Closure of Foreign Company Branch Office (विदेशी कम्पनीको शाखा खारेजी)

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

Categories Business Closure, Company Closure

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Introduction: Closure of Foreign Branch Office

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.

Legal Requirements: Compliance Under the Companies Act, 2063

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.

Process: Closure of Foreign Company Branch

Parent Company Resolution

the foreign parent company must pass a formal resolution authorizing the closure of the Nepal branch and appointing an authorized representative.

Public Notice & Creditor Settlement

Publish a mandatory notice in a national daily newspaper in Nepal for 30 days to invite any local creditors or claimants to settle their dues before the branch is dissolved.

Tax Clearance & Creditor Settlement

Complete a final tax audit to obtain a clearance certificate from the IRD. Settle all local dues and payment to be made in Nepal.

Final OCR Deregistration

Submit the proof of payment of all local liabilities, tax clearance, and newspaper clippings to the OCR to obtain the official Cancellation of Registration, effectively ending the branch’s legal existence in Nepal.

Ready to wrap up your Nepal Operations?

Closing a foreign branch involves complex cross-border documentation and strict coordination with the IRD and NRB for fund repatriation. Present Consultants Private Limited specializes in managing the “Exit Strategy” for international firms, ensuring your withdrawal from the Nepalese market is legally seamless and financially secure.
Contact us today to manage your branch closure and ensure a clean exit from Nepal