Foreign Investors’ Guide to Registering a New Company in Nepal

If you are a foreign investor exploring South Asia, private vs public company in Nepal is one of the first decisions you must make. This choice affects ownership control, compliance burden, fundraising options, and long-term exit strategies. Nepal offers a clear legal framework for foreign companies, but selecting the wrong structure can delay approvals, increase regulatory risk, or limit growth.

This guide is written specifically for foreign companies. It explains the legal, financial, and strategic differences between private and public companies in Nepal. You will also learn when each structure makes sense, what regulators expect, and how to avoid common pitfalls.

Why Nepal Is on the Radar for Foreign Companies

Nepal has quietly become a strategic destination for regional expansion and back-office operations. Foreign companies are drawn by competitive labor costs, a growing talent pool, and improving regulatory clarity.

Key drivers include:

• Liberalized foreign direct investment rules

• English-friendly corporate documentation

• Low incorporation and operating costs

• Access to South Asian markets

Most foreign investors start with a private limited company, but a public company may be suitable for specific growth or capital-raising strategies.

Understanding Company Types Under Nepalese Law

Company formation in Nepal is governed primarily by the Companies Act and administered by the Office of the Company Registrar.

Nepal recognizes two main corporate structures for investment purposes:

1. Private Limited Company

2. Public Limited Company

Both can be 100 percent foreign-owned in approved sectors.

What Is a Private Limited Company in Nepal?

A private limited company is the most common structure for foreign investors entering Nepal.

Core Characteristics

• Shareholders: Minimum 1, maximum 101

• Shares cannot be publicly traded

• Transfer of shares is restricted

• Separate legal entity

Why Foreign Investors Prefer It

Private companies offer simplicity, speed, and control. They are ideal for subsidiaries, offshore delivery centers, and regional headquarters.

Typical Use Cases

• IT and software development centers

• Outsourcing and shared services

• Consulting and professional services

• Trading and distribution

What Is a Public Limited Company in Nepal?

A public limited company is designed for large-scale operations and public fundraising.

Core Characteristics

• Shareholders: Minimum 7, no maximum

• Can issue shares to the public

• Higher disclosure and governance standards

• Mandatory statutory audits

When It Makes Sense

Public companies are appropriate when you plan to raise capital locally or list on Nepal’s stock exchange in the future.

Private vs Public Company in Nepal: Key Differences Explained

Ownership and Control

Private companies allow tight control. Public companies dilute control due to wider shareholding.

Compliance Burden

Public companies face stricter reporting, disclosure, and audit requirements.

Capital Raising

Private companies rely on internal funding or private placements. Public companies can raise funds from the public.

Speed to Market

Private companies are faster to register and operationalize.

Comparison Table: Private vs Public Company in Nepal

This table reflects why private vs public company in Nepal is usually an easy decision for first-time foreign investors.

Minimum Capital Requirements for Foreign Companies

Capital thresholds are regulated under foreign investment guidelines.

Typical Benchmarks

• Private company with foreign investment

  • Minimum investment threshold applies per investor

• Public company

  • Higher paid-up capital expectations

Capital must be remitted through formal banking channels and recorded with regulators.

Step-by-Step Company Registration Process in Nepal

Foreign investors must follow a structured process.

1. Name Reservation

Submit proposed company names to the Office of the Company Registrar.

2. Foreign Investment Approval

Apply for approval under foreign investment laws.

3. Incorporation Filing

File constitutional documents and shareholder details.

4. Tax Registration

Register for Permanent Account Number and applicable taxes.

5. Capital Injection

Bring approved capital into Nepal through authorized banks.

Regulatory and Compliance Obligations

Both company types must comply with:

• Annual filings

• Tax returns

• Statutory audits

Public companies face additional obligations, including enhanced disclosures and governance standards.

Taxation Overview for Foreign-Owned Companies

Nepal follows a source-based taxation system.

Key points:

• Corporate income tax applies to net profits

• Withholding tax on dividends and services

• Transfer pricing rules apply to related parties

Private and public companies are taxed similarly, but compliance scrutiny is higher for public entities.

Common Mistakes Foreign Investors Make

Avoid these frequent errors:

• Choosing a public company too early

• Underestimating compliance costs

• Structuring shareholding without exit planning

• Delaying capital remittance

A clear understanding of private vs public company in Nepal prevents these issues.

When Should You Choose a Public Company in Nepal?

A public company makes sense if:

• You plan to raise capital locally

• You require large-scale visibility

• You intend to list shares in the future

For most foreign entrants, these conditions apply later, not at market entry.

When Is a Private Company the Better Choice?

A private company is ideal if:

• You want full ownership control

• You prioritize speed and flexibility

• You are testing the Nepal market

• You operate as a subsidiary or captive center

This explains why private companies dominate foreign investment registrations.

Strategic Insight: Start Private, Scale Public

Many multinational groups adopt a staged approach:

1. Enter Nepal as a private company

2. Stabilize operations and compliance

3. Convert to a public company when scale demands

This strategy minimizes risk while preserving future options.

Private vs Public Company in Nepal: Final Verdict

For most foreign companies, the answer is clear. A private limited company offers speed, control, and cost efficiency. A public company is a strategic tool, not a starting point.

Understanding private vs public company in Nepal allows you to align legal structure with business reality.