Essential Steps: How to Register a Private Limited Company in Nepal

When foreign companies explore market entry, private vs public company in Nepal is one of the first strategic decisions they must make. The choice affects ownership, control, compliance, funding options, and long-term scalability. Most foreign investors begin with a Private Limited Company because it offers faster setup, tighter control, and lower regulatory exposure.

This guide explains the differences between private and public companies in Nepal, then walks you step by step through how to register a Private Limited Company, with legal references, practical insights, and investor-focused advice.

Understanding the Corporate Landscape in Nepal

Nepal’s company law framework is primarily governed by the Companies Act 2006, supported by the Foreign Investment and Technology Transfer Act (FITTA) 2019, Industrial Enterprises Act 2020, and tax and labor legislation.

For foreign companies, the most common structures are:

• Private Limited Company

• Public Limited Company

• Branch Office

• Liaison or Representative Office

This article focuses on private vs public company in Nepal, with a strong emphasis on why private companies dominate foreign investment.

What Is a Private Limited Company in Nepal?

A Private Limited Company (Pvt. Ltd.) in Nepal is a closely held corporate entity designed for controlled ownership and operational flexibility.

Key Characteristics

• Minimum shareholders: 1

• Maximum shareholders: 101

• Share transfer restrictions apply

• Cannot issue shares to the public

• Separate legal personality

Private companies are the default choice for foreign companies entering Nepal through FDI.

What Is a Public Limited Company in Nepal?

A Public Limited Company (PLC) is designed for large-scale operations and public capital raising.

Key Characteristics

• Minimum shareholders: 7

• No maximum shareholder limit

• Mandatory public disclosures

• Can issue shares to the public

• Heavier compliance and governance

Public companies are usually adopted by banks, hydropower developers, insurance firms, and large infrastructure projects.

Private vs Public Company in Nepal: Core Differences

Structural Comparison Table

Insight: Over 90 percent of foreign-owned entities in Nepal are private companies, reflecting global SME and subsidiary trends.

Why Foreign Companies Prefer Private Companies in Nepal

Foreign investors overwhelmingly select private companies because they offer:

• Faster incorporation

• Lower regulatory exposure

• Greater operational control

• Confidential ownership structures

• Easier exit or restructuring

A public company only makes sense when public fundraising in Nepal is a core objective.

Legal Framework Governing Company Registration

Understanding the legal base strengthens compliance and credibility.

Primary Legislation

• Companies Act 2006

• Foreign Investment and Technology Transfer Act 2019

• Industrial Enterprises Act 2020

• Income Tax Act 2002

• Labour Act 2017

These laws define ownership limits, reporting obligations, employment rules, and tax treatment.

Essential Steps: How to Register a Private Limited Company in Nepal

This section delivers the practical, step-by-step roadmap foreign companies need.

Step 1: Decide Ownership and Capital Structure

Before filing, define:

• Shareholder identity

• Shareholding percentages

• Authorized and paid-up capital

• Foreign investment amount

Foreign investment must meet the minimum FDI threshold prescribed by law.

Step 2: Name Reservation

You must reserve a unique company name with the Office of Company Registrar (OCR).

Tips for approval:

• Avoid restricted or sensitive words

• Ensure no similarity with existing entities

• Align the name with proposed business activities

Step 3: Draft Constitutional Documents

Two documents form the legal backbone:

• Memorandum of Association (MOA)

• Articles of Association (AOA)

These define business scope, share rights, governance rules, and director powers.

Step 4: Foreign Investment Approval (If Applicable)

If shareholders are non-Nepali:

• Apply for FDI approval

• Submit project details and investment plan

• Declare source of funds

This step is mandatory before incorporation for foreign investors.

Step 5: Company Registration with OCR

Submit:

• Approved company name

• MOA and AOA

• Shareholder and director details

• Registered office address

• Capital declaration

Once approved, the company receives its Certificate of Incorporation.

Step 6: PAN and Tax Registration

Every company must obtain:

• Permanent Account Number (PAN)

• VAT registration if applicable

This enables lawful invoicing and tax compliance.

Step 7: Bank Account Opening and Capital Injection

After incorporation:

• Open a Nepal bank account

• Inject paid-up capital

• Complete KYC and compliance checks

Foreign capital inflow must follow central bank guidelines.

Step 8: Local Level and Industry Registration

Depending on activities, register with:

• Local municipality

• Industry or sector regulator

This finalizes operational legality.

Typical Timeline for Private Company Registration

• Name reservation: 1–3 days

• FDI approval: 2–4 weeks

• OCR registration: 5–7 working days

• Tax and bank setup: 1–2 weeks

Average total timeline: 4–6 weeks for foreign-owned private companies.

Compliance Obligations After Incorporation

Private companies enjoy lighter compliance but still must:

• Maintain statutory registers

• File annual returns

• Prepare audited financial statements

• Comply with labor and social security laws

• Submit tax filings

Non-compliance can result in penalties or suspension.

Private vs Public Company in Nepal: Which Should You Choose?

Choose a Private Limited Company if you:

• Are a foreign parent or subsidiary

• Want full control

• Do not need public capital

• Prefer speed and confidentiality

Choose a Public Limited Company only if you:

• Intend to raise capital from the public

• Operate in regulated sectors

• Are prepared for higher compliance

Common Mistakes Foreign Companies Make

Avoid these frequent errors:

• Choosing public company structure unnecessarily

• Underestimating FDI approval timelines

• Using generic MOA templates

• Ignoring labor compliance

• Delaying tax registrations

Strategic planning prevents costly restructuring later.

Frequently Asked Questions 

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

For foreign investors, yes. Private companies offer faster setup, lower compliance, and stronger ownership control compared to public companies.

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

Yes. Most sectors allow full foreign ownership, subject to FDI approval and sectoral restrictions.

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

There is no fixed minimum under company law, but foreign investment must meet the statutory FDI threshold.

How long does company registration take in Nepal?

For foreign-owned private companies, the process usually takes four to six weeks, depending on approvals.

Can a private company convert into a public company later?

Yes. Nepalese law allows conversion, subject to compliance with public company requirements.

Conclusion

Choosing between a private vs public company in Nepal is not merely a legal formality. It is a strategic decision that shapes risk, control, scalability, and compliance. For most foreign companies, a Private Limited Company provides the optimal balance of flexibility, speed, and regulatory certainty.

By understanding the differences and following the correct registration steps, foreign investors can enter Nepal confidently and compliantly.