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:
You’ll walk away with clarity, confidence, and a roadmap.
Before comparing structures, it’s important to understand Nepal’s governing laws.
Company formation is governed primarily by:
Foreign investment is regulated under:
IP protection in Nepal currently operates under:
Nepal is also a WTO member and signatory to TRIPS obligations.
This framework shapes how ownership, licensing, and enforcement work in practice.
Let’s break down the differences in a practical, investor-focused way.
Under the Companies Act, a private company:
Most foreign investors choose this structure.
Because it offers:
For innovation-led businesses, this flexibility matters.
A public company:
Public companies are appropriate for:
They are less common for early-stage foreign entrants.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share issue | Not allowed | Allowed |
| Regulatory burden | Moderate | High |
| Governance formalities | Flexible | Strict |
| Best for | FDI, tech, services | Large-scale capital raising |
| IP confidentiality | High | Lower due to disclosures |
Insight:
For IP-driven businesses, confidentiality and control are critical. Private companies generally offer better structural protection.
Here is where most foreign investors underestimate risk.
Under Nepal law, IP must be registered in the name of the legal entity.
If your Nepal entity owns:
The corporate structure determines:
A private company allows tighter shareholder agreements governing IP.
Under FITTA 2019, technology transfer agreements must be approved by authorities.
Private companies often structure IP as:
This reduces risk of IP leakage.
Public companies require broader disclosures, which may dilute strategic confidentiality.
IP enforcement happens through:
In enforcement proceedings, a private company’s centralized ownership structure simplifies action.
Public companies may face board-level complexity before litigation.
From an advisory perspective, here are the top reasons.
Foreign investors retain majority equity.
Private companies ring-fence:
Confidential licensing agreements remain private.
Fewer mandatory disclosures reduce strategic risk.
Private companies typically register faster through the OCR system.
Public companies are appropriate if:
For IP-heavy startups or FDI-led operations, this is rarely the first step.
Here is a structured approach we recommend:
Structure determines control.
Trademarks must be filed at Department of Industries.
Include clauses on:
Approval may be required under FITTA.
Under Income Tax Act, 2002, royalty payments may attract withholding tax.
Proper structuring avoids revenue leakage.
These errors create long-term complications.
Imagine a Singapore-based SaaS company entering Nepal.
Best structure:
Benefits:
Public company would unnecessarily increase compliance burden.
Under the Companies Act and FITTA:
Private companies face fewer public disclosure obligations.
Let’s evaluate from a board-level perspective.
| Priority | Private Company | Public Company |
|---|---|---|
| IP confidentiality | Strong | Moderate |
| Capital scalability | Moderate | Strong |
| Regulatory risk | Lower | Higher |
| Governance complexity | Lower | High |
| Ideal for innovation | Yes | Limited |
If innovation and IP are central, private structure aligns better.
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.
Yes. Under FITTA 2019, foreign investors can own 100% equity in many sectors, subject to approval and sectoral restrictions.
Trademarks are registered under the Patent, Design and Trade Mark Act through the Department of Industries. Registration grants exclusive rights within Nepal.
Yes. A private company offers stronger confidentiality and tighter control over IP ownership and licensing arrangements.
Not necessarily. Large FDI projects often begin as private companies and convert later if public capital is needed.
Choosing between a private vs public company in Nepal is not just a formality.
It affects:
For most foreign companies entering Nepal to build brands, technology, or manufacturing capabilities, a private company provides better structural alignment with intellectual property protection.
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.