Foreign investors often begin with one core question: Private vs public company in Nepal — which structure best supports innovation and intellectual property protection?

If you are entering Nepal to build technology, manufacturing, or a branded consumer business, your company structure and IP strategy must align from day one. The wrong choice can create tax inefficiencies, governance risks, and even IP ownership complications.

This guide explains:

• Private vs public company in Nepal
• How each structure affects intellectual property rights
• Compliance under Nepal’s key legislation
• Strategic recommendations for foreign companies

You’ll walk away with clarity, confidence, and a roadmap.

Nepal’s Legal Framework: The Foundation for Company and IP Protection

Before comparing structures, it’s important to understand Nepal’s governing laws.

Key Legislation for Companies

Company formation is governed primarily by:

• Companies Act, 2006
• Office of Company Registrar

Foreign investment is regulated under:

• Foreign Investment and Technology Transfer Act, 2019

Key Legislation for Intellectual Property

IP protection in Nepal currently operates under:

• Patent, Design and Trade Mark Act, 1965
• Department of Industries

Nepal is also a WTO member and signatory to TRIPS obligations.

This framework shapes how ownership, licensing, and enforcement work in practice.

Private vs Public Company in Nepal: Core Structural Differences

Let’s break down the differences in a practical, investor-focused way.

What Is a Private Company in Nepal?

Under the Companies Act, a private company:

• Limits shareholders (typically up to 101)
• Restricts share transfers
• Cannot invite public share subscription
• Offers flexible governance

Most foreign investors choose this structure.

Why?

Because it offers:

• Strong control over equity
• Easier compliance management
• Better confidentiality
• Faster decision-making

For innovation-led businesses, this flexibility matters.

What Is a Public Company in Nepal?

A public company:

• Requires minimum 7 shareholders
• May issue shares to the public
• Is subject to stricter governance
• Can list on Nepal Stock Exchange

Public companies are appropriate for:

• Large infrastructure projects
• Banking and insurance
• Capital-intensive industries

They are less common for early-stage foreign entrants.

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

Insight:
For IP-driven businesses, confidentiality and control are critical. Private companies generally offer better structural protection.

How Company Structure Impacts Intellectual Property Rights

Here is where most foreign investors underestimate risk.

1. Ownership of IP Assets

Under Nepal law, IP must be registered in the name of the legal entity.

If your Nepal entity owns:

• Trademarks
• Patents
• Designs

The corporate structure determines:

• Who controls them
• How they can be licensed
• How profits are repatriated

A private company allows tighter shareholder agreements governing IP.

2. Licensing and Technology Transfer

Under FITTA 2019, technology transfer agreements must be approved by authorities.

Private companies often structure IP as:

• Parent-owned IP
• Licensed to Nepal subsidiary

This reduces risk of IP leakage.

Public companies require broader disclosures, which may dilute strategic confidentiality.

3. Enforcement Strategy

IP enforcement happens through:

• Department of Industries
• Commercial courts

In enforcement proceedings, a private company’s centralized ownership structure simplifies action.

Public companies may face board-level complexity before litigation.

Why Most Foreign Companies Choose a Private Company in Nepal

From an advisory perspective, here are the top reasons.

1. Control

Foreign investors retain majority equity.

2. Risk Containment

Private companies ring-fence:

• Tax exposure
• Compliance risk
• Employment liabilities

3. IP Protection

Confidential licensing agreements remain private.

4. Simplified Governance

Fewer mandatory disclosures reduce strategic risk.

5. Faster Setup

Private companies typically register faster through the OCR system.

When a Public Company Makes Strategic Sense

Public companies are appropriate if:

• You plan IPO within 5–7 years
• You require mass capital mobilization
• You operate in regulated sectors

For IP-heavy startups or FDI-led operations, this is rarely the first step.

Intellectual Property Strategy for Foreign Companies Entering Nepal

Here is a structured approach we recommend:

Step 1: Decide Entity Type (Private vs Public Company in Nepal)

Structure determines control.

Step 2: Register IP in the Correct Name

Trademarks must be filed at Department of Industries.

Step 3: Draft Shareholder Agreements Covering IP

Include clauses on:

• IP ownership
• Assignment rights
• Exit events
• Licensing terms

Step 4: Structure Technology Transfer Agreements

Approval may be required under FITTA.

Step 5: Align Tax and Royalty Planning

Under Income Tax Act, 2002, royalty payments may attract withholding tax.

Proper structuring avoids revenue leakage.

Common Mistakes Foreign Companies Make

• Registering IP in personal names
• Ignoring technology transfer approvals
• Choosing public company too early
• Failing to align shareholder agreements with IP strategy

These errors create long-term complications.

Practical Scenario: Technology Startup Entering Nepal

Imagine a Singapore-based SaaS company entering Nepal.

Best structure:

• Private limited company
• 100% foreign-owned under FITTA
• Parent retains global IP
• Nepal entity operates under license

Benefits:

• Clear IP chain
• Controlled royalty flow
• Simplified exit

Public company would unnecessarily increase compliance burden.

Compliance Snapshot for Foreign Investors

Under the Companies Act and FITTA:

• Annual returns must be filed
• Audited financial statements required
• Tax returns filed under Income Tax Act
• IP renewals monitored

Private companies face fewer public disclosure obligations.

The Strategic Lens: Risk vs Control vs Scalability

Let’s evaluate from a board-level perspective.

If innovation and IP are central, private structure aligns better.

Frequently Asked Questions (People Also Ask)

1. What is the difference between a private and public company in Nepal?

A private company limits shareholders and cannot issue public shares. A public company can raise capital from the public and has stricter governance. Private companies are more common for foreign investors.

2. Can foreign investors own 100% of a private company in Nepal?

Yes. Under FITTA 2019, foreign investors can own 100% equity in many sectors, subject to approval and sectoral restrictions.

3. How are trademarks registered in Nepal?

Trademarks are registered under the Patent, Design and Trade Mark Act through the Department of Industries. Registration grants exclusive rights within Nepal.

4. Does company type affect IP protection?

Yes. A private company offers stronger confidentiality and tighter control over IP ownership and licensing arrangements.

5. Is a public company required for large investments?

Not necessarily. Large FDI projects often begin as private companies and convert later if public capital is needed.

Why This Decision Matters More Than You Think

Choosing between a private vs public company in Nepal is not just a formality.

It affects:

• IP ownership
• Tax exposure
• Capital strategy
• Exit flexibility
• Governance risk

For most foreign companies entering Nepal to build brands, technology, or manufacturing capabilities, a private company provides better structural alignment with intellectual property protection.

Final Thoughts: Private vs Public Company in Nepal

If your entry strategy involves innovation, branding, or proprietary technology, the safest and most scalable starting point is usually a private company.

It offers control.
It protects confidentiality.
It simplifies governance.

And most importantly, it aligns with a strong IP strategy under Nepal’s legal framework.