Key Legal Requirements for Company Registration in Nepal

If you’re a foreign company planning to expand into Nepal, your first major legal decision is choosing between a private vs public company structure. It may seem like a technical formality. In reality, it shapes your FDI approval process, compliance obligations, capital structure, reporting requirements, and even your long-term exit strategy.

This topic matters because Nepal’s regulatory framework especially under the Companies Act, 2063 (2006) and the Foreign Investment and Technology Transfer Act (FITTA) is precise. One wrong structural decision can delay approvals from the Department of Industry (DOI) or Nepal Rastra Bank (NRB).

This guide is written for foreign companies, investors, and international founders evaluating Nepal as a market entry destination.

In this post, we’ll explain what private vs public company means in Nepal, outline the legal requirements step-by-step, clarify FDI implications, and share practical insights from cross-border incorporations so you can move forward with confidence.

What Is Private vs Public Company, and Why Does It Matter?

Under Nepal’s Companies Act, 2063, companies are broadly classified into:

• Private Limited Company (Pvt. Ltd.)
• Public Limited Company (Ltd.)

Private Company (Pvt. Ltd.)

A private company:

• Limits shareholders (maximum 101).
• Restricts share transfer.
• Cannot offer shares to the public.
• Has simpler compliance requirements.

This is the most common structure for foreign investors entering Nepal.

Public Company (Ltd.)

A public company:

• Requires a minimum of 7 shareholders.
• Can invite public share subscription.
• Has stricter disclosure and governance obligations.
• May list on the Nepal Stock Exchange (NEPSE).

For most foreign companies entering Nepal for operational expansion, a private company structure is more practical and cost-efficient.

Why This Choice Matters

Your decision affects:

• FDI approval pathway
• Capital injection timeline
• Board composition
• Audit requirements
• Public reporting obligations
• Exit strategy

In our experience advising cross-border clients, 90% of first-time foreign investors opt for a private limited company due to flexibility and lower regulatory burden.

Key Legal Requirements for Company Registration in Nepal

Let’s break down the process clearly and practically.

Step 1: Determine the Appropriate Structure (Private vs Public Company)

Before filing any documents, clarify:

• Shareholding structure (local vs foreign)
• Planned capital
• Whether you plan to raise public funds
• Governance complexity tolerance

For foreign investors, most projects begin as a private limited company under FDI approval.

Step 2: Obtain Foreign Investment Approval (If Applicable)

If the shareholders are foreign entities or individuals, you must secure approval under the Foreign Investment and Technology Transfer Act (FITTA).

Approval authority:

• Department of Industry (DOI) (most sectors)
• Investment Board Nepal (IBN) (large projects)

You’ll submit:

• Project proposal
• Financial projections
• Parent company documents
• Board resolution approving Nepal investment

Without FDI approval, company registration cannot proceed for foreign shareholders.

Step 3: Name Reservation with Office of Company Registrar (OCR)

You must:

1. Propose company name online.
2. Ensure it complies with Companies Act naming rules.
3. Wait for name approval confirmation.

Tip: Avoid generic names. Distinct names reduce rejection risk.

Step 4: Draft Memorandum and Articles of Association (MOA/AOA)

These documents define:

• Company objectives
• Share structure
• Governance framework
• Director powers
• Share transfer rules

For foreign investors, it’s critical to align MOA objectives with FDI approval scope. A mismatch can cause regulatory delays.

Step 5: Register with the Office of Company Registrar (OCR)

Submit:

• Approved name
• MOA & AOA
• Director details
• Shareholder information
• Capital structure
• Registered office address

Upon approval, you receive:

• Certificate of Incorporation
• Company Registration Number

Your company is now legally formed.

Step 6: Obtain PAN and Tax Registration

Register with the Inland Revenue Department (IRD) for:

• Permanent Account Number (PAN)
• VAT (if applicable)
• Tax account activation

Under Nepal’s Income Tax Act, companies must comply with annual corporate tax filing and audit requirements.

Step 7: Open Bank Account and Capital Injection (FDI Companies)

Foreign shareholders must:

1. Transfer capital through formal banking channels.
2. Obtain inward remittance certificate.
3. Report investment to Nepal Rastra Bank (NRB).

This ensures lawful capital recognition and future profit repatriation eligibility.

Step 8: Sector-Specific Licenses (If Required)

Depending on your industry, you may need:

• ICT licenses
• Manufacturing permits
• Environmental clearances
• SEZ registration
• Labor registration

Compliance varies by sector.

Private vs Public Company: Legal Comparison Table

For foreign companies, the private structure typically provides strategic flexibility and lower risk.

Tips and Reminders for Foreign Investors

1. Align FDI approval with company objectives.
2. Structure shareholding carefully to avoid future restructuring costs.
3. Plan profit repatriation early — compliance with NRB rules is essential.
4. Ensure audit readiness from Year 1.
5. Choose advisors familiar with cross-border filings.

Many delays we see are due to misaligned documentation between DOI, OCR, and NRB.

Common Mistakes Foreign Companies Make

• Registering locally without proper FDI approval
• Copy-pasting MOA templates not aligned with sector
• Underestimating tax registration timelines
• Ignoring labor law compliance
• Choosing public structure unnecessarily

These mistakes are avoidable with proper planning.

Frequently Asked Questions 

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

A private company limits shareholders and cannot offer shares publicly. A public company can raise capital from the public and has stricter compliance requirements under the Companies Act, 2063.

2. Can a foreign investor register a private company in Nepal?

Yes. Foreign investors can register a private limited company after obtaining FDI approval from the Department of Industry or Investment Board Nepal.

3. Is FDI approval mandatory before company registration?

Yes. For foreign shareholders, FDI approval must be secured before incorporation proceeds.

4. How long does company registration take in Nepal?

Typically 2–6 weeks, depending on FDI approval, documentation accuracy, and regulatory coordination.

5. Can a private company later convert into a public company?

Yes. A private company can convert into a public company by meeting minimum shareholder and compliance requirements.

Final Verdict: Private V.s Public Company

Understanding the legal requirements for company registration in Nepal begins with choosing the correct private vs public company structure. For foreign investors, this decision influences regulatory approval, tax exposure, governance obligations, and long-term flexibility.

Nepal offers strong opportunities across technology, manufacturing, services, and infrastructure. But regulatory precision matters. The right structure today prevents costly restructuring tomorrow.

If you approach the process strategically, Nepal can become a highly efficient regional base for your expansion.

Call to Action

Planning to register your company in Nepal?

Our cross-border advisory team helps foreign investors:

• Secure FDI approval
• Structure private vs public company decisions
• Draft compliant MOA/AOA
• Manage OCR, IRD, and NRB filings
• Build a fully compliant entry framework

👉 Book a strategy consultation today and receive a customized Nepal market entry roadmap tailored to your industry.