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- Anamnagar Kathmandu
Investment Company Registration in Nepal
16
Jun
Investment company registration in Nepal is governed by multiple statutes that must be understood before any application is filed. The process has been made more structured in recent years, yet many entrepreneurs remain confused about where to begin. This guide has been prepared to answer every question that is commonly asked about starting an investment firm in Nepal.
The legal framework for investment company registration in Nepal is found in the Companies Act 2063 (2006), the Securities Act 2063 (2007), and the Foreign Investment and Technology Transfer Act 2075 (2019). Additionally, the Securities Board of Nepal (SEBON) has been designated as the regulatory authority for investment companies under the Asset (Money Laundering) Prevention Act 2064, following a government decision dated Poush 18, 2081 (January 2, 2025).
What Is an Investment Company in Nepal?
An investment company in Nepal is a corporate entity whose primary objective is to invest in securities, debentures, mutual funds, real estate, or other financial instruments. While no single statute provides a codified definition, Section 176(1) of the Companies Act 2063 mentions companies whose sole objective is buying or selling securities. In practice, such companies are registered as private or public limited companies with investment-focused objectives stated in their Memorandum of Association.
Furthermore, SEBON has been empowered under Section 7(na), sub-section (2) of the Asset (Money Laundering) Prevention Act to regulate investment companies. This was done to strengthen Nepal's anti-money laundering framework, particularly after Nepal's inclusion in the FATF greylist.
Legal Framework for Investment Company Registration in Nepal
The following laws and regulations govern investment company registration in Nepal:
| Legislation | Year | Relevance to Investment Companies |
|---|---|---|
| Companies Act | 2063 (2006) | Governs incorporation, management, and operation of companies |
| Securities Act | 2063 (2007) | Regulates securities issuance, trading, and market intermediaries |
| Foreign Investment and Technology Transfer Act | 2075 (2019) | Governs foreign investment procedures and approvals |
| Asset (Money Laundering) Prevention Act | 2064 (2008) | Designates SEBON as regulator for AML compliance |
| Income Tax Act | 2058 (2002) | Governs corporate taxation and capital gains |
| Value Added Tax Act | 2052 (1996) | Applies to applicable services at 13% |
| Securities Registration and Issuance Regulations | 2080 (2023) | Detailed process for securities registration |
| Industrial Enterprises Act | 2076 (2020) | Classifies investment companies as service industries |
Who Must Register with SEBON?
SEBON's regulatory oversight applies to investment companies meeting specific thresholds. According to the notification issued in 2081, the following categories must register:
| Category | Threshold |
|---|---|
| Investment Companies | Paid-up Capital of NPR 5 Crore or more |
| Investment Companies | Annual Transaction Volume of NPR 10 Crore or more |
Companies that fall below these thresholds may still choose to register voluntarily, though it is not mandatory. However, all investment companies are advised to act proactively to avoid future penalties and maintain market credibility.
Step-by-Step Process for Investment Company Registration in Nepal
The investment company registration in Nepal process involves multiple stages across different government authorities. Each stage must be completed sequentially.
Step 1: Name Reservation at OCR
The first step in investment company registration in Nepal is the reservation of a company name. The proposed name must be unique and must not conflict with existing registered companies. The name reservation is done through the OCR e-Services Portal. For a private limited company, the name must end with "Private Limited" or "Pvt. Ltd." For a public limited company, it must end with "Limited" or "Ltd."
Step 2: Document Preparation
After name approval, the Memorandum of Association (MOA) and Articles of Association (AOA) must be drafted. For investment companies, the MOA must clearly state investment-related objectives such as portfolio management, securities trading, or investment advisory services. The AOA must outline corporate governance structures, shareholder rights, and decision-making procedures.
Step 3: Capital Deposit
A bank account must be opened in the proposed company name, and the minimum required capital must be deposited. For a private limited investment company, the minimum paid-up capital is NPR 1,00,000. For a public limited company, it is NPR 1,00,00,000. However, if SEBON registration is sought, the paid-up capital must be at least NPR 5 Crore.
