Planning Your Business in Nepal: A Look at Company Registration Costs

If you are a foreign company planning to enter South Asia, understanding the difference between a private vs public company in Nepal is not optional. It directly affects your registration costs, compliance burden, ownership flexibility, and long-term scalability.

Nepal welcomes foreign investment, but its corporate framework is formal and rule-driven. Many foreign founders overestimate the benefits of public companies or underestimate the efficiency of private companies. This guide cuts through the confusion.

You will learn how company type impacts cost, compliance, control, and credibility, so you can choose the structure that aligns with your business goals, not assumptions.

Understanding Company Types Under Nepalese Law

Nepal’s corporate regime is governed primarily by the Companies Act 2006 and overseen by the Office of the Company Registrar (OCR).

Under Nepalese law, companies are broadly classified into:

• Private Limited Company

• Public Limited Company

Both structures are legally distinct, with different cost implications and compliance expectations.

What Is a Private Company in Nepal?

A private company in Nepal is designed for closely held businesses, subsidiaries, joint ventures, and foreign-owned operating entities.

Key Legal Characteristics

• Maximum 101 shareholders

• Restriction on public share transfer

• Cannot invite public subscriptions

• Minimum paid-up capital determined by business activity

• Suitable for FDI, wholly owned subsidiaries, and service centers

Why Foreign Companies Prefer Private Companies

Most foreign investors choose private companies because they provide:

• Lower entry cost

• Faster incorporation

• Simplified governance

• Strong operational control

What Is a Public Company in Nepal?

A public company in Nepal is designed for capital-intensive enterprises and companies planning public fundraising.

Key Legal Characteristics

• Minimum 7 shareholders

• No maximum shareholder limit

• Can issue shares to the public

• Mandatory regulatory oversight

• Higher paid-up capital threshold

Public companies are rarely chosen by first-time foreign entrants unless capital markets access is essential.

Private vs Public Company in Nepal: Core Differences at a Glance

This comparison alone explains why over 90% of foreign-owned entities in Nepal are private companies, according to OCR registration data.

Company Registration Costs in Nepal: Private vs Public

Understanding company registration costs in Nepal requires looking beyond government fees.

1. Government Registration Fees

Registration fees are linked to authorized capital.

• NPR 1 million capital: approx. NPR 1,000

• NPR 10 million capital: approx. NPR 15,000

• NPR 100 million+ capital: increases progressively

Public companies almost always incur higher registration fees due to higher capital requirements.

2. Legal and Advisory Costs

Foreign investors typically require:

• Legal structuring advice

• FDI approval support

• Document notarization and translation

• Regulatory liaison

Private companies require fewer approvals, lowering professional fees by 30–50% compared to public companies.

Minimum Capital Requirements Explained

Private Company Capital

There is no universal minimum capital. Capital is assessed based on:

• Business sector

• Visa requirements

• Industry regulator expectations

Many service companies register with USD 20,000–50,000 equivalent capital.

Public Company Capital

Public companies must meet statutory minimums, often NPR 10 million or higher, depending on sector regulations.

This capital must be fully justified and documented, increasing both cost and scrutiny.

Compliance Costs Over Time: The Hidden Difference

Foreign companies often focus on setup cost, but annual compliance costs are where the real difference lies.

Ongoing Compliance for Private Companies

• Annual audit

• Annual return filing

• Tax filings

• Statutory registers maintenance

Ongoing Compliance for Public Companies

• Enhanced audits

• Public disclosures

• Board committees

• Shareholder reporting

• Regulatory filings

Public companies typically incur 2–3x higher annual compliance costs than private companies.

Ownership and Control Considerations

Private Company Ownership

• Up to 100% foreign ownership (subject to sector rules)

• Share transfers require board approval

• Tight control over governance

Public Company Ownership

• Diluted ownership by design

• Public scrutiny

• Higher governance complexity

For foreign parent companies, private companies preserve strategic control.

Tax Treatment: No Advantage to Going Public

A common misconception is that public companies receive tax benefits. In Nepal:

• Corporate tax rates are identical

• Incentives are sector-based, not structure-based

• Compliance costs do not reduce tax liability

Choosing a public company does not reduce tax exposure.

Sector-Specific Restrictions Foreign Companies Must Know

Certain sectors restrict or prohibit foreign investment, regardless of company type.

Examples include:

• Retail trading (limited exceptions)

• Small domestic services

• Certain media activities

Your FDI eligibility matters more than private vs public classification.

When a Public Company Makes Strategic Sense

Although uncommon, a public company may be justified if:

1. You plan to raise capital from Nepalese investors

2. You operate in infrastructure or hydropower

3. You need market credibility for regulated industries

4. You intend to list shares in the future

For most foreign service, tech, consulting, and outsourcing firms, these conditions do not apply.

Step-by-Step: Registering a Private Company in Nepal

1. Name reservation with OCR

2. Document preparation and notarization

3. Online application filing

4. Capital declaration

5. Company registration certificate issuance

6. PAN registration and bank account opening

The entire process typically takes 10–15 working days when properly managed.

Common Mistakes Foreign Companies Make

Foreign investors often stumble due to:

• Choosing public company status unnecessarily

• Overcapitalizing at incorporation

• Ignoring annual compliance obligations

• Misunderstanding sectoral FDI rules

Avoiding these errors saves time, money, and regulatory risk.

Strategic Recommendation: Private vs Public Company in Nepal

For foreign companies entering Nepal, a private limited company is almost always the optimal structure.

It offers:

• Cost efficiency

• Faster market entry

• Regulatory simplicity

• Long-term scalability

Public companies should be considered only with clear capital market objectives.

Frequently Asked Questions: Private vs Public Company in Nepal

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

Yes. For most foreign investors, private companies offer lower costs, simpler compliance, and stronger control.

Can a foreigner own 100% of a private company in Nepal?

Yes, subject to sectoral FDI rules and approvals.

What is the minimum capital for a private company in Nepal?

There is no fixed minimum. Capital depends on business activity and visa requirements.

Are public companies taxed less in Nepal?

No. Tax rates are the same for private and public companies.

Can a private company later convert into a public company?

Yes. Conversion is legally permitted but involves regulatory approval and restructuring costs.

Conclusion: Making the Right Choice From Day One

Choosing between a private vs public company in Nepal is not about prestige. It is about cost, control, and compliance efficiency.

For foreign companies, a private limited company delivers faster entry, lower risk, and long-term flexibility. Public companies serve a narrow purpose and should be approached strategically.

If you want clarity before committing capital, professional structuring advice is essential.