Subsidiary Company Registration in Nepal

A subsidiary company is a company controlled by another company, known as its parent or holding company. In Nepal, a subsidiary is generally incorporated as a separate company under the Companies Act, 2063. The parent company may control the subsidiary through majority shareholding or control over its board of directors.

The Companies Act, 2063 defines a parent company as a company that controls a subsidiary and a subsidiary as a company under the control of a parent company. The Act recognizes control through majority shareholding or direct or indirect control over the formation of the board of directors.

A subsidiary registered in Nepal has its own legal identity, assets, liabilities, management and business activities. Where a foreign company establishes or controls a subsidiary in Nepal, foreign investment approval and other regulatory requirements may also apply.

What Is A Subsidiary Company In Nepal?

A subsidiary company is a separate company controlled by another company. The controlling company is commonly called the parent company. The parent company may be a Nepali company or, subject to applicable laws, a foreign company.

Under the Companies Act, 2063, a company may be treated as a subsidiary when another company controls it. Such control can arise when the parent company holds the majority of shares or has direct or indirect control over the composition of the subsidiary’s board of directors.

A subsidiary is legally different from a branch office. A branch is an extension of the foreign company, while a subsidiary is separately incorporated in Nepal. Therefore, the subsidiary has its own certificate of incorporation and operates under its own corporate name.

Why Do Companies Establish Subsidiaries In Nepal?

Companies may establish subsidiaries in Nepal to carry out business through a separately incorporated company. A subsidiary can have its own management, assets, contracts, employees, bank accounts and business operations, subject to applicable law.

For foreign investors, establishing a Nepali subsidiary can provide a local corporate structure through which approved investment and business activities can be conducted. The Department of Industry states that foreign investment in Nepal is regulated mainly under the Foreign Investment and Technology Transfer Act, 2075 (2019) and the Industrial Enterprises Act, 2076 (2020).

The subsidiary structure may also be used for joint ventures where a foreign investor participates together with a Nepali company or other investors.

However, the parent company cannot assume that every business activity is automatically permitted merely because a subsidiary has been incorporated. Sector-specific approval and foreign investment restrictions may apply.

Who Can Establish A Subsidiary Company?

A subsidiary can be established by a parent company or other eligible shareholders in accordance with the Companies Act and applicable sectoral laws.

For a private company, Nepal’s company-registration system allows a single shareholder company as well as companies with multiple shareholders. The OCR currently states that a private company may have up to 101 shareholders and that a single-shareholder company is also recognized as a private company.

A public company generally requires at least seven founders under Section 3 of the Companies Act, 2063, subject to the exceptions provided by law.

If the parent company or shareholders are foreign, the foreign investor must comply with the applicable foreign investment approval requirements before making the investment.

What Are Requirements For Subsidiary Registration?

The requirements depend on whether the subsidiary will have only Nepali shareholders, foreign shareholders, or both. The proposed business activity also affects the approvals and documents required.

For a company involving foreign investment, the OCR currently requires additional documents. These include evidence of permission to invest in Nepal, and, where the foreign investor is a company, its incorporation certificate and relevant corporate decision concerning the investment.

The general requirements include:

Approval of the proposed company name.
Application for company registration.
Memorandum of Association.
Articles of Association.
Details of shareholders.
Details of directors.
Identification documents of founders.
Details of registered office.
Details of proposed business objectives.
Foreign investment approval, where applicable.
Corporate documents of the parent company.
Board decision of the parent company approving the investment.
Nomination of the parent’s representative, where required.
Passport or identification documents of foreign representatives.
Sector-specific licence or approval, where applicable.

The exact documents should be checked against the current OCR requirements and the nature of the proposed business.

Where Can You Register A Subsidiary Company?

A subsidiary incorporated as a Nepali company is registered with the Office of the Company Registrar (OCR) under the Companies Act, 2063.

The OCR handles registration of private and public companies and provides the company-registration process and document requirements.

Where the subsidiary involves foreign investment, the process may also involve the Department of Industry (DOI) or another competent authority. The DOI states that it administers foreign investment under the Foreign Investment and Technology Transfer Act and provides foreign-investment-related services.

For regulated industries such as banking, insurance, securities and other specially regulated sectors, approval from the relevant regulator may also be required.

How To Start Subsidiary Company Registration?

The first step is to determine the ownership structure and business activities of the proposed subsidiary. This is particularly relevant when the parent company is located outside Nepal because foreign investment approval may be required.

