Essential Steps for Company Registration in Nepal

Choosing between a private vs public company in Nepal is one of the most strategic decisions a foreign investor will make. It shapes control, compliance, capital raising, and exit options. Nepal welcomes foreign direct investment, but its corporate framework is precise. Understanding how private and public companies differ helps you avoid delays, regulatory friction, and unnecessary costs.

This guide is written for foreign companies planning market entry, back-office operations, or long-term expansion in Nepal. It breaks down the legal structure, compliance burden, governance, and real-world use cases so you can decide with confidence.

Nepal’s Corporate Landscape at a Glance

Nepal’s company law is primarily governed by the Companies Act, 2006, supported by foreign investment rules under FITTA 2019 and sector-specific regulations. Companies are registered with the Office of the Company Registrar.

For foreign companies, the most common incorporation routes are:

• Private limited company
• Public limited company

Both are separate legal entities. Both allow foreign shareholding, subject to sector approval. Their practical implications, however, differ significantly.

What Is a Private Company in Nepal?

A private company in Nepal is designed for closely held ownership. It is the most popular structure for foreign investors entering Nepal.

Key Characteristics of a Private Company

• Minimum 1 shareholder, maximum 101 shareholders
• Share transfer is restricted
• Cannot invite the public to subscribe for shares
• Lower compliance and governance requirements
• Faster incorporation timeline

Private companies are ideal for foreign subsidiaries, joint ventures, and back-office operations.

When Foreign Companies Prefer Private Companies

Foreign companies usually choose a private company when:

• Nepal is a cost center or support hub
• Ownership control is critical
• Capital is funded internally
• The business does not require public fundraising

What Is a Public Company in Nepal?

A public company in Nepal is designed for large-scale operations with broader ownership and public capital participation.

Key Characteristics of a Public Company

• Minimum 7 shareholders
• No maximum shareholder limit
• Can issue shares to the public
• Mandatory higher paid-up capital
• Strict disclosure and governance rules

Public companies are often used by banks, insurance firms, hydropower projects, and large infrastructure ventures.

When a Public Company Makes Sense

A public company structure fits when:

• Large capital mobilization is required
• Long-term infrastructure investment is planned
• Public trust and visibility are important
• Listing on the stock exchange is a future goal

Private vs Public Company in Nepal: Core Differences

Ownership and Control

Private companies offer concentrated ownership. Public companies dilute control but enable scale.

Compliance and Governance

Public companies face heavier reporting, audits, and regulator oversight.

Capital and Growth

Private companies rely on internal funding. Public companies can raise capital from the public.

Comparison Table: Private vs Public Company in Nepal

Step-by-Step Company Registration Process in Nepal

Foreign investors follow a structured registration path. While the steps apply to both private and public companies, approvals and timelines differ.

1. Name Reservation

• Proposed name checked for uniqueness
• Must align with business activity
• Reserved through the Registrar

2. Investment Approval

Foreign investors require approval under foreign investment rules.

• Sector clearance
• Investment threshold verification
• Approval from relevant authorities

3. Document Preparation

Key documents include:

• Memorandum of Association
• Articles of Association
• Shareholder resolutions
• Passport and corporate documents of foreign investors

4. Company Registration

• Filing with the Office of the Company Registrar
• Issuance of incorporation certificate

5. Post-Registration Compliance

• Tax registration
• Bank account opening
• Capital injection confirmation
• Employment and social security registration

Capital Requirements: What Foreign Companies Should Know

Private Companies

• No universal minimum capital
• Capital aligned with approved investment
• Flexible structure for phased funding

Public Companies

• Statutory minimum capital applies
• Capital must often be injected upfront
• Higher scrutiny on fund sources

Taxation and Ongoing Compliance

Both private and public companies are subject to:

• Corporate income tax
• Withholding taxes
• VAT where applicable
• Annual audits

Public companies face additional disclosure and reporting obligations.

Governance Expectations for Foreign Investors

Private Company Governance

• Board-driven management
• Simplified decision-making
• Fewer mandatory committees

Public Company Governance

• Independent directors required
• Formal board committees
• Enhanced shareholder reporting

Common Mistakes Foreign Companies Make

Foreign investors often underestimate compliance intensity. Avoid these pitfalls:

• Choosing a public company unnecessarily
• Under-capitalizing at registration
• Ignoring sector restrictions
• Assuming private companies face minimal reporting

Strategic structuring at entry prevents future restructuring costs.

How to Choose Between Private vs Public Company in Nepal

Use this practical checklist:

1. Define your Nepal objective
   Cost center, market entry, or public fundraising.
2. Assess capital needs
   Internal funding or public investment.
3. Evaluate control preferences
   Tight ownership or broad participation.
4. Plan your exit strategy
   Sale, listing, or long-term operation.

For most foreign companies, a private company is the right starting point.

Strategic Insight: Start Private, Scale Public

Many successful foreign investors adopt a phased approach:

• Start as a private company
• Build operations and compliance history
• Convert to a public company if scale demands it

This reduces risk while preserving flexibility.

Why Nepal Is Attractive for Foreign Companies

Nepal offers:

• Competitive labor costs
• English-speaking talent pool
• Strategic access to South Asia
• Improving investment frameworks

When paired with the right company structure, Nepal becomes a sustainable expansion base.

Conclusion: Private vs Public Company in Nepal for Foreign Investors

Choosing between a private vs public company in Nepal is not a legal formality. It is a strategic investment decision. Private companies offer speed, control, and flexibility. Public companies offer scale, visibility, and capital access.

For most foreign companies entering Nepal, a private company is the optimal launchpad. With proper planning, it can evolve into a public entity when growth demands.

Ready to structure your Nepal entry the right way? Speak with an expert before you incorporate and avoid costly restructuring later.

Frequently Asked Questions 

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

For most foreign companies, yes. Private companies offer lower compliance, faster setup, and better control.

Can a foreigner own 100 percent of a Nepal company?

Yes, in permitted sectors, foreign investors can own up to 100 percent.

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

There is no fixed minimum. Capital depends on the approved investment proposal.

Can a private company convert into a public company later?

Yes. Conversion is permitted under Nepal company law, subject to conditions.

How long does company registration take in Nepal?

Typically 4–8 weeks, depending on approvals and documentation readiness.