Step 4: Online Application Submission at OCR
The complete application package is submitted through the OCR online portal. This includes the MOA, AOA, application form, identification documents of promoters/directors, and proof of capital deposit. Foreign promoters must submit additional documents including passport copies and FDI approval if applicable.
Step 5: Document Verification by OCR
The Office of Company Registrar examines all submitted documents for accuracy, compliance with the Companies Act, and consistency between the MOA and AOA. If discrepancies are found, corrections are requested. Upon satisfactory verification, the registration certificate is issued.
Step 6: PAN/VAT Registration at IRD
After company registration, Permanent Account Number (PAN) registration must be completed at the Inland Revenue Department. If the annual turnover is expected to exceed NPR 5 million for goods or NPR 2 million for services, VAT registration is also mandatory.
Step 7: SEBON Registration (If Applicable)
For investment companies meeting the NPR 5 Crore capital or NPR 10 Crore transaction thresholds, SEBON registration is mandatory. The following documents must be submitted:
| Document | Purpose |
|---|---|
| Formal Registration Application | Request for SEBON oversight |
| Board of Directors Details | Names, addresses, qualifications |
| MOA and AOA | Constitutional documents |
| Criminal Clearance Certificate | For company and directors |
| PAN Certificate | Tax registration confirmation |
| Company Registration Certificate | From OCR |
| Shareholding Structure | Details of shareholders and beneficial owners |
| Board Authorization Letter | Approving registration and representatives |
| Audited Financial Statements | Balance sheet, P&L, cash flow, auditor report |
| CEO Details | Name, contact, qualifications, professional history |
Step 8: Ward Office Registration
Local business registration must be completed at the municipal ward office where the company is located. This requires submission of the company registration certificate, lease agreement, and payment of local business operation tax.
Minimum Capital Requirements for Investment Company Nepal
Capital requirements vary based on company type and regulatory scope:
| Company Type | Minimum Paid-Up Capital | SEBON Registration Requirement |
|---|---|---|
| Private Limited Company | NPR 1,00,000 | NPR 5 Crore for mandatory SEBON registration |
| Public Limited Company | NPR 1,00,00,000 | NPR 5 Crore for mandatory SEBON registration |
| Fund Manager (SEBON Licensed) | NPR 2,00,00,000 | Mandatory licensing under SIF Rules |
| Merchant Banking | As prescribed by SEBON | SEBON license required |
| Portfolio Management | As prescribed by SEBON | SEBON license required |
Tax Obligations for Investment Companies in Nepal
Investment companies in Nepal are subject to specific tax rates based on their activities:
| Tax Type | Rate | Applicability |
|---|---|---|
| Corporate Income Tax (General) | 25% | Standard rate for most companies |
| Corporate Income Tax (Capital Market Business) | 30% | For entities engaged in securities business, merchant banking, commodity futures |
| Capital Gains Tax (Listed Shares, Long Term) | 5% | Holding period exceeding 365 days |
| Capital Gains Tax (Listed Shares, Short Term) | 7.5% | Holding period of 365 days or less |
| Capital Gains Tax (Unlisted Shares, Natural Person) | 10% | For resident natural persons |
| Capital Gains Tax (Unlisted Shares, Others) | 15% | For companies and non-residents |
| Dividend Withholding Tax | 5% | Final tax on distributed dividends |
| Value Added Tax | 13% | On applicable services |
| TDS on Interest | 15% | On interest payments |
| TDS on Rent | 10% | On rental payments |
Additionally, companies listed on the Nepal Stock Exchange (NEPSE) enjoy a concessional corporate tax rate of 20%. Special industries including manufacturing may also avail a 20% rate under Section 11 of the Income Tax Act.
