How to Register a New Company in Nepal: A Step-by-Step Process

Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies must make before market entry. The right structure affects ownership, compliance burden, capital flexibility, and long-term exit options. This guide explains the difference in plain language and walks you through how to register a new company in Nepal step by step, with practical insight drawn from Nepal’s company law, tax rules, and foreign investment framework. If you are expanding into South Asia or building a delivery hub, this article gives you clarity and confidence from day one.

Why the Private vs Public Company Choice Matters for Foreign Companies

For overseas founders, Nepal is attractive due to competitive talent costs, a growing services economy, and improving digital administration. However, regulators treat private and public companies very differently.

Your choice will directly influence:

• Speed of incorporation

• Capital and shareholder limits

• Ongoing reporting and audit requirements

• Future fundraising or IPO readiness

• Perception by banks, regulators, and partners

Most foreign companies start with a private company. A public company is usually considered later, once scale, funding, or listing ambitions arise.

Legal Framework Governing Company Registration in Nepal

Company formation in Nepal is governed primarily by:

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act, 2019

• Income Tax Act, 2002

• Industrial Enterprises Act, 2020

The registering authority is the Office of Company Registrar, while tax registration is handled by the Inland Revenue Department.

These laws apply equally to domestic and foreign-owned companies, with additional approvals required for foreign investment.

Understanding Company Types in Nepal

What Is a Private Company in Nepal

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

Key characteristics include:

• Minimum 1 and maximum 101 shareholders

• Shares are not offered to the public

• Faster incorporation timeline

• Lower compliance and disclosure burden

Private companies are ideal for wholly owned subsidiaries, joint ventures, and regional back-office operations.

What Is a Public Company in Nepal

A public company is designed for scale and capital markets.

Key characteristics include:

• Minimum 7 shareholders

• No upper limit on shareholders

• Shares can be offered to the public

• Mandatory enhanced disclosures and governance

Public companies are often used for banks, hydropower, insurance, and large infrastructure projects.

Private vs Public Company in Nepal: Side-by-Side Comparison

Insight: Over 90 percent of foreign investors entering Nepal choose a private company structure initially due to speed and flexibility.

Step-by-Step Process to Register a New Company in Nepal

Step 1: Decide the Right Company Structure

Before filing anything, confirm whether a private or public company aligns with your business model, funding plan, and exit strategy. This decision is difficult to reverse later without restructuring.

Step 2: Name Reservation

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

The name must:

1. Not conflict with existing companies

2. Reflect the business activity

3. End with “Private Limited” or “Limited” as applicable

Name approval is usually granted within a few working days.

Step 3: Prepare Constitutional Documents

Two core documents are required:

• Memorandum of Association defining objectives and capital

• Articles of Association defining governance and internal rules

Foreign promoters often underestimate the importance of drafting these correctly. Poorly drafted objectives can later restrict licensing or tax positions.

Step 4: File Incorporation Application

The incorporation application includes:

• Approved name

• Memorandum and Articles

• Shareholder and director details

• Registered office address

Once reviewed and approved, the Registrar issues the Certificate of Incorporation.

Step 5: Obtain Tax Registration (PAN)

Every company must obtain a Permanent Account Number. This is mandatory before opening a bank account or issuing invoices.

Step 6: Open a Company Bank Account

Banks conduct detailed KYC for foreign-owned companies. Expect scrutiny on ownership, source of funds, and business purpose.

Step 7: Foreign Investment Approval and Capital Injection

Foreign shareholders must secure foreign investment approval and route capital through the Nepal banking system in compliance with central bank rules.

Compliance Obligations After Registration

Once incorporated, companies must maintain ongoing compliance.

These include:

• Annual general meetings

• Annual filings with the Registrar

• Tax returns and advance tax payments

• Statutory audits

Public companies face stricter disclosure and governance rules, including mandatory independent directors and public reporting.

Costs and Timelines: What Foreign Companies Should Expect

Typical Timelines

• Private company incorporation: 2 to 4 weeks

• Public company incorporation: 1 to 2 months

Typical Cost Heads

• Government registration fees

• Professional drafting and filing fees

• Translation and notarization for foreign documents

• Banking and compliance setup costs

Actual costs vary depending on share capital, sector, and foreign ownership complexity.

Private vs Public Company in Nepal: Which Is Right for You

Choose a private company if you want speed, control, and lower compliance.
Choose a public company only if you plan public fundraising, listing, or large-scale infrastructure investment.

For most foreign service companies, tech firms, and regional hubs, a private company is the optimal starting point.

Common Mistakes Foreign Investors Make

Foreign companies often face delays due to avoidable errors.

The most common include:

• Selecting the wrong company type too early

• Overly narrow business objectives

• Incomplete foreign document legalization

• Underestimating tax and audit obligations

Early legal and tax structuring avoids expensive restructuring later.

Frequently Asked Questions: Private vs Public Company in Nepal

Is a private company in Nepal suitable for foreign ownership

Yes. A private company is the most common structure for foreign investors and allows up to 100 percent foreign ownership in approved sectors.

Can a private company later become a public company

Yes. A private company can be converted into a public company after meeting capital, governance, and regulatory requirements.

How long does company registration take in Nepal

A private company typically takes two to four weeks. Public companies take longer due to additional approvals.

What is the minimum capital requirement

There is no fixed minimum capital for most sectors, but certain regulated industries impose thresholds.

Do foreign directors need to reside in Nepal

No. Foreign directors can reside abroad, though a local authorized representative is required.

Conclusion: Making the Right Choice from Day One

Understanding private vs public company in Nepal is not just a legal formality. It is a strategic decision that shapes your cost structure, risk profile, and growth options. Most foreign companies succeed by starting with a private company, building operations, and scaling strategically. With the right planning, Nepal offers a stable and cost-efficient platform for long-term growth.