Essential Steps for Foreigners to Register a Company in Nepal

If you are a foreign investor planning to enter Nepal, one question quietly shapes everything that follows: private vs public company in Nepal.
This decision affects ownership control, capital requirements, regulatory exposure, fundraising flexibility, and even how easily profits can be repatriated later.

Most foreign companies eventually discover that Nepal’s rules strongly favor one structure over the other. But understanding why requires more than surface-level definitions. This guide walks you through the legal, strategic, and practical realities of choosing the right company type in Nepal, step by step, with a clear foreign-investor lens.

Why the “Private vs Public Company in Nepal” Decision Matters

For foreign companies, incorporation is not just a compliance step. It is a long-term structural commitment.

Choosing between a private limited company and a public limited company determines:

• How much capital must be locked in upfront
• How many shareholders are allowed
• Whether shares can be freely transferred
• How heavy the compliance burden will be
• How regulators interpret your presence in Nepal

Many market entries fail not because Nepal is difficult, but because the wrong structure was chosen at the start.

Overview of Company Types in Nepal

Under Nepal’s Companies Act, foreign investors primarily choose between two structures.

Private Limited Company in Nepal

A private company is the most common entry vehicle for foreign investors.

Key features:

• Limits the number of shareholders
• Restricts share transferability
• Prohibits public share issuance
• Designed for controlled ownership

Public Limited Company in Nepal

A public company is designed for large-scale capital mobilization.

Key features:

• Requires higher minimum capital
• Allows public share issuance
• Subject to stricter disclosure rules
• Suitable for large infrastructure or capital-heavy sectors

Legal Framework Governing Company Registration in Nepal

Foreign companies must comply with multiple overlapping laws and regulators.

Primary legal instruments include:

• Companies Act, 2006
• Foreign Investment and Technology Transfer Act (FITTA), 2019
• Industrial Enterprises Act, 2020
• Income Tax Act, 2002
• Foreign exchange directives of Nepal Rastra Bank

Key regulators involved:

• Office of Company Registrar
• Department of Industry
• Nepal Rastra Bank

Private vs Public Company in Nepal: Core Differences

1. Capital Requirements

Private companies have no fixed statutory minimum capital.
Capital is typically aligned with the approved foreign investment amount.

Public companies must meet higher thresholds:

• NPR 10 million minimum paid-up capital
• Sector-specific increases for finance, energy, or infrastructure

For foreign investors, this difference alone often decides the outcome.

2. Ownership and Shareholders

Private company:

• 1 to 101 shareholders
• Foreign ownership allowed up to 100 percent (sector permitting)
• Share transfers require internal approvals

Public company:

• Minimum 7 shareholders
• No maximum limit
• Shares are freely transferable

Foreign companies rarely need unrestricted shareholder expansion in early-stage market entry.

3. Governance and Compliance Burden

Public companies face:

• Mandatory annual general meetings
• Enhanced audit requirements
• Prospectus and disclosure obligations
• Higher scrutiny from regulators

Private companies operate with leaner governance.

For foreign operators testing the market, simplicity matters.

4. Fundraising Flexibility

This is where public companies shine.

Public companies can:

• Raise capital from the public
• List on the Nepal Stock Exchange
• Issue debentures or public shares

Private companies cannot invite public investment.
However, foreign investors usually fund Nepal operations through parent-company capital or internal funding.

Strategic Comparison Table: Private vs Public Company in Nepal

Insight:
For foreign companies entering Nepal as a cost center, back office, manufacturing unit, or services hub, private companies provide maximum control with minimum friction.

Why Most Foreign Investors Choose a Private Company in Nepal

Foreign investors consistently gravitate toward private companies because they offer:

• Faster incorporation timelines
• Lower regulatory exposure
• Stronger ownership control
• Easier restructuring or exit

In practice, over 90 percent of foreign direct investment entities in Nepal are private limited companies, according to DOI approval trends.

When a Public Company in Nepal Actually Makes Sense

A public company is justified only when:

1. Capital requirements exceed private thresholds
2. Local public investment is essential
3. Long-term listing is planned
4. The project is infrastructure-heavy

Typical examples include:

• Hydropower projects
• Large manufacturing plants
• Banking or insurance ventures

For service-based foreign companies, public status usually adds cost without benefit.

Step-by-Step: How Foreigners Register a Company in Nepal

Step 1: Investment Structure Approval

Foreign investors must first obtain approval from the Department of Industry or Investment Board Nepal.

This includes:

• Proposed shareholding structure
• Capital commitment
• Business activity classification

Step 2: Name Reservation and Incorporation

The Office of Company Registrar handles:

• Company name approval
• Memorandum and Articles of Association
• Director and shareholder registration

Step 3: Capital Inflow via Nepal Rastra Bank

Foreign capital must enter Nepal through approved banking channels.

NRB requires:

• Source of funds documentation
• Share capital credit confirmation
• Ongoing reporting

Step 4: Tax, Labor, and Statutory Registration

After incorporation:

• PAN and VAT registration
• Social Security Fund enrollment
• Local municipality registration

Common Mistakes Foreign Companies Make

Avoid these costly errors:

• Choosing public structure “just in case”
• Overcapitalizing at entry
• Misaligning capital with DOI approval
• Ignoring repatriation planning
• Underestimating compliance costs

Early structural decisions are expensive to reverse later.

Private vs Public Company in Nepal and Profit Repatriation

Profit repatriation is permitted for both structures, subject to:

• Tax clearance
• Audited financials
• NRB approval

However, private companies generally face fewer procedural delays due to simpler ownership and capital histories.

Tax Considerations for Foreign-Owned Companies

Both private and public companies are taxed identically on paper.

Key points:

• Corporate tax typically 25 percent
• Withholding tax on dividends
• Transfer pricing rules apply
• VAT registration mandatory for taxable supplies

The difference lies in compliance effort, not tax rate.

How Entry Structure Impacts Exit Strategy

Private companies allow:

• Share sale to parent or third parties
• Capital reduction or buyback
• Cleaner winding-up process

Public companies face:

• Shareholder approvals
• Market disclosure obligations
• Longer exit timelines

Foreign investors planning optional exits should factor this early.

Choosing the Right Structure: A Practical Framework

Ask these questions:

1. Do you need public capital in Nepal
2. Will ownership remain tightly held
3. Is speed and flexibility critical
4. Will Nepal be a cost center or revenue hub

If you answer “yes” to control and flexibility, a private company is almost always the right choice.

Conclusion

For foreign investors, the private vs public company in Nepal decision is not theoretical. It directly affects control, cost, compliance, and exit outcomes.

In most cases, a private limited company offers the cleanest, safest, and most efficient entry into Nepal. Public companies serve a narrow purpose and should be used only when scale and public capital truly justify the complexity.

Choosing the right structure at the start is the quiet decision that determines everything.

Frequently Asked Questions

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

Yes. Most foreign investors choose private companies due to lower capital requirements, simpler compliance, and stronger ownership control.

Can a foreigner own 100 percent of a private company in Nepal

Yes. Full foreign ownership is allowed in most approved sectors, subject to DOI and FITTA compliance.

What is the minimum capital for a public company in Nepal

The general minimum is NPR 10 million, with higher requirements for regulated sectors.

Can a private company convert into a public company later

Yes. Conversion is allowed but involves regulatory approvals, capital restructuring, and higher compliance.

Which company type is easier to close or exit in Nepal

Private companies are significantly easier to exit due to simpler governance and ownership structures.