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Start-up Enterprise or Business in Nepal (2025)

In 2024, the Government of Nepal, through the Ministry of Law, Justice, and Parliamentary Affairs, introduced Ordinance No. 01 of 2081 to amend various laws concerning investment facilitation. A major development under this Ordinance is the inclusion of new legal provisions within the Industrial Enterprise Act, 2020, specifically focusing on start-up enterprises or businesses.

This article highlights the key features of these new provisions introduced for startups.

Eligibility for Startup Registration in Nepal

The definition of a “startup enterprise or business” is now incorporated into Section 2(p1) of the Industrial Enterprise Act, with detailed criteria outlined in Section 4A.

To qualify as a startup under Nepalese law, the business must be a company or firm engaged in commercial activities rooted in innovative research, creativity, and new technology, particularly in the development, production, operation, or distribution of goods, services, or processes.

The specific conditions for startup registration include:

-          The entity must be newly registered as a company, private firm, or partnership firm;

-          It must incorporate innovative ideas and technologies into its operations;

-          It should demonstrate potential for rapid growth or scaling;

-          The business must have been registered within the last 10 years; and

-          Its annual turnover in any fiscal year after registration must not exceed NPR 150 million.

Establishment of Business Incubation Centres

To promote the growth of startup businesses, federal, provincial, and local governments are authorized to establish Business Incubation Centres under Section 4A of the Act. These centers aim to support startups by offering necessary infrastructure, mentorship, and networking opportunities.

Regulation and Maintenance of Records

The designated registration authority will oversee the regulation of startups as per the provisions of Section 4A. It is also responsible for maintaining a separate register containing detailed information about all registered startup enterprises.

Formulation of Guidelines and Procedures

Under Sections 68(1) (E1) and 68(1) (E2) of the Industrial Enterprise Act, the Government of Nepal is empowered to issue procedures, guidelines, and criteria concerning the registration, regulation, and operation of startups and incubation centers. These regulations are intended to ensure a structured and efficient ecosystem for emerging businesses.

Conclusion

The inclusion of startup-specific provisions in Nepal’s legal framework represents a forward-looking step toward encouraging entrepreneurship and innovation. By simplifying the registration process and facilitating support through incubation centers, the amendment seeks to establish an ecosystem where startups can grow and thrive in a more enabling environment.