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The registration of a branch office of a foreign company in Nepal is governed by the Companies Act, 2006 (2063) (“Companies Act”). Section 154 (1) of Companies act incorporates the provision related to the registration of branch office of a foreign company in Nepal.

Office of Company Register (‘OCR”) is the governing authority to register a Branch Office in Nepal.

The Companies Act requires registration of a branch office, if a foreign company is undertaking business activity in Nepal for a continuous period of one month or more through an office established in Nepal or used therefor or appoints any person for regular contact or avails its service.

As a matter of practice, registration of branch office in Nepal requires either of these approvals:

a. Approval from government authority (Approval of the government authority is required.  The government authority shall be the government authority related with the nature of business that the branch office will be operating in Nepal eg: approval from Ministry of Information, Communication and Technology is required for IT related business) or 

b. Agreement of foreign company with any government authority of Nepal, executed for purpose of doing the business in Nepal.

Establishment of business through equity investment and its management, engaging the agent or distributor in Nepal would not be construed to have established a branch office in Nepal.

Branch office establishment does not provide the legal status of separate legal personality. It shall be considered as the part of foreign company operating in Nepal. 

The branch office should carry out the business activities that are permissible in Nepal. However, the business activities carried by the branch office  should be similar to the business activities that is carried by the foreign company. 

There is no minimum capital threshold for the investment of branch office, Companies Act is silent in this regard. Generally, the foreign companies inject the investment amount for branch office considering their operation cost. There is no minimum capital threshold for the investment of branch office, Companies Act is silent in this regard. Generally, the foreign companies inject the investment amount for branch office considering their operation cost.

Following steps are followed for branch office registration: 

Kindly Note: Separate approval shall not be required if the foreign company have already executed the agreement with government authority. 

The timeline for registration of a branch office in Nepal is usually 30 to 45 days. Sometimes it may require additional days to receive the approval from concerned government authority.

Following are the documents required for branch office registration: 

Government Fee of the branch office depends on capital that foreign company want to inject in Nepal: 

Following are the post compliance requirement of branch office in Nepal:

• a.  Submit 3-month compliance document before OCR;
• b. Appoint Auditor to prepare annual financial statement (audit report) of branch office;
• c. Submit the financial statement at OCR within 6 months of completion of each fiscal year;
• d. Submit the financial statement to its head office within 3 months from its preparation date and
• e. Update document at OCR in case there is change in name and address of the foreign company. 

Note: Branch Office has obligation to do compliance applicable pursuant to other prevailing Nepalese law including Labor Law, Social Security Law, Tax Law etc. during the process of its operation in Nepal. 

• a. Unlike branch office, liaison office are not allowed to do any income earning activities in Nepal. The liaison office can only be used as a contact point for the foreign company and other local parties to communicate, coordinate and regulate the relationship;
• b. As a matter of practice unlike branch office liaison office are not required to take any approval from the concerned authority for establishment;
• c. Activities such as entering into a contract for transaction and marketing and advertisement of product of the company is restricted for Liaison Office.

For more details regarding the registration of the liaison office in Nepal please visit the article published at our law firm website. Link;  Liaison Office Registration in Nepal

• a. Local subsidiary company has an entirely separate legal personality from its parent company, whereas branch office does not have separate personality from its parent company;
• b.Unlike branch office, parent company is not automatically liable for activities carried out by the local subsidiary company.
   

For more details regarding the registration of the local subsidiary company in Nepal please visit the article published at our law firm website. Link: Company Registration Process in Nepal  .

Related Article Link: 
Please click the article published at our law firm website, which are related to the above article topic: 
Establishment of Business in Nepal by the Foreign Investor 
Company Registration Process in Nepal
FDI (Foreign Direct Investment) Approval Process In Nepal
Liaison Office Registration in Nepal

Disclaimer: Bhandari Law and Partners is one of the leading law firm in Nepal  with team of best professional lawyers in Nepal.This article published on website of the law firm is just for information purpose only. It shall not be taken as the legal advice, advertisement, personal communication, solicitation or inducement. Bhandari Law and Partners or any of the team members of the firm shall not be liable for the consequence arising of the information provided. As the factual situation may be different on your case, thereof if you need further legal advice on the subject matter, please Contact Us.