Company Formation in Nepal: Fee Structure and Expenses

Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies face when entering the Nepali market. This choice directly affects setup costs, regulatory exposure, compliance burden, fundraising options, and long-term scalability. While Nepal is increasingly open to foreign investment, its company law framework has clear distinctions between private and public entities that investors must understand before committing capital.

This guide is written for foreign founders, CFOs, and expansion leaders who want clarity. We break down company formation in Nepal, explain fee structures and expenses, and compare private and public companies from a cost, compliance, and risk perspective—without legal jargon.

Why “Private vs Public Company in Nepal” Matters for Foreign Companies

For foreign investors, the decision is rarely academic. It determines:

• How much capital you must lock in upfront

• Whether you can remain closely held or raise funds publicly

• The level of regulatory scrutiny you face

• Ongoing compliance and disclosure costs

Most foreign companies start with a private limited company. A public company is usually considered only when large-scale capital raising or listing is planned.

Legal Framework Governing Company Formation in Nepal

Company formation in Nepal is primarily governed by:

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act (FITTA), 2019

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

These laws define ownership thresholds, capital requirements, and compliance obligations for both private and public companies.

What Is a Private Company in Nepal?

A private company in Nepal is a closely held entity designed for limited shareholders and controlled ownership.

Key Characteristics

• 1 to 50 shareholders

• Shares cannot be offered to the public

• No requirement to issue a prospectus

• Lower disclosure obligations

For foreign companies, this structure offers speed, flexibility, and cost control.

What Is a Public Company in Nepal?

A public company in Nepal is designed for large-scale ownership and capital mobilisation.

Key Characteristics

• Minimum 7 shareholders

• Shares may be offered to the public

• Mandatory prospectus and enhanced disclosures

• Heavily regulated governance structure

Public companies are suitable for banks, hydropower projects, insurance firms, and large infrastructure ventures.

Private vs Public Company in Nepal: Core Differences

Structural Comparison at a Glance

Company Formation in Nepal: Fee Structure and Expenses

Understanding the fee structure and expenses is essential for accurate budgeting. Costs fall into three categories: statutory fees, professional fees, and post-incorporation compliance costs.

Registration Fees for Private Companies in Nepal

Private company registration fees are based on authorised capital.

Typical Government Fees

• NPR 1,000 to NPR 9,500 depending on capital slab

• Name reservation and registration filing fees

• PAN registration at no additional cost

Professional Costs (Estimated)

• Legal drafting and incorporation support

• Document notarisation and translations

• Foreign investment approval support (if applicable)

Registration Fees for Public Companies in Nepal

Public companies face substantially higher entry costs.

Government and Regulatory Fees

• Higher registration fees based on large capital base

• Prospectus review and approval costs

• Additional regulator coordination expenses

Professional and Advisory Costs

• Legal counsel for prospectus and compliance

• Auditor appointment at incorporation

• Corporate governance structuring

Capital Requirements: Private vs Public Company in Nepal

Private Company Capital

• No fixed minimum capital under company law

• Foreign investment thresholds may apply under FITTA

• Capital can be structured flexibly

Public Company Capital

• Generally NPR 10 million or higher

• Sector-specific minimums often apply

• Capital must justify public fundraising intent

Ongoing Compliance Costs Compared

Private Company Ongoing Costs

• Annual return filing

• Financial statements preparation

• Income tax filings

• Basic corporate secretarial work

Public Company Ongoing Costs

• Mandatory annual audit

• Public disclosures and reporting

• Annual general meetings with stricter rules

• Regulator filings and compliance reviews

Annual cost difference:
A public company can cost 2–4× more annually to maintain than a private company.

Tax Treatment: Private vs Public Company in Nepal

From an income tax perspective, both entities are broadly taxed under the same corporate tax framework. However:

• Public companies face higher scrutiny

• Transfer pricing documentation is more common

• Regulatory audits are more frequent

The tax rate itself is not the primary differentiator—compliance exposure is.

Which Structure Do Foreign Companies Usually Choose?

Most Foreign Companies Choose a Private Company Because:

1. It allows full operational control

2. It reduces upfront and recurring costs

3. It avoids unnecessary public disclosures

Public Companies Are Usually Chosen When:

• Large capital mobilisation is required

• Sector regulations mandate it

• Long-term listing is planned

Advantages and Disadvantages for Foreign Investors

Advantages of a Private Company in Nepal

• Faster incorporation timeline

• Lower formation and compliance costs

• Easier governance and decision-making

Disadvantages

• Cannot raise capital from the public

• Share transfers are restricted

Advantages of a Public Company in Nepal

• Access to public capital markets

• Stronger market visibility

Disadvantages

• High compliance burden

• Expensive setup and maintenance

• Reduced flexibility

Step-by-Step: Company Formation in Nepal (Private Company)

1. Name reservation

2. Drafting Memorandum and Articles

3. Filing with Company Registrar

4. PAN registration

5. Industry and investment approvals (if applicable)

6. Bank account opening

This process typically takes 2–4 weeks if documentation is complete.

Common Mistakes Foreign Companies Make

• Choosing a public company too early

• Underestimating compliance costs

• Misaligning capital structure with business reality

• Ignoring foreign investment approval sequencing

These mistakes can delay operations and increase regulatory risk.

Practical Recommendation for Foreign Companies

If you are a foreign company entering Nepal for:

• Market entry

• Back-office operations

• Technology or services delivery

A private limited company is almost always the optimal starting point. Public company formation should be a deliberate second-stage decision, not a default choice.

Conclusion: Private vs Public Company in Nepal

The private vs public company in Nepal decision directly impacts cost, control, and compliance. For most foreign companies, a private company offers the right balance of flexibility, affordability, and regulatory clarity. Public companies are powerful tools—but only when scale and capital strategy demand them.

Choosing the right structure at the start can save years of restructuring and unnecessary expense.

Frequently Asked Questions

Is a private company better than a public company in Nepal for foreigners?

Yes. Most foreign investors prefer private companies due to lower costs, faster setup, and fewer compliance requirements.

What is the minimum capital for a public company in Nepal?

While the Companies Act sets general thresholds, most public companies require at least NPR 10 million or more, depending on sector rules.

Can a foreigner fully own a private company in Nepal?

Yes, subject to foreign investment approval and sector eligibility under Nepal’s investment laws.

Are taxes different for private and public companies in Nepal?

The corporate tax rate is generally similar, but public companies face higher audit and disclosure scrutiny.

How long does company formation in Nepal take?

A private company can usually be incorporated within 2–4 weeks if documents are complete.