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Closing a branch office of a foreign company in Nepal is a formal regulatory exit that involves coordinating with the Office of the Company Registrar (OCR). This process ensures all local tax liabilities, employee dues, and contractual obligations are settled before the branch’s legal status is officially terminated.
₨ 50,000.00
Under Section 154 of the Companies Act, 2063, a foreign company may operate in Nepal through a registered branch office. However, unlike a local subsidiary, a branch is a direct extension of the parent company. Closing it requires a formal withdrawal process that mirrors its registration—ensuring that the parent company is legally discharged from its operational responsibilities in Nepal and that all local assets are liquidated or repatriated according to foreign exchange regulations.
Pursuant to Section 158 of the Companies Act, 2063, a foreign company must notify the OCR at least 30 days before it intends to cease its business operations in Nepal. The primary legal hurdle is the Settlement of Local Liabilities. Because the parent company is directly liable for the branch’s actions. Company must prove that all local creditors, vendors, and government dues have been cleared.
Failure to follow these steps leads to severe legal and financial risks for the parent company. Under Section 160, the OCR can impose heavy fines for failing to notify the office of closure. More importantly, leaving a branch “Inactive” without formal closure prevents the parent company from obtaining a Tax Clearance Certificate from the Inland Revenue Department (IRD). This block will stop the repatriation of any remaining funds or surplus assets out of Nepal, as the Nepal Rastra Bank (NRB) requires a final tax clearance and OCR dissolution certificate to approve the outward transfer of foreign currency.