For a foreign-invested subsidiary, the Department of Industry describes the general sequence as:

Apply for foreign investment approval.
Incorporate the company with OCR.
Complete tax registration.
Register the industry with the relevant authority.
Complete other sector-specific approvals.
Begin permitted business activities.

The DOI’s current foreign-investment information identifies FDI approval, company incorporation, tax registration and industry registration as the main sequence for a new foreign-invested industry.

The exact sequence may differ depending on the nature of the business and whether the activity requires a licence from another government authority.

What Documents Are Required For Subsidiary?

The documents depend on the ownership and structure of the subsidiary. A subsidiary controlled by a foreign parent company normally requires documents proving the identity and legal status of the parent company.

For foreign-invested companies, the OCR currently lists documents such as foreign investment permission, the foreign corporate investor’s incorporation certificate, its decision concerning the investment, and documents identifying its authorized representative.

Common Documents

Proposed company name approval.
Registration application.
Memorandum of Association.
Articles of Association.
Shareholders’ identification documents.
Directors’ identification documents.
Registered-office details.
Parent company’s certificate of incorporation.
Parent company’s constitutional documents.
Parent company’s board resolution approving investment.
Authorization or nomination of the parent company’s representative.
Passport of the foreign representative, where applicable.
Foreign investment approval.
Joint Venture Agreement, where applicable.
Project report or business proposal.
Financial credibility documents, where required.
Sector-specific approval or licence, where applicable.

Foreign documents may also require authentication and Nepali translation according to the applicable filing requirements.

How Does Foreign Investment Affect Registration?

Foreign investment changes the registration process because the investment must comply with Nepal’s foreign investment laws in addition to company law.

The Department of Industry states that foreign investment is regulated under the Foreign Investment and Technology Transfer Act, 2075 and the Industrial Enterprises Act, 2076.

For a new foreign-invested company, the DOI lists documents such as:

Project report.
Joint Venture Agreement where there is more than one investor.
Local partner’s citizenship or company incorporation documents.
Foreign investor’s passport or company incorporation documents.
Foreign investor’s bio-data or company profile.
Financial credibility certificate from the investor’s home-country bank.
Authorization letter where required.

After approval, the company can proceed with incorporation and other required registrations.

How Long Does Subsidiary Registration Take?

The time depends on whether the subsidiary involves foreign investment, whether the business requires additional approval, and whether the documents are complete.

For ordinary company incorporation, Section 5 of the Companies Act provides that the OCR should register the company and issue the registration certificate within seven days after receiving the application, subject to the statutory requirements and payment of the required fee.

A foreign-invested subsidiary can take longer because foreign investment approval, company incorporation, tax registration, industry registration and sector-specific approvals may all be involved.

The DOI’s current foreign-investment process separately identifies foreign investment approval and subsequent company incorporation and industry registration stages.

Therefore, the seven-day company-registration period should not be treated as the total time required for establishing a foreign-invested subsidiary.

How Much Does Subsidiary Registration Cost?

There is no single registration fee that applies to every subsidiary. The OCR registration fee depends mainly on the type of company and the proposed or authorized capital structure applicable to the company.

For example, the OCR currently publishes different fee schedules for private and public companies. A private company’s registration fee varies according to its authorized capital, while public-company fees follow a separate schedule.

Additional costs may arise from:

Foreign investment approval.
Industry registration.
Document authentication.
Translation.
Legal and professional services.
Government licences.
Tax-related compliance.
Environmental approvals, where applicable.
Other sector-specific approvals.

Because fee schedules and government notices can change, applicants should check the latest OCR and relevant authority notices before filing.

What Government Fees Apply During Registration?

The government fees depend on the legal structure of the subsidiary and its capital.

For a private company, the OCR currently publishes a graduated registration fee schedule based on authorized capital. Public companies have a separate fee schedule.

The subsidiary itself does not have a separate general “subsidiary registration fee.” It is registered according to the applicable private or public company category.

Where foreign investment is involved, other government fees may apply for industry registration, licences or regulatory approvals.

Therefore, the total government cost should be calculated based on:

Cost Area	Authority/Requirement
Company registration	Office of Company Registrar
Foreign investment approval	Department of Industry, where applicable
Industry registration	Relevant authority
Tax registration	Inland Revenue Department
Sector licence	Relevant regulator
Environmental approval	Relevant authority, where applicable

The actual amount depends on the proposed business and capital structure.

How Is A Subsidiary Different From A Branch?

A subsidiary and a branch office are different legal structures.

A subsidiary is separately incorporated in Nepal. It has its own legal personality, shares, directors, assets and liabilities. Its parent company controls it through shareholding or board control.

