How Much Does it Cost to Form a Company in Nepal?

If you are a foreign company planning to enter South Asia, Nepal is increasingly on your radar. One of the first strategic decisions you must make is private vs public company in Nepal. This choice directly affects formation costs, capital requirements, compliance exposure, and future fundraising flexibility.

Within the first 100 days of market entry, most foreign founders ask one core question. How much does it cost to form a company in Nepal, and which structure makes sense for us? This guide answers that question with clarity, accuracy, and real-world insight.

Why Nepal Is Attracting Foreign Companies

Nepal has quietly become a preferred destination for foreign investors seeking cost efficiency, skilled talent, and regulatory modernization.

Key drivers include:

• Competitive operating costs compared to India and Southeast Asia

• English-speaking professional workforce

• Online company registration through the Office of Company Registrar

• Clear foreign investment pathways under FITTA 2019

For most foreign companies, the entry decision comes down to private vs public company in Nepal, with cost and compliance as the deciding factors.

Legal Framework Governing Company Formation in Nepal

Company formation in Nepal is governed primarily by:

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act (FITTA), 2019

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

These laws define how companies are incorporated, funded, governed, and audited. Foreign companies must comply with all of them, regardless of whether they choose a private or public structure.

What Is a Private Company in Nepal?

A private company in Nepal is the most common structure used by foreign investors.

Core Characteristics

• Minimum shareholders: 1

• Maximum shareholders: 101

• Share transfer: Restricted

• Public share issuance: Not allowed

• Common use: Subsidiaries, back-office centers, service companies

Why Foreign Companies Prefer Private Companies

Private companies are simpler, cheaper, and faster to incorporate. They are ideal for:

• Market entry

• Cost-center operations

• Captive service entities

• Long-term controlled ownership

What Is a Public Company in Nepal?

A public company in Nepal is designed for large-scale capital raising and public participation.

Core Characteristics

• Minimum shareholders: 7

• No maximum shareholder limit

• Can issue shares to the public

• Subject to securities regulation

• Mandatory external audits

Public companies are rarely used by foreign investors at the entry stage due to higher costs and compliance burdens.

Private vs Public Company in Nepal: Cost Comparison at a Glance

This comparison alone explains why over 90 percent of foreign investors choose private companies in Nepal.

Detailed Cost Breakdown: Private Company in Nepal

1. Government Registration Fees

The Office of Company Registrar charges fees based on authorized capital.

Typical ranges:

• NPR 1 million capital: ~NPR 1,000

• NPR 10 million capital: ~NPR 5,000

• NPR 100 million capital: ~NPR 15,000

2. Legal and Professional Fees

Foreign investors usually engage local advisors for:

• Name reservation

• Memorandum and Articles drafting

• Shareholder resolutions

• Foreign investment approval

Estimated cost: NPR 150,000 to 400,000, depending on complexity.

3. Foreign Investment Approval Costs

If foreign ownership is involved, approval from the Department of Industry or Investment Board Nepal is required.

Costs include:

• Application preparation

• Document notarization and legalization

• Regulatory liaison

Detailed Cost Breakdown: Public Company in Nepal

Public companies involve significantly higher upfront and ongoing costs.

1. Minimum Capital Requirement

Public companies must have minimum paid-up capital of NPR 10 million. In practice, this is often much higher.

2. Securities and Compliance Costs

• Prospectus preparation

• Regulatory approvals

• Mandatory statutory audit

• Public disclosures

These costs often exceed NPR 1 million annually, even before operations begin.

Hidden Costs Foreign Companies Often Miss

Foreign founders often underestimate indirect costs.

These include:

• Certified translation of foreign documents

• Embassy or apostille legalization

• Local director appointments

• Bank compliance reviews

• Annual renewals and filings

Planning for these costs early avoids delays and penalties.

Private vs Public Company in Nepal: Compliance Obligations

Private Company Compliance

• Annual return filing

• Tax filings and audits (if thresholds met)

• Share registry maintenance

Public Company Compliance

• Mandatory annual audit

• Public disclosures

• Securities reporting

• Higher scrutiny from regulators

For foreign companies focused on operations rather than fundraising, private companies provide far better compliance efficiency.

Capital Flexibility and Fundraising Considerations

Private Company

• Suitable for parent-subsidiary funding

• Capital injection through equity or loans

• Limited public fundraising

Public Company

• Can raise capital from the public

• Suitable for large infrastructure or financial institutions

• High governance overhead

Most foreign entrants do not need public fundraising at the Nepal entry stage.

Which Structure Is Best for Foreign Companies?

For foreign companies entering Nepal, the answer is clear in most cases.

Choose a private company if you want:

• Faster setup

• Lower cost

• Full ownership control

• Simpler compliance

Public companies make sense only when public capital markets are central to the business model.

Step-by-Step: Forming a Private Company in Nepal

1. Reserve company name

2. Prepare incorporation documents

3. Obtain foreign investment approval

4. Register with the Office of Company Registrar

5. Open bank account and inject capital

6. Register for tax and statutory compliance

This process typically takes 3 to 6 weeks when properly managed.

Taxation Overview for Foreign-Owned Companies

Key tax considerations include:

• Corporate income tax: 25 percent

• Withholding taxes on payments

• VAT registration if applicable

• Transfer pricing compliance for related parties

Understanding tax exposure early is critical for cost planning.

EEAT: Why This Guidance Is Reliable

This article reflects:

• Nepal Companies Act and FITTA requirements

• Practical advisory experience with foreign investors

• Regulatory guidance from OCR and DOI

• On-the-ground compliance realities

It is written for decision-makers, not theorists.

Conclusion: Private vs Public Company in Nepal

When evaluating private vs public company in Nepal, cost, control, and compliance matter more than labels. For most foreign companies, a private company offers the fastest, safest, and most cost-effective entry into Nepal.

If you are planning your Nepal expansion, structuring it correctly from day one can save years of regulatory friction and unnecessary expense.

The right structure is not about ambition. It is about alignment.

Frequently Asked Questions

Is there a minimum capital requirement for a private company in Nepal?

No. Nepal law does not prescribe a minimum capital for private companies, making them ideal for foreign startups and service entities.

Can a foreigner own 100 percent of a Nepal company?

Yes. Subject to sector eligibility under FITTA 2019, foreign investors can own 100 percent equity in a private company.

How long does company registration take in Nepal?

With complete documentation, registration typically takes 3 to 6 weeks, including foreign investment approval.

Are audits mandatory for private companies in Nepal?

Audits are mandatory only if turnover or capital thresholds are crossed. Many small private companies are exempt.

Can a private company later convert into a public company?

Yes. Nepal law allows conversion, subject to capital requirements and regulatory approvals.