Registration, Approval, Licence or Permit? What Your Business Actually Needs

What the certificate does

The problem usually surfaces about three weeks after incorporation. The company exists, the bank account is open, the office is leased, and somebody has just said the business cannot begin. Nothing has gone wrong. The certificate never did what people assume it does.

Under the Companies Act 2063 (2006), once the Office of the Company Registrar has registered a company, “the company shall be deemed incorporated”. That is the whole of its effect. It creates a legal person capable of holding property, contracting and suing. It says nothing about whether that person may carry on the activity in its objects clause, whether the money behind it may lawfully be in Nepal, or whether the premises it occupies may be used for the purpose.

Four further permissions sit above it. They come from different bodies, are granted on different criteria and run on different clocks. None can be substituted for another, or inferred from another.

The five permissions

Permission	Instrument	Granted by	What it establishes	What it does not
Entity registration	Companies Act 2063; Partnership Act 2020; Private Firm Registration Act 2014	Office of the Company Registrar; Department of Industry or commerce office	That a legal person exists and who owns it	Anything about the activity
Investment approval	Foreign Investment and Technology Transfer Act 2075 (2019)	Department of Industry or Investment Board Nepal	That this foreign money may enter this enterprise	That the enterprise may operate
Industry registration	Industrial Enterprises Act 2076 (2020)	Department of Industry or the provincial government	That the industry is on the register, in a size class and a nature class	That the specific regulated activity is licensed
Sectoral licence	The statute governing the activity	The sectoral regulator	That this entity may carry on this regulated business	That the premises may be used
Local registration and permission	Local-level powers under the Constitution	Municipality or rural municipality	That the business may operate at this place, and the local tax base	Anything about the activity’s federal regulation

Read the third column downwards. Five different institutions, four different levels of government, and no single counter with a view of all of them.

Registration establishes identity

Registration answers who. It is a records function, and the Registrar’s discretion is narrow: refusal is permitted on limited grounds, mostly to do with the name and the completeness of the documents. Nobody assesses whether the business is a good idea, whether the promoters are fit, or whether the activity is lawful.

The same holds one level down. A partnership firm registered under the Partnership Act 2020 (1964) is registered, not licensed. What registration buys there is enforceability. The business of an unregistered firm has no legal validity, a far heavier sanction than the fine of NPR 50 per partner that sits alongside it.

Foreign investment approval

Foreign investment is approved separately under the Foreign Investment and Technology Transfer Act 2075 (2019), by the Department of Industry or, for larger projects, by Investment Board Nepal. It is a decision about capital rather than operations. It fixes how much may come in, in what form and into which enterprise. Because inbound approval is what later underwrites outbound repatriation, it fixes the exit route too.

Sequencing is the trap. The Companies Act contemplates a foreign founder producing an investment or business authorisation issued under law with the incorporation application. The Department of Industry’s own procedure runs approval first, then incorporation, then industry registration within thirty-five days. A company incorporated with foreign shareholders before approval has saved no time. It has created a shareholding that now needs approval as a transfer rather than as an original subscription.

Industry registration

The Industrial Enterprises Act 2076 (2020) applies to industries, a broader category than manufacturing. It covers energy, agriculture and forest products, mining, infrastructure, tourism, information and communication technology, and services. Establishing or operating an industry without registering it is prohibited.

Registration is not a licence. It places the enterprise in a class by nature and a class by size, and those classes determine which incentives apply, which reporting obligations attach, and which body supervises it. The Department of Industry registers industries with foreign investment, industries requiring Schedule 1 permission, industries spanning more than one province, and industries on the federal list. Provincial governments register the rest.

The sanction for skipping it sits in section 43(1): NPR 5,000 for a micro-industry, NPR 25,000 for a cottage or small industry, NPR 50,000 for a medium industry and NPR 100,000 for a large one, with the registering body empowered to order immediate closure. The fines are a rounding error for a large project. The closure power is not.

Sectoral licences

A licence is a permission to carry on a specified regulated activity, issued by a regulator with continuing supervisory powers over the licensee. It is issued under its own statute, on fit-and-proper and capital grounds, and it can be conditioned, suspended and revoked in ways a registration cannot.

The set is activity-specific and there is no consolidated list. Banking and financial institutions are licensed by Nepal Rastra Bank; securities business by the Securities Board of Nepal; insurance by the Nepal Insurance Authority; telecommunications by the Nepal Telecommunications Authority; electricity generation, transmission and distribution under the Electricity Act 2049 (1992), which remains the governing statute; tourism activity under the Tourism Act 2035 (1978), likewise still in force.