A branch office, by contrast, is an extension of the foreign company and is registered as a foreign company office rather than being incorporated as a new Nepali company.

The distinction matters because the Companies Act separately regulates Nepali companies and foreign companies. The Act defines a foreign company as a company incorporated outside Nepal, while a subsidiary is a company controlled by its parent company.

Basis	Subsidiary	Branch Office
Legal identity	Separate company	Extension of foreign company
Incorporation	Nepali company incorporated under Companies Act	Foreign company registered in Nepal
Ownership	Shares held by parent/investors	Belongs to foreign parent
Management	Own board and management	Managed under parent structure
Liability	Generally separate from parent	Connected directly with parent
Shares	Has its own shares	Does not issue separate Nepali shares
Main law	Companies Act and other applicable laws	Foreign-company provisions

The appropriate structure depends on the proposed activities, ownership and regulatory requirements.

What Is The Role Of Parent Company?

The parent company controls the subsidiary according to the ownership and governance arrangement. Under Section 142 of the Companies Act, a parent company may control a subsidiary by holding a majority of its shares or through direct or indirect control over the formation of its board of directors.

The parent company may therefore participate in major corporate decisions, appoint directors according to the company’s constitutional documents and exercise shareholder rights.

However, the subsidiary remains a separate legal entity. Its corporate activities should be conducted in its own name and according to its Memorandum of Association, Articles of Association and applicable laws.

The parent company’s ownership does not remove the subsidiary’s own corporate compliance responsibilities.

What Are Subsidiary Company Compliance Requirements?

After registration, the subsidiary must comply with the Companies Act and other laws applicable to its business.

Common compliance areas include:

Maintaining statutory company records.
Holding required meetings.
Maintaining accounting records.
Preparing financial statements.
Completing statutory audits.
Filing required documents with OCR.
Completing tax filings.
Maintaining PAN and VAT compliance where applicable.
Renewing sector-specific licences.
Complying with labor laws.
Following foreign investment rules where applicable.
Reporting changes in directors or shareholders.
Complying with applicable industry requirements.

Where the subsidiary has foreign investment, additional requirements concerning foreign investment, foreign currency, repatriation and other matters may apply.

The DOI’s current information also provides separate procedures for industry registration after foreign investment approval.

Can A Foreign Company Own A Nepal Subsidiary?

A foreign company can participate as an investor in a Nepali company subject to Nepal’s foreign investment laws and applicable restrictions.

The OCR specifically provides additional requirements for companies established with foreign citizens or foreign legal entities as founders or shareholders. For a foreign corporate investor, the OCR lists documents such as the foreign company’s registration certificate, its decision regarding the investment, and nomination of a representative.

The Department of Industry also handles foreign investment approval and identifies the required documents for foreign investment in new industries.

However, foreign investment is not permitted in every business activity. The proposed sector, investment amount, ownership structure and applicable law must therefore be reviewed before incorporation.

What Is The Industry Registration Process?

If the subsidiary will operate as an industry requiring registration with the Department of Industry, industry registration is completed after the required foreign investment approval and company incorporation.

The DOI currently states that, after obtaining foreign investment approval, the industry should be registered with the DOI within 35 days. The DOI lists the foreign investment approval letter, company incorporation certificate, Memorandum of Association, Articles of Association and applicable environmental study documents among the required documents.

The general sequence is:

Foreign Investment Approval → Company Incorporation → Tax Registration → Industry Registration → Other Required Approvals → Business Operation

The exact requirements can vary depending on the industry.

What Is The Role Of Department Of Industry?

The Department of Industry plays a major role where a subsidiary involves foreign investment or industrial activity.

The DOI identifies itself as the government agency responsible for administration and implementation of foreign investment under the relevant foreign investment law.

The DOI also operates a One Stop Service Center, which provides various investment-related services from one location, including foreign-investment approvals, industry registration and other investor services.

Therefore, a foreign parent company planning to establish a subsidiary should determine whether DOI approval is required before completing the company-registration process.

What Is The Checklist For Subsidiary Registration?

A proper checklist helps the parent company and proposed shareholders prepare the registration documents before filing.

Subsidiary Registration Checklist

Select the proposed company structure.
Decide the ownership and shareholding structure.
Select a suitable company name.
Define the company’s objectives.
Check foreign investment eligibility.
Obtain foreign investment approval if required.
Prepare the project report where required.
Prepare the Memorandum of Association.
Prepare the Articles of Association.
Collect parent-company corporate documents.
Prepare the parent’s board resolution.
Nominate an authorized representative.
Prepare shareholder and director documents.
Arrange required translations and authentication.
Submit the incorporation application to OCR.
Pay applicable registration fees.
Obtain the certificate of incorporation.
Complete PAN and other tax registrations.
Complete industry registration where required.
Obtain sector-specific licences.
Maintain ongoing corporate compliance.

