Navigating Nepal's Trademark Legislation: What You Need to Know

If you are evaluating private vs public company in Nepal, trademark protection must be part of your entry strategy. Many foreign companies focus on incorporation first. That is a mistake. Your legal structure and your intellectual property position work together.

In Nepal, the right company structure under the Companies Act 2006 and proper trademark registration under the Patent, Design and Trademark Act 1965 determine how well you protect brand value, manage investors, and enforce rights.

This guide is written for foreign companies entering Nepal. It combines company law, trademark legislation, compliance rules, and strategic risk management. By the end, you will know which structure fits your expansion plan and how to protect your brand from day one.

Understanding Private vs Public Company in Nepal

Under the Companies Act 2006, companies in Nepal are broadly categorized as:

• Private Limited Company
• Public Limited Company

Both can own intellectual property. Both can register trademarks. But their structure affects governance, fundraising, disclosure, and investor confidence.

What Is a Private Company in Nepal?

A private company:

• Limits shareholders to 101
• Restricts share transfers
• Cannot invite public share subscriptions
• Has simpler compliance requirements

Most foreign investors entering Nepal choose this structure initially.

What Is a Public Company in Nepal?

A public company:

• Requires a minimum of 7 shareholders
• Can invite public investment
• May list on the Nepal Stock Exchange
• Faces stricter regulatory oversight

This structure suits large infrastructure, banking, manufacturing, or FDI projects requiring capital markets.

Nepal’s Trademark Framework: Legal Foundation

Trademark protection in Nepal is governed by the Patent, Design and Trademark Act 1965 and administered by the Department of Industry.

Nepal follows a first-to-file system. That means registration — not prior use — determines ownership priority.

If you are comparing private vs public company in Nepal, remember this:

Your company structure determines how your trademark is owned, licensed, and enforced.

Why Trademark Strategy Matters When Choosing a Company Structure

Many foreign businesses overlook this connection. Here is what is at stake.

1. Ownership Structure

A private company allows tight control over brand assets.
A public company may require disclosure of IP holdings.

2. Investor Due Diligence

Public investors require proof of:

• Registered trademarks
• IP assignments
• Brand protection strategy

3. Risk Exposure

Public companies face greater reputational risk.
Trademark disputes impact valuation directly.

Trademark Registration Process in Nepal (Step-by-Step)

Here is how registration works under Nepal’s trademark legislation:

1. Name Search at the Department of Industry
2. Application Filing with logo or word mark
3. Examination by Authority
4. Publication in IP Bulletin
5. Opposition Period (if any)
6. Registration Certificate Issued

Registration is valid for 7 years and renewable.

Foreign applicants must appoint a local authorized agent.

Private vs Public Company in Nepal: Strategic Comparison for Foreign Investors

Below is a comparison tailored for international companies entering Nepal.

For most foreign SMEs, a private company offers flexibility and lower regulatory friction.

Key Legal Considerations for Foreign Companies

If you are entering Nepal, these laws intersect:

• Companies Act 2006
• Patent, Design and Trademark Act 1965
• Foreign Investment and Technology Transfer Act 2019
• Income Tax Act 2002

You cannot assess private vs public company in Nepal without evaluating:

• FDI approval process
• Dividend repatriation
• IP licensing to parent company
• Transfer pricing compliance

Common Mistakes Foreign Companies Make

Here is what we frequently see in market entry projects:

• Registering a company before securing trademark
• Using brand without local registration
• Ignoring translation risks
• Structuring IP under foreign parent without Nepal registration
• Assuming prior international registration protects in Nepal

Nepal is not automatically covered by foreign filings.

Trademark Ownership Structure: Parent vs Subsidiary?

This is where structure matters deeply.

Option A: Trademark Owned by Foreign Parent

Pros:

• Centralized global control
• Easier global licensing

Cons:

• Licensing documentation required
• Tax implications
• Repatriation complexity

Option B: Trademark Owned by Nepal Subsidiary

Pros:

• Strong local enforceability
• Simpler commercial use

Cons:

• Harder cross-border brand restructuring later

This decision should align with your private vs public company in Nepal strategy.

Enforcement and Dispute Resolution

Trademark infringement cases are handled under Nepal’s IP law and can proceed through:

• Administrative action
• Civil court
• Criminal penalties in certain cases

Public companies often face higher litigation exposure.

Brand protection is not just legal. It is reputational.

Timeline and Costs (Indicative)

Early filing is strongly recommended.

When Should You Choose a Private Company?

Choose private if:

• You want operational control
• You are testing market entry
• You have a limited shareholder base
• You want simplified compliance
• You are protecting IP before expansion

Most foreign service, tech, and consulting firms start here.

When Should You Choose a Public Company?

Choose public if:

• You require significant capital
• You plan to list on the Nepal Stock Exchange
• You operate in regulated sectors
• You aim for broad investor participation

Infrastructure and banking projects commonly use this structure.

Tax Implications Linked to Structure

Under the Income Tax Act 2002:

• Corporate income tax applies to both structures.
• Public companies may face greater audit scrutiny.
• Royalty payments require withholding compliance.
• Transfer pricing documentation may apply.

Trademark licensing between parent and Nepal entity must be structured carefully.

Frequently Asked Questions (FAQ)

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

A private company restricts share transfers and cannot raise capital from the public. A public company can invite public investment and faces stricter regulation.

2. Is trademark registration mandatory in Nepal?

It is not mandatory but strongly recommended. Nepal operates under a first-to-file system. Registration ensures enforceable rights.

3. Can a foreign company directly register a trademark?

Yes. Foreign entities can register trademarks in Nepal through a local authorized agent.

4. How long does trademark registration take?

Typically 6 to 12 months. Objections or opposition may extend this timeline.

5. Which structure is better for foreign investors?

Most foreign SMEs prefer a private company for flexibility. Large capital projects often require a public company.

Strategic Recommendation for Foreign Companies

If you are evaluating private vs public company in Nepal, consider this phased approach:

1. Register trademark early.
2. Incorporate private company initially.
3. Structure IP ownership clearly.
4. Scale to public model if capital demand increases.

This reduces regulatory friction and protects brand equity.

Conclusion: Align Structure and Brand from Day One

Choosing between private vs public company in Nepal is not only about compliance. It is about governance, capital strategy, and intellectual property protection.

Nepal’s legal framework — including the Companies Act 2006 and Patent, Design and Trademark Act 1965 — provides clarity. But execution determines risk.

Foreign companies that integrate trademark strategy with incorporation planning avoid costly restructuring later.

If you are planning market entry into Nepal, now is the time to structure correctly.

Ready to protect your brand and choose the right structure?
Contact our advisory team for a customized market entry roadmap.