Government Fees for Investment Company Registration
The following fees are applicable during investment company registration in Nepal:
| Fee Type | Amount (NPR) | Authority |
|---|---|---|
| Name Reservation Fee | 50-100 | OCR |
| Company Registration Fee | 1,000-3,000+ (based on capital) | OCR |
| Stamp Duty on MOA/AOA | Varies | OCR |
| SEBON Registration Fee | As prescribed | SEBON |
| Fund Manager Registration (One-time) | 3,00,000 | SEBON |
| Fund Manager Annual Renewal | 1,50,000 | SEBON |
| PAN Registration | Free | IRD |
| VAT Registration | Free | IRD |
| Ward Office Registration | Varies by municipality | Local Body |
Timeline for Investment Company Registration Nepal
The complete timeline for investment company registration in Nepal is as follows:
| Stage | Duration |
|---|---|
| Name Reservation | 1-3 days |
| Document Preparation | 1-2 weeks |
| Capital Deposit and Bank Account Opening | 1-2 weeks |
| OCR Application and Processing | 3-5 days |
| PAN/VAT Registration | 1-2 days |
| SEBON Registration (if applicable) | 30-60 working days |
| Ward Office Registration | 1-3 days |
| Total Timeline | 2-4 months |
Post-Registration Compliance for Investment Companies Nepal
After investment company registration in Nepal is completed, ongoing compliance obligations must be fulfilled:
| Compliance Requirement | Frequency | Authority |
|---|---|---|
| Annual Return Filing | Annual | OCR |
| Audited Financial Statements | Annual | SEBON/OCR |
| Tax Return Filing | Annual (within 3 months of fiscal year end) | IRD |
| VAT Return Filing | Monthly/Bi-monthly/Quarterly | IRD |
| SEBON Periodic Reporting | As prescribed | SEBON |
| Portfolio Composition Disclosure | Periodic | SEBON |
| Risk Exposure Reports | Periodic | SEBON |
| AML/KYC Compliance | Continuous | SEBON/FIU |
| Board Meetings | Quarterly | Internal |
| Annual General Meeting | Annual | Internal |
| Investment Transaction Reports | Periodic | SEBON |
| Ownership/Board Change Updates | Within prescribed time | SEBON |
Failure to comply with these obligations can result in administrative fines, suspension or revocation of registration, disqualification of directors, and criminal prosecution in severe cases.
Foreign Investment in Investment Companies Nepal
Foreign investors are permitted to establish investment companies in Nepal under the Foreign Investment and Technology Transfer Act 2075. Key provisions include:
| Aspect | Requirement |
|---|---|
| Minimum Investment | NPR 20 million (approx. USD 150,000), except IT companies |
| Foreign Ownership | 100% permitted in most sectors |
| Approval Authority | Department of Industry (DOI) for up to NPR 6 billion; IBN for above |
| Automatic Route | Available for investments up to NPR 500 million in 102 sectors |
| Capital Injection Timeline | 25% within 1 year, 70% before operation, 30% within 2 years |
| NRB Recording | Within 6 months of capital inflow |
| Repatriation | Permitted for profits and dividends with NRB approval |
AML Compliance for Investment Companies
Anti-money laundering compliance is a central focus for SEBON-regulated investment companies. The following measures are mandatory:
| AML Requirement | Description |
|---|---|
| Know Your Customer (KYC) | Verification of investor identity and source of funds |
| Transaction Monitoring | Continuous monitoring of suspicious transactions |
| Employee Training | Regular AML awareness training for staff |
| Record Keeping | Maintenance of transaction records for prescribed periods |
| AML Compliance Officer | Mandatory appointment of a dedicated officer |
| Suspicious Transaction Reporting | Reporting to Financial Intelligence Unit |
Frequently Asked Questions
What is the minimum capital for investment company registration in Nepal?
