How to Register Your Business in Nepal: Key Steps Explained

Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign investors face.
This choice affects ownership control, capital raising, tax exposure, compliance workload, and future exit options.

Nepal actively welcomes foreign direct investment, but its company law framework is precise and process-driven.
If you structure incorrectly at entry, fixing it later can be expensive and time-consuming.

This guide gives you a clear, authoritative, and practical roadmap.
You will learn how private and public companies differ, how registration works, and which structure fits your expansion strategy.

Understanding Business Structures in Nepal

Nepal’s Companies Act recognizes multiple legal forms.
For foreign companies, two dominate in practice: private limited companies and public limited companies.

What Is a Private Company in Nepal?

A private company in Nepal is a closely held corporate entity.
It is the preferred option for most foreign investors entering Nepal.

Key features include:

• Shareholders limited to a small group
• No public share issuance
• Strong control for founders and parent companies
• Faster incorporation and simpler compliance

Private companies are commonly used for:

• Back-office operations
• IT and software development centers
• Liaison and cost-center entities
• Wholly owned FDI subsidiaries

What Is a Public Company in Nepal?

A public company in Nepal is designed for large-scale capital mobilization.
It can invite investment from the general public and institutional investors.

Key characteristics include:

• Minimum seven shareholders
• Higher paid-up capital thresholds
• Mandatory regulatory disclosures
• Stricter governance standards

Public companies are typically used for:

• Banking and financial institutions
• Insurance companies
• Hydropower and infrastructure projects
• Companies planning IPOs

Private vs Public Company in Nepal: Core Differences

Understanding the structural differences helps foreign investors avoid misalignment.

Ownership and Shareholding

Private companies limit share transfers and protect control.
Public companies allow free share transferability and broad ownership.

Capital Requirements

Private companies require lower initial capital.
Public companies require substantially higher paid-up capital, often sector-specific.

Compliance Burden

Private companies face fewer filings and disclosures.
Public companies are subject to enhanced regulatory scrutiny.

Comparison Table: Private vs Public Company in Nepal

Insight:
Over 90 percent of foreign-owned entities in Nepal register as private companies during market entry.

Why Foreign Companies Usually Choose a Private Company

For foreign businesses, the private structure offers flexibility and risk control.

Strategic Advantages

• Full ownership retention
• Easier profit repatriation planning
• Lower administrative costs
• Faster decision-making

Operational Benefits

• Simple board structure
• Reduced disclosure obligations
• Easier employee and payroll setup
• Faster banking and tax registration

Step-by-Step: How to Register a Company in Nepal

Whether you choose a private or public structure, the registration flow follows defined steps.

Step 1: Name Reservation

The proposed company name must be approved by the Office of Company Registrar.
Names must be unique and compliant with naming guidelines.

Step 2: Prepare Constitutional Documents

You must draft:

• Memorandum of Association
• Articles of Association

These documents define ownership, objectives, and governance.

Step 3: Capital Structuring and Shareholding

Foreign investors must specify:

• Shareholding percentages
• Paid-up capital commitments
• Investment currency and inflow schedule

This step is critical for compliance with foreign investment rules.

Step 4: Company Registration Filing

Documents are filed digitally with the registrar.
Upon approval, the company receives a Certificate of Incorporation.

Step 5: Foreign Investment Approval

Foreign shareholders must obtain approval under Nepal’s foreign investment framework.
This step confirms legality of capital inflow and ownership.

Step 6: Tax and Statutory Registrations

After incorporation, the company must register for:

• Permanent Account Number
• VAT, if applicable
• Social security and labor registrations

Only after this stage can operations begin.

Regulatory and Legal Framework Foreign Investors Must Know

Nepal’s business environment is rules-based and documentation-driven.

Key governing instruments include:

• Companies Act
• Foreign Investment and Technology Transfer framework
• Income Tax Act
• Labor and social security laws

These laws define ownership rights, tax obligations, and employment compliance.

Tax Implications: Private vs Public Company in Nepal

Tax treatment is broadly similar, but scale matters.

Corporate Income Tax

Most companies are taxed at the standard corporate rate.
Certain industries face higher or preferential rates.

Dividend Distribution

Dividends are subject to withholding tax.
Foreign shareholders must comply with repatriation procedures.

Compliance Costs

Public companies incur higher audit, disclosure, and reporting costs.
Private companies remain more cost-efficient.

Common Mistakes Foreign Companies Make

Foreign investors often underestimate Nepal’s procedural requirements.

Avoid these errors:

• Choosing a public company without capital needs
• Incorrect shareholding disclosures
• Delayed tax registration
• Poor documentation of capital inflow
• Ignoring labor compliance obligations

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

Choose a Private Company If:

• You want full ownership control
• You are setting up a cost center
• You are testing the Nepal market
• You want faster incorporation

Choose a Public Company If:

• You plan public fundraising
• You operate in regulated sectors
• You require large domestic capital pools

Future Conversion: Can a Private Company Become Public?

Yes.
Nepalese law allows private companies to convert into public companies later.

This staged approach reduces early-stage risk while preserving growth options.

Key Takeaways for Foreign Investors

• Private companies dominate foreign investment structures
• Public companies suit large, regulated ventures
• Early structuring decisions shape long-term success
• Compliance planning matters as much as incorporation

The private vs public company in Nepal decision should align with your investment horizon, risk tolerance, and capital strategy.

Conclusion: Making the Right Entry into Nepal

Nepal offers strong potential for foreign businesses, but structure matters.
For most investors, a private company in Nepal provides the ideal balance of control, compliance, and scalability.

Understanding the differences between a private vs public company in Nepal helps you enter the market confidently and compliantly.

If you plan your structure correctly at the start, Nepal can become a cost-effective and strategic regional base.

Frequently Asked Questions 

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

Yes. Most foreign investors choose private companies due to lower capital requirements and simpler compliance.

Can a foreigner own 100 percent of a Nepal company?

Yes. Full foreign ownership is permitted in many sectors, subject to approval.

How long does company registration take in Nepal?

Private company registration typically takes a few weeks, excluding approvals.

Are public companies mandatory for large projects?

Only in specific regulated sectors. Most projects can begin as private companies.

Can profits be repatriated from Nepal?

Yes. Profits can be repatriated after tax compliance and regulatory approval.