Decoding IPR Law in Nepal: What Businesses Need to Know

If you are comparing a private vs public company in Nepal, intellectual property protection should be part of your decision from day one. Many foreign companies focus only on incorporation. But your legal structure affects trademark ownership, patent filings, investor rights, and enforcement strategy.

Nepal’s IPR framework is governed primarily by the Patent, Design and Trademark Act 2022 (1965 AD) and enforced by the Department of Industry under the Ministry of Industry, Commerce and Supplies. Company formation is governed by the Companies Act 2006.

For foreign companies entering Nepal, the question is not just legal form. It is control, scalability, compliance, and IP ownership security.

This guide explains how IPR law interacts with corporate structure in Nepal. It is written for serious investors who want clarity, not general summaries.

Understanding the Legal Framework of IPR in Nepal

Nepal’s intellectual property regime is primarily governed by:

• Patent, Design and Trademark Act 2022 (1965)
• Companies Act 2006
• Industrial Enterprises Act 2020
• Foreign Investment and Technology Transfer Act 2019

Nepal follows a first-to-file principle for trademarks. Registration grants exclusive rights. Unregistered marks receive limited protection.

According to the Department of Industry guidelines, trademark registration is valid for seven years and renewable indefinitely. Patents are protected for seven years and are not renewable beyond statutory limits.

Foreign applicants may file directly or via a local agent.

Private vs Public Company in Nepal: Why Structure Impacts IP Strategy

When choosing between a private vs public company in Nepal, you are also deciding:

1. Who owns the IP.
2. How shares are transferred.
3. How investors access IP value.
4. How disputes are resolved.
5. How licensing revenue is structured.

Let us break this down clearly.

What Is a Private Company in Nepal?

Under the Companies Act 2006, a private limited company:

• Limits shareholders to 101.
• Restricts share transfer.
• Cannot invite public subscription.
• Requires at least one director.

Most foreign investors entering Nepal use a private limited structure.

IP Advantages of a Private Company

• Centralized ownership.
• Controlled shareholder base.
• Easier IP assignment documentation.
• Simplified licensing structures.
• Confidential financial disclosures.

For startups, tech companies, and manufacturing FDI projects, this structure offers operational flexibility.

What Is a Public Company in Nepal?

A public company:

• Requires a minimum of seven shareholders.
• Can offer shares to the public.
• Must comply with additional reporting obligations.
• Falls under securities regulations.

Public companies are generally used when:

• Capital markets funding is required.
• Large-scale manufacturing expansion is planned.
• IPO ambitions exist.

From an IP perspective, public companies require stronger internal governance over intangible assets.

Comparison Table: Private vs Public Company in Nepal (IPR Lens)

Insight:
For foreign companies prioritizing brand protection and technology transfer control, private limited companies generally provide stronger IP containment.

Trademark Protection Under Nepal’s IPR Law

Key Steps in Trademark Registration

1. Application filing.
2. Formal examination.
3. Publication for opposition.
4. Registration certificate issuance.
5. Renewal every seven years.

Foreign companies must ensure:

• Correct applicant entity name.
• Alignment with shareholding structure.
• Power of attorney documentation.
• Proper classification under Nice Classification.

If your corporate structure changes, IP ownership must also be updated.

Patent and Design Protection

Patents protect inventions. Designs protect industrial appearance.

Under the Patent, Design and Trademark Act 2022:

• Patent term: 7 years.
• Industrial design term: 5 years (renewable twice).
• Compulsory working requirement applies.

For manufacturing FDI projects, proper structuring prevents IP leakage to local partners.

How Corporate Structure Affects IP Enforcement

This is where many foreign investors make mistakes.

In a public company:

• Multiple shareholders may question litigation costs.
• Board approvals can delay enforcement.
• Disclosure obligations may expose sensitive strategy.

In a private company:

• Decision-making is faster.
• Enforcement strategy is confidential.
• IP licensing can be internalized.

Structure influences control.

Common IPR Risks for Foreign Companies in Nepal

Here are practical risks we observe in market entry projects:

• Registering trademarks under individuals instead of company entities.
• Failing to record technology transfer agreements.
• Not aligning IP ownership with FDI approval.
• Ignoring renewal deadlines.
• Weak employment IP assignment clauses.

Each of these can create litigation exposure.

Employment Agreements and IP Ownership

Under Nepal’s legal practice, employee-created IP must be contractually assigned to the company.

If not:

• Ownership may be disputed.
• Investors may hesitate.
• Due diligence becomes complicated.

This is critical in tech and software outsourcing projects.

Private vs Public Company in Nepal: Strategic Decision Framework

When advising foreign investors, we apply a four-part framework:

1. Capital Needs

Are you planning public capital raising?

2. Control Priority

Do founders require full IP control?

3. Regulatory Appetite

Are you prepared for higher compliance burden?

4. Exit Strategy

Is IPO part of long-term roadmap?

Most early-stage foreign investors choose private limited structures.

IPR Compliance Checklist for Foreign Investors

Here is a practical compliance checklist:

• Register trademark before commercial launch.
• Record technology transfer agreements.
• Align IP ownership with FDI structure.
• Insert IP clauses in employment contracts.
• Monitor renewal deadlines.
• Conduct annual IP audit.

Consistency protects enterprise value.

Why Nepal’s IPR Environment Is Evolving

Nepal is a member of the World Trade Organization and adheres to TRIPS obligations. Reforms are ongoing to modernize IP enforcement.

The government has also introduced investment-friendly policies under the Foreign Investment and Technology Transfer Act 2019.

Foreign investors now receive clearer repatriation rights and dispute resolution channels.

Real-World Insight: Structuring IP for Long-Term Value

Many foreign companies assume IPR protection is identical regardless of company type. It is not.

A private company:

• Preserves founder control.
• Simplifies licensing.
• Reduces shareholder disputes.

A public company:

• Enables capital scale.
• Requires structured IP governance.
• Demands transparency.

Choose based on long-term strategy.

Frequently Asked Questions (People Also Ask)

1. What is the main difference between a private vs public company in Nepal?

A private company restricts share transfer and limits shareholders. A public company can offer shares to the public and has higher disclosure obligations.

2. How long does trademark registration last in Nepal?

Trademark registration is valid for seven years and can be renewed indefinitely under Nepal’s IP law.

3. Can a foreign company own 100% shares in Nepal?

Yes, under the Foreign Investment and Technology Transfer Act 2019, subject to sectoral approvals.

4. Is trademark registration mandatory in Nepal?

It is not mandatory but strongly recommended. Nepal follows a first-to-file principle.

5. Which structure is better for protecting IP in Nepal?

Private limited companies generally provide stronger IP control and confidentiality.

Conclusion: Private vs Public Company in Nepal -Choose with IP in Mind

The debate around private vs public company in Nepal is not just about shareholders. It is about governance, risk, control, and intellectual property security.

If you are entering Nepal with proprietary technology, brand value, or trade secrets, structure matters.

IPR law intersects directly with corporate architecture. The right decision today prevents litigation tomorrow.