How to Register Your Business in Nepal: Tips for First Time Entrepreneurs

If you are a foreign entrepreneur planning market entry, understanding private vs public company in Nepal is your first strategic decision. The structure you choose affects ownership control, compliance burden, capital raising, and long-term exit options.

Nepal welcomes foreign investment, but the legal framework is precise. Many first-time investors delay entry due to uncertainty, not complexity. This guide removes that friction. You will learn how private and public companies differ, which model suits foreign companies, and how to register your business in Nepal correctly the first time.

This article is written specifically for international founders, CFOs, and expansion teams seeking clarity, compliance, and speed.

Why Company Structure Matters in Nepal

Choosing the wrong entity can create unnecessary regulatory exposure. It can also limit profit repatriation or future fundraising.

In Nepal, company structure directly affects:

• Foreign ownership permissions

• Capital requirements

• Compliance timelines

• Audit and disclosure rules

• Ease of exit or conversion

For most foreign investors, the debate always comes back to private vs public company in Nepal.

Overview of Company Types Available in Nepal

Nepal primarily recognizes two incorporated company forms under corporate law.

1. Private Limited Company

2. Public Limited Company

Both can accept foreign investment, subject to sector eligibility and approval rules.

What Is a Private Company in Nepal?

A private company in Nepal is designed for closely held ownership and operational control.

Key Characteristics of a Private Company

• Minimum shareholders: 1

• Maximum shareholders: 101

• No public share issuance

• Restricted share transfer

• Lower compliance burden

This structure is the most common choice for foreign companies entering Nepal.

What Is a Public Company in Nepal?

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

Key Characteristics of a Public Company

• Minimum shareholders: 7

• No maximum shareholders

• Can issue shares to the public

• Mandatory regulatory disclosures

• Higher capital threshold

Public companies are uncommon for first-time foreign investors.

Private vs Public Company in Nepal: Core Differences

The table below highlights the most practical differences foreign businesses must evaluate.

This comparison alone answers why most international firms choose private incorporation.

Which Structure Is Best for Foreign Companies?

For 90 percent of foreign investors, a private company is the optimal entry vehicle.

A public company only makes sense if you:

• Plan an IPO in Nepal

• Require local public capital

• Operate regulated infrastructure projects

Otherwise, private incorporation offers speed, flexibility, and risk control.

Legal Framework Governing Company Registration in Nepal

Foreign companies must comply with multiple statutes. These laws are stable and consistently enforced.

Key governing legislation includes:

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act, 2019

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

Nepal aligns closely with international corporate norms while maintaining local safeguards.

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

Below is a simplified registration roadmap for foreign companies.

1. Name Reservation

Submit proposed company names for approval.

2. Foreign Investment Approval

Apply for foreign investment clearance for eligible sectors.

3. Incorporation Filing

Submit constitutional documents to the Registrar.

4. Capital Inflow

Bring approved capital through formal banking channels.

5. Tax and Compliance Setup

Register for tax, social security, and payroll systems.

This process typically takes 4 to 6 weeks when managed professionally.

Documents Required for Foreign Company Registration

Foreign shareholders must prepare precise documentation.

Typical requirements include:

• Passport copies of shareholders

• Board resolution approving Nepal investment

• Company profile of foreign parent

• Memorandum and Articles of Association

• Capital commitment letter

Documentation errors are the most common cause of delays.

Capital Requirements for Private vs Public Company in Nepal

Nepal does not impose a fixed minimum capital for private companies, except in regulated sectors.

Public companies require significantly higher capital commitments.

Foreign investors typically inject capital based on:

• Operational runway

• Sector licensing needs

• Staffing and lease costs

Capital can be increased later without restructuring.

Taxation Overview for Foreign Owned Companies

Understanding tax exposure early prevents surprises.

Key Tax Rates in Nepal

• Corporate income tax: 25 percent

• Dividend tax: 5 percent withholding

• VAT: 13 percent

• Capital gains tax: Applicable on exit

Nepal allows profit repatriation after tax compliance.

Employment and Labor Compliance Considerations

Once operational, companies must comply with local labor laws.

Key employer obligations include:

• Written employment contracts

• Social Security Fund contributions

• Paid leave and gratuity provisions

• Monthly tax withholding

These rules apply equally to private and public companies.

Can a Private Company Convert to a Public Company Later?

Yes. Nepalese law allows conversion.

This is a common long-term strategy.

Foreign companies often:

• Start as private

• Validate the market

• Scale operations

• Convert to public when capital markets matter

Conversion requires regulatory approval and revised governance.

Common Mistakes Foreign Companies Make

Avoid these early-stage errors.

• Choosing public incorporation unnecessarily

• Underestimating compliance timelines

• Using nominee structures incorrectly

• Failing to align capital with approvals

Professional structuring prevents costly restructuring.

Strategic Insight: Why Private Companies Dominate Foreign Investment

Foreign investors prioritize control, compliance clarity, and exit flexibility.

A private company in Nepal delivers:

• Faster setup

• Lower compliance cost

• Easier ownership changes

• Clear profit repatriation

This is why private incorporation dominates FDI statistics.

Frequently Asked Questions: Private vs Public Company in Nepal

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

Yes. Private companies offer simpler compliance, full ownership control, and faster setup. Public companies suit large-scale fundraising only.

Can foreigners own 100 percent of a Nepal company?

Yes, in approved sectors. Foreign ownership is permitted subject to investment approval.

How long does company registration take in Nepal?

Typically, 4 to 6 weeks if documents are complete and approvals are coordinated.

What is the minimum investment for foreign companies?

There is no universal minimum, except for sector-specific thresholds under-investment laws.

Can profits be repatriated from Nepal?

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

Final Thoughts: Making the Right Choice

Choosing between a private vs public company in Nepal is not a legal formality. It is a strategic decision that shapes cost, control, and growth.

For first-time foreign entrepreneurs, private incorporation remains the safest and smartest entry route. Public companies belong later in the growth journey.

With proper structuring, Nepal offers a compliant, cost-efficient, and scalable destination for international expansion.