Two interactions with the other permissions are worth setting out.

First, section 12 of the Companies Act forces the legal form before the licence. Banking, financial transactions, insurance, securities business, pension funds and mutual funds must be carried on by public companies, as must telecommunications service providers above the stated capital level. A private limited company cannot apply for those licences. It has to convert first, which means seven promoters and NPR 10 million of paid-up capital.

Second, Schedule 1 of the Industrial Enterprises Act forces permission before registration, reversing the order that applies everywhere else. Nine categories need prior permission: arms, ammunition, gunpowder and explosives; security printing, banknotes and coins; tobacco products and electronic cigarettes; microbrewery, beer and alcohol production; excavation of stone, ballast and sand; radio communication equipment; excavation of precious minerals and petroleum; liquefied petroleum gas refilling; and drone manufacture and services. The permission is decided within thirty days and lapses if the industry is not registered inside the period it specifies.

Local registration

The layer most foreign entrants fail to budget for is the municipality. Under the Constitution’s allocation of powers to the local level, municipalities and rural municipalities register businesses operating in their area and levy business tax on them. The requirement is real and annual, and it is administered locally. The process, the fee and the documents are set by the municipality rather than nationally.

Alongside it sits tax identity: a permanent account number from the Inland Revenue Department, and value added tax registration where the activity or turnover requires it. Neither is a permission in the licensing sense, since nobody assesses whether an applicant deserves a PAN. Both are preconditions for invoicing, for withholding, and for a bank relationship.

The One Stop Service Centre

The Industrial Enterprises Act establishes a One Stop Service Centre to deliver the services an industry needs through a single point. It is a genuine administrative improvement, and no kind of legal simplification. The Centre can bring counters together. It cannot merge the statutory tests, and it cannot decide on behalf of a regulator with its own governing Act. A business that treats a visit there as having disposed of the permissions question finds the missing one at the first invoice, the first import, or the first inspection.

Four questions in order

Rather than asking what is needed to register a business in Nepal, ask four narrower questions in this order. Is any of the money foreign? Is the activity an industry? Is it separately licensed? And where physically will it be carried on? Each answer names a different institution, and the order in which those institutions must be approached is set by law rather than by convenience.

Sources

1. Companies Act, 2063 (2006) — sections 5 and 12 [unofficial reproduction, actnepal.com]

   Government of Nepal (English translation) · In force, as amended · Tier 6 — Professional or news source

   Supports: That registration means the company is deemed incorporated, and that banking, financial, insurance, securities, pension and mutual fund businesses, and telecommunications above a stated capital, must be public companies.

   Accessed 26 August 2026

2. The Industrial Enterprises Act, 2076 (2020) — sections 3, 4, 5, 6, 9, 37, 38 and 43, and Schedule 1

   Government of Nepal (English translation) · Authenticated 2076.10.28 (11 February 2020); in force, as amended · Tier 1 — Primary legal instrument

   Supports: The registration requirement and its penalties, the division of registering authority between the Department of Industry and provincial governments, the Schedule 1 prior-permission list, the operation-commencement notification, and the One Stop Service Centre.

   Accessed 26 August 2026

3. The Industrial Enterprises Act, 2076 (2020) — official copy

   Department of Industry · In force, as amended · Tier 1 — Primary legal instrument

   Supports: The Department of Industry's own published copy of the Act.

   Accessed 26 August 2026

4. उद्योग दर्ता सम्बन्धी जानकारी (Information on industry registration)

   Department of Industry · Current as at 26 August 2026 · Tier 2 — Official publication

   Supports: That an industry with foreign investment must be registered with the Department within 35 days of the foreign investment approval, and the documents required at that stage.

   Accessed 26 August 2026

5. Companies Act, 2063 (2006) — section 4, application to be made for incorporation [unofficial reproduction, actnepal.com]

   Government of Nepal (English translation) · In force, as amended · Tier 6 — Professional or news source

   Supports: That the incorporation application must carry any pre-approval licence or permit required by law and, for foreign founders, the investment or business authorisation issued under law.

   Accessed 26 August 2026

6. The Foreign Investment and Technology Transfer Act, 2019 (2075)

   Investment Board Nepal · 2019; in force, as amended 31 March 2025 · Tier 1 — Primary legal instrument

   Supports: That foreign investment in Nepal requires approval under a separate statute from the Companies Act.

   Accessed 26 August 2026