Branch Office Registration in Nepal
This article provides the comprehensive guide on Branch Office Registration in Nepal.
Introduction: Branch Office Registration in Nepal
The registration of a foreign company’s branch office in Nepal is regulated by the Companies Act, 2006 (2063). The Office of the Company Registrar (OCR) is the designated authority overseeing the registration process.
Legal Requirement for Registration
As per Section 154 of the Companies Act, 2006, a foreign company must register a branch office with the OCR before conducting any business or transactions in Nepal. If a foreign company carries out business activities for more than one month through an established office, appoints a representative for continuous contact, or provides services within Nepal, it is deemed to have established an office.
Investing in shares of a Nepalese company, providing loans, or participating in its management, with necessary government approvals, does not qualify as operating a business for the purposes of branch office registration.
Procedure for Branch Office Registration
1. Application Submission – The foreign company must submit an application for branch office registration along with the required documents to OCR.
2. Approval from Relevant Authorities – The company must obtain an approval or recommendation letter from the concerned government authority. If the company has been selected through a competitive process or has entered into a contract with a government entity, such selection or contract serves as the necessary approval.
3. Issuance of Registration Certificate – OCR evaluates the application and supporting documents before granting registration and issuing a branch office certificate.
4. Tax Registration – The branch office must register for Permanent Account Number (PAN) and Value Added Tax (VAT) at the Inland Revenue Office.
5. Local Business Registration – The company must also register with the local ward office.
Required Documents for Branch Office Registration in Nepal
- Application for registration at OCR
- Company Registration Certificate, Memorandum of Association (MOA), and Articles of Association (AOA) of the foreign company, along with notarized Nepali translations
- Signed company profile
- Declaration from the directors or representatives regarding the authenticity of submitted information
- Board resolution authorizing the establishment of the branch office in Nepal
- Passport copies of all directors
- Citizenship certificate of the branch office’s authorized representative in Nepal
- Proposed operational plan
- Appointment letter of the authorized representative
- Power of Attorney
- Agreement between the foreign company and the Nepalese government authority (if applicable)
- Approval or recommendation letter from the relevant authority (if available).
Government Fees
Registration fees are based on the proposed investment amount:
| Investment Amount (NPR) | Registration Fee (NPR) |
|---|---|
| Up to 10,000,000 | 15,000 |
| 10,000,001 – 100,000,000 | 40,000 |
| 100,000,001 – 200,000,000 | 70,000 |
| 200,000,001 – 300,000,000 | 100,000 |
| 300,000,001 – 400,000,000 | 130,000 |
| 400,000,001 – 500,000,000 | 160,000 |
| Above 500,000,000 | 3,000 + 3,000 for each additional 10,000,000 |
If the proposed investment is not specified, a flat registration fee of NPR 100,000 applies.
Timeline for Registration
The registration process typically takes 2 to 3 weeks to complete.
Permitted Business Activities
A branch office in Nepal can engage only in activities similar to those conducted by the parent company in its home country, provided they are permitted under Nepalese law.
Approval Requirements
Section 154(2) of the Companies Act mandates approval from a competent government authority. Generally, registration is granted based on an official license, selection process, or agreement with a Nepalese government entity.
Minimum Investment Requirement
The law does not impose a minimum investment threshold for registering a branch office in Nepal. The investment amount should align with the operational requirements of the business.
Branch Office vs. Liaison Office
• A branch office can conduct income-generating activities in Nepal.
• A liaison office cannot engage in revenue-generating operations; it serves solely as a point of contact.
Legal Status of a Branch Office
• The capital injected for operating a branch office is not classified as foreign investment and does not require foreign investment approval unless a local subsidiary is established.
• Registering a branch office does not create a separate legal entity; it remains an extension of the foreign company.
Compliance Requirements
• Tax registration at the Inland Revenue Department
• Submission of initial compliance report to OCR within three months of registration
• Appointment of an auditor and annual financial reporting to OCR
• Submission of the parent company’s financial statement to OCR within three months of its preparation
• Submission of financial statements to the Inland Revenue Department
• Annual business tax and monthly rent tax payments to the local ward office
Branch Office vs. Local Subsidiary
A local subsidiary requires approval from the Department of Industry (DOI) for Foreign Direct Investment (FDI) and must meet minimum capital requirements. It is a distinct legal entity separate from its parent company.
A branch office, however, is registered directly with OCR after obtaining necessary approvals and does not constitute a separate legal entity. Only foreign companies, not individuals or entities, can establish a branch office in Nepal.