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.
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.
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.
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.
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.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | No limit |
| Public share offering | Not allowed | Allowed |
| Compliance burden | Moderate | High |
| Typical use by foreigners | Subsidiaries, service hubs | Large capital projects |
| Time to incorporate | Faster | Longer |
Insight: Over 90 percent of foreign investors entering Nepal choose a private company structure initially due to speed and flexibility.
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.
You must reserve a unique company name with the Office of Company Registrar.
The name must:
Not conflict with existing companies
Reflect the business activity
End with “Private Limited” or “Limited” as applicable
Name approval is usually granted within a few working days.
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.
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.
Every company must obtain a Permanent Account Number. This is mandatory before opening a bank account or issuing invoices.
Banks conduct detailed KYC for foreign-owned companies. Expect scrutiny on ownership, source of funds, and business purpose.
Foreign shareholders must secure foreign investment approval and route capital through the Nepal banking system in compliance with central bank rules.
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.
Private company incorporation: 2 to 4 weeks
Public company incorporation: 1 to 2 months
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.
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.
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.
Yes. A private company is the most common structure for foreign investors and allows up to 100 percent foreign ownership in approved sectors.
Yes. A private company can be converted into a public company after meeting capital, governance, and regulatory requirements.
A private company typically takes two to four weeks. Public companies take longer due to additional approvals.
There is no fixed minimum capital for most sectors, but certain regulated industries impose thresholds.
No. Foreign directors can reside abroad, though a local authorized representative is required.
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.