Under the prevailing laws of Nepal, foreign companies willing to undertake business transactions are either required to make a foreign investment with equity injection in the sectors which are permitted for foreign investment or establish a branch office in Nepal. This brief discusses the registration procedure of the branch and liaison office in Nepal as per The Companies Act of Nepal 2006  (“Nepalese Company Act”). 

Nepalese Company Act provides the scope of registration of branch and liaison office in Nepal. The Act requires any foreign company to establish a branch office before undertaking any business activities in Nepal. It also requires the establishment of a liaison office before setting up an office in Nepal. However, the establishment of an office or undertaking of business through equity investment and its management, engaging the agent or distributor in Nepal would not be construed to have established a branch of the liaison office in Nepal. 

Pursuant to the Nepalese Company Act, any foreign company engaged in a business transaction from an office established in Nepal or from a location in Nepal regularly, or appoints person for a regular contact or avails service from such person, the foreign company is construed to have undertaken business transaction in Nepal.  

Approval from the competing authority

A foreign company desiring to have a branch or liaison office is required to submit an application to the Office of the Company Register (“OCR”) and get approval from a specific regulatory authority regulating its line of business in order to carry to set up branch or liaison office in Nepal. Upon receiving an application, the OCR must make the necessary inquiries, register such branch or liaison office and give the registration certificate to the concerned applicant within thirty days. 

The branch office so registered is permitted to operate business activities that are permissible in Nepal, but the nature of such business transactions must be similar to that of its parent company carrying out in its country of incorporation. However, the liaison office registered in Nepal cannot be engaged in any kind of income-generating activities in Nepal. 

Required Documents to register Branch/Liaison Office in Nepal:

The following documents are required to be submitted by the foreign company along with the registration application for the purpose of registering a branch/liaison office in Nepal:

1. Notarized copies of the charter, certificate of incorporation, memorandum of association, articles of association of the Foreign Company and Nepali translation thereof.
2. Board Resolution of the Foreign Company to set up a branch or liaison office in Nepal.
3. Documents specifying the full name and address of the registered office of the company and principal place to its business, the date of incorporation of the company, its issued capital and the details of the company’s objectives.
4. Documents specifying the names, addresses of the directors, managers, company or main officers of the company along with their citizenship.
5. Documents specifying the name and address of the representative of the company resident in Nepal.
6. Documents specifying address of the principal place where the company carries on its transaction or business in Nepal and the office of the company situated in that place.
7. Documents specifying details of the proposed investment and transaction.
8. Documents specifying the proposed date of commencing its transaction or operation. 
9. Declaration made by directors or by the representative on behalf of the directors that the matters submitted by the company are true and correct.
10. Power of Attorney.

Branch/Liaison Office Registration Revenue:

The governmental revenue for the branch/liaison office registration varies with the investment of the foreign company. The tentative governmental fee for the given investment is indicated below:

Investment Amount (in NPR)	Registration Fee (in NPR)
Up to 100,00,000	15,000
From 1,00,00,001 to 10,00,00,000	40,000
From 10,00,00,001 to 20,00,00,000	70,000
From 20,00,00,001 to 30,00,00,000	1,00,000
From 30,00,00,001 to 40,00,00,000	1,30,000
From 40,00,00,001 to 50,00,00,000	1,60,000
Above 50,00,00,000	Additional 3,000 in each one crore
If the investment amount is not shown	Lump sum amount of Rs. 1,00,000

Other Compliance Requirements:

In the case of a branch office, 

• Once registered, the branch office is required to appoint an auditor and prepare an annual financial statement, along with the balance sheet and profit and loss account, which shall be submitted to OCR within 6 months from the date of completion of fiscal year each year. Branch offices are also required to submit the balance sheet of its parent company within 3 months from its preparation date. 
• The annual financial statement must incorporate the following details:

1. Particulars of the fixed, running and other properties held in the name of the foreign company in Nepal.
2. Details of cash held with the banks and financial institutions in the name of the foreign company.
3. Total amount of loans and liabilities, payable by the foreign company to any Nepali resident or a Nepalese company. 

In the case of the liaison office,

• Once registered, the liaison office is required to appoint an auditor, prepare an annual financial statement and submit it to the OCR within 3 months from the date of completion of fiscal year each year. 
• The annual financial statement must incorporate the following details:

1. Statements of salary, allowance and amounts paid to the employees.
2. Consultants or liaison persons serving in such office.
3. Statements of deduction of tax from such payment pursuant to the prevailing law.
4. Payment of rental and expenses for the operation of such office.
5. Statements of deduction of tax from such payment pursuant to the prevailing law.

Disclaimer: This note is not a legal opinion but for general understanding. It is advised to consult a lawyer for legal advice before initiating the process to set up a branch or liaison office in Nepal. Please note that the copyright for this note vests on Vidhi Legal Concern.