Can an investment company invest outside Nepal?
A foreign-invested investment company must state in its application that it will invest only in Nepal.
Does SEBON registration allow an investment company to deal in securities?
No. SEBON registration concerns anti-money-laundering supervision. Dealing in securities as an intermediary needs a separate licence under securities legislation.
Does an investment company need a separate licence from the DOI beyond industry registration?
No. There is no general investment company licence beyond industry registration under Schedule 8 and, where it applies, SEBON registration.
How Niti Partners & Associates Can Help
Niti Partners & Associates advises promoters and investors on structuring and registering an investment company in Nepal. Our work in this area typically covers:
- structuring the choice between an investment company and a holding company
- incorporation and DOI industry registration
- foreign investment approval, beneficial ownership disclosure and NRB recording
- SEBON registration and anti-money-laundering compliance
- tax classification, treaty and dividend repatriation questions
- continuing corporate and regulatory compliance
Investors who wish to test a proposed structure, ownership, capital plan and approvals against current law can discuss it with the firm through the contact page.