The checklist should be adjusted according to the ownership structure and proposed business activity.

Can A Subsidiary Be A Private Company?

Yes. A subsidiary can generally be incorporated as a private company if its ownership and business structure meet the requirements of the Companies Act.

The OCR recognizes private companies, including a company with a single shareholder.

A private subsidiary can therefore be suitable where the parent company wants a closely controlled corporate structure. The parent company may hold the shares allowed by the applicable foreign investment and sectoral rules.

If the business requires public-company status or another regulated structure, different requirements may apply.

Can A Subsidiary Be A Public Company?

A subsidiary can also be structured as a public company where the legal requirements are satisfied.

Section 3 of the Companies Act generally requires at least seven founders for incorporation of a public company, subject to statutory exceptions.

Public companies are subject to additional corporate governance, disclosure and reporting requirements. Certain sectors may also be required by law to operate as public companies or under separate regulatory legislation.

The proposed business should therefore be reviewed before selecting a public-company structure.

How Can Lawyers Help With Subsidiary Registration?

Lawyers can assist the parent company and proposed shareholders with corporate structuring, foreign investment approval, company incorporation and regulatory compliance.

Legal assistance may include:

Reviewing the proposed ownership structure.
Checking whether foreign investment is permitted.
Reviewing the parent company’s corporate documents.
Preparing or reviewing board resolutions.
Preparing Memorandum and Articles of Association.
Preparing incorporation documents.
Coordinating foreign investment approval.
Coordinating with OCR and DOI.
Reviewing sector-specific licensing requirements.
Assisting with tax and industry registration.
Advising on shareholder and director arrangements.
Reviewing related-party transactions.
Supporting annual corporate compliance.

This assistance can help ensure that the subsidiary’s structure matches its proposed business activities and the applicable legal requirements.

Conclusion

Subsidiary company registration in Nepal involves incorporating a separate Nepali company that is controlled by a parent company. Under the Companies Act, 2063, control can arise through majority shareholding or direct or indirect control over the company’s board of directors.

A subsidiary may be established as a private or public company depending on the proposed structure and applicable law. Where the parent or shareholders are foreign, the company must also comply with Nepal’s foreign investment framework. The Department of Industry identifies foreign investment approval, company incorporation, tax registration and industry registration as the main stages for establishing a new foreign-invested industry.

The Office of the Company Registrar handles company incorporation, while the Department of Industry and other regulators may be involved depending on the investment and business sector.

A foreign parent company should therefore determine the proposed ownership, investment, business activity and regulatory requirements before starting the registration process.

Frequently Asked Questions

What Is A Subsidiary Company In Nepal?

A subsidiary is a company controlled by another company known as its parent company. The control may arise through majority shareholding or direct or indirect control over the subsidiary’s board.

Can Foreign Companies Own Nepal Subsidiaries?

Yes, foreign companies may participate as shareholders in Nepali companies subject to foreign investment laws, approval requirements and restrictions applicable to the proposed business sector.

Where Is A Subsidiary Registered?

A Nepali subsidiary is incorporated through the Office of the Company Registrar under the Companies Act, 2063.

Is Foreign Investment Approval Required?

Foreign investment approval may be required where a foreign company or foreign investor will invest in the subsidiary. The requirement depends on the investment structure and proposed activity.

How Long Does Registration Take?

The Companies Act provides a seven-day period for company registration after submission of the required application and payment of applicable fees, subject to the statutory requirements.

What Documents Are Required?

Documents generally include incorporation papers, constitutional documents, shareholder and director details, parent-company documents, investment approval and other documents depending on the ownership and business activity.

Can A Subsidiary Be Private?

Yes. A subsidiary can generally be incorporated as a private company if the ownership and business structure comply with applicable law.

Can A Subsidiary Be Public?

Yes. A subsidiary may be established as a public company where the requirements of the Companies Act and other applicable laws are satisfied.

What Is A Parent Company?

A parent company is a company that controls another company. Under the Companies Act, control may arise through majority shareholding or control over the subsidiary’s board.

What Is Subsidiary And Branch Difference?

A subsidiary is separately incorporated as a company in Nepal, while a branch office is an extension of a foreign company registered in Nepal.