A Quick Guide to Company Creation in Nepal: Procedures, Costs, and Timeframes

If you are a foreign investor evaluating private vs public company in Nepal, the decision shapes your costs, control, compliance burden, and speed to market. Nepal has opened steadily to international businesses, but its company law has nuances that can surprise first-time entrants. This guide explains, in plain language, how private and public companies differ, how to register each, and which structure best supports your market-entry goals in Nepal.

You will learn procedures, statutory requirements, realistic timelines, and practical pitfalls. By the end, you will know which route delivers the fastest, safest launch for your business.

Understanding the Corporate Landscape in Nepal

Nepal’s corporate framework is governed primarily by the Companies Act, 2006, supported by sectoral laws and foreign investment regulations. For foreign companies, two incorporated forms dominate:

• Private Limited Company (Pvt. Ltd.)

• Public Limited Company (Ltd.)

While both are legal persons with limited liability, they differ sharply in ownership limits, disclosure obligations, and fundraising options.

Private vs Public Company in Nepal: The Core Difference

When clients ask about private vs public company in Nepal, the most important distinction is who can own shares and how capital is raised.

What is a Private Limited Company in Nepal 

A private company is designed for closely held ownership.

Key features

• Minimum shareholders: 1

• Maximum shareholders: 50

• No public invitation to subscribe shares

• Lower compliance and reporting burden

• Ideal for foreign subsidiaries, joint ventures, and operating entities

Most foreign companies entering Nepal choose this structure first.

What is a Public Limited Company in Nepal 

A public company is built for large-scale capital raising.

Key features

• Minimum shareholders: 7

• No maximum shareholders

• Can issue shares to the public

• Mandatory higher paid-up capital

• Heavier regulatory oversight

Public companies are uncommon for initial foreign market entry.

Private vs Public Company in Nepal: Side-by-Side Comparison

Insight: Over 85% of foreign-owned incorporated businesses in Nepal start as private companies due to speed and flexibility.

Why Foreign Companies Prefer Private Companies in Nepal

For foreign investors, simplicity matters.

Practical reasons

• Faster registration

• Lower capital lock-in

• Easier shareholder control

• Predictable compliance costs

Unless you plan a public listing or mass capital raising, a public company rarely adds value at entry stage.

Step-by-Step: Company Registration Process in Nepal

Below is the standard procedure for incorporating either structure.

1. Name reservation with the Office of Company Registrar

2. Drafting constitutional documents

   • Memorandum of Association

   • Articles of Association

3. Capital declaration and shareholder details

4. Submission and approval by the Registrar

5. PAN registration with tax authorities

6. Industry-specific licenses, if required

7. Foreign investment approval, if applicable

Private companies usually complete this faster.

Timeframes: How Long Does Company Creation Take?

Private company

• Name approval: 1–2 days

• Incorporation approval: 5–10 working days

• Total realistic timeframe: 2–3 weeks

Public company

• Additional scrutiny and capital verification

• Total realistic timeframe: 1–2 months

Costs: What to Budget For

Understanding costs early avoids delays.

Typical cost components

• Government registration fees

• Legal drafting and filing

• Translation and notarization

• Capital deposit confirmation

• Foreign investment approvals

Indicative ranges

• Private company: USD 1,000–2,500

• Public company: USD 4,000–7,000+

Costs vary by industry and shareholding complexity.

Compliance Obligations After Registration

Private companies must

• Maintain statutory registers

• File annual returns

• Submit audited financials annually

• Comply with labor and tax laws

Public companies must additionally

• Publish audited accounts

• Hold statutory general meetings

• Comply with securities regulations

• Maintain stricter governance standards

For foreign owners, compliance predictability is a decisive factor.

Tax Considerations for Foreign Owned Companies

Both private and public companies face the same corporate income tax rate, subject to incentives by sector.

Key taxes include

• Corporate income tax

• Withholding tax on dividends

• VAT, if applicable

• Payroll taxes and social security contributions

Tax treatment depends more on activity than company type.

Foreign Investment Rules: What You Should Know

Foreign investment is regulated under Nepal’s investment framework.

Important points

• Certain sectors are restricted

• Minimum investment thresholds may apply

• Capital must be brought through approved banking channels

• Repatriation of dividends is permitted, subject to compliance

Private companies handle these processes more smoothly.

Common Mistakes Foreign Companies Make

Avoid these early missteps.

• Choosing a public company without a capital strategy

• Underestimating compliance costs

• Delaying tax and labor registrations

• Ignoring sector-specific approvals

A structured entry plan prevents costly restructuring later.

When Does a Public Company Make Sense?

A public company may be appropriate if you:

• Plan an IPO in Nepal

• Require broad domestic capital participation

• Operate regulated infrastructure sectors

• Need enhanced public credibility

For most foreign service and operating businesses, this is a future step, not a starting point.

Private vs Public Company in Nepal: Decision Checklist

Choose a private company if you want:

• Speed to market

• Full shareholder control

• Lower compliance burden

• Flexible exit options

Choose a public company if you want:

• Public fundraising

• Large-scale expansion

• Institutional investor participation

• Long-term capital market access

Conclusion

Choosing private vs public company in Nepal is not just a legal formality. It is a strategic decision that affects cost, risk, and scalability. For most foreign companies, a private limited company delivers faster entry, cleaner governance, and operational freedom. Public companies serve a narrower purpose and are best considered later.

If you are planning to establish your presence in Nepal, the right structure from day one saves time and money.