For a private limited investment company, the minimum paid-up capital is NPR 1,00,000. However, if SEBON registration is required, the paid-up capital must be at least NPR 5 Crore. For fund managers, SEBON mandates a minimum paid-up capital of NPR 2 Crore.
How long does investment company registration in Nepal take?
The complete process typically takes 2 to 4 months. OCR registration can be completed within 1 to 2 weeks, while SEBON registration (if applicable) takes an additional 30 to 60 working days.
Can foreigners register an investment company in Nepal?
Yes, foreigners can register investment companies in Nepal. Most sectors allow 100% foreign ownership. However, FDI approval from the Department of Industry is required, and the minimum investment threshold is NPR 20 million (except for IT companies).
Is SEBON registration mandatory for all investment companies?
No, SEBON registration is mandatory only for investment companies with paid-up capital of NPR 5 Crore or more, or annual transaction volume of NPR 10 Crore or more. Companies below these thresholds may register voluntarily.
What documents are required for SEBON registration?
SEBON requires a formal application, board details, MOA/AOA, criminal clearance certificates, PAN certificate, company registration certificate, shareholding structure, board authorization, audited financial statements, and CEO details.
What is the corporate tax rate for investment companies in Nepal?
The standard corporate tax rate is 25%. However, entities engaged in capital market business, securities business, or merchant banking are taxed at 30%. Listed companies enjoy a concessional rate of 20%.
What are the annual compliance requirements after registration?
Annual compliance includes filing annual returns with OCR, submitting audited financial statements, filing tax returns within 3 months of fiscal year end, VAT returns, SEBON periodic reporting, AML compliance, and holding annual general meetings.
Can an investment company be registered as a single-person company?
Yes, a private limited company can be registered with a single promoter under the Companies Act 2063. However, for public limited companies, a minimum of 7 promoters is required.
What is the difference between an investment company and a fund manager?
An investment company is a corporate entity that invests its own or pooled funds. A fund manager is a licensed entity that manages investment funds on behalf of investors. Fund managers require a separate SEBON license with a minimum paid-up capital of NPR 2 Crore.
Are there any restrictions on foreign investment in investment companies?
Foreign investment is allowed in most sectors. However, certain sectors such as retail business, real estate (excluding construction), and personal services are restricted under the FITTA 2019 negative list.
Why Choose CorporateNp for Investment Company Registration in Nepal?
Investment company registration in Nepal involves navigating multiple government authorities, complex documentation, and strict compliance requirements. CorporateNp provides end-to-end legal and advisory services to ensure your investment company is registered smoothly, legally, and efficiently.
Our services include:
- Complete document preparation and drafting
- OCR name reservation and registration
- SEBON registration and compliance guidance
- PAN/VAT registration assistance
- Foreign investment approval support
- Post-registration compliance management
- AML policy framework development
- Ongoing legal advisory services
Contact CorporateNp today to begin your investment company registration in Nepal journey with confidence.
References
For further reading and official verification, the following authoritative sources are referenced:
- Office of Company Registrar Nepal - Official company registration portal
- Securities Board of Nepal (SEBON) - Capital market regulator
- Department of Industry Nepal - Foreign investment approvals
- Nepal Rastra Bank - Foreign exchange and investment recording
- Inland Revenue Department Nepal - Tax registration and compliance
- Nepal Stock Exchange (NEPSE) - Securities listing and trading
- Ministry of Finance Nepal - Tax policy and financial regulations
- Investment Board Nepal - Large-scale investment approvals
- Financial Action Task Force (FATF) - International AML standards
- International Organization of Securities Commissions (IOSCO) - Global securities regulation standards
Disclaimer: This article is provided solely for informational and educational purposes. It does not constitute legal advice, professional counsel, or solicitation. The information presented herein is based on laws and regulations as of June 2026 and may be subject to change. Readers are advised to consult qualified legal professionals before making any decisions related to investment company registration in Nepal. CorporateNp and its affiliates shall not be held liable for any actions taken based on the contents of this guide.
