Setting Up a Business in Nepal: A Guide to Registration Costs

Private vs public company in Nepal is one of the first strategic decisions foreign companies must make before entering the Nepali market. The choice affects registration costs, compliance exposure, ownership flexibility, and long-term scalability. This guide breaks down the real costs, legal requirements, and practical considerations so you can register the right entity with confidence. If you are planning a back-office, tech center, or market-entry vehicle, this article gives you a clear, decision-ready view.

Understanding the Business Landscape in Nepal

Nepal has steadily modernized its company registration system. The Office of the Company Registrar operates an online portal for name reservation, incorporation, and statutory filings. Foreign participation is permitted, subject to sectoral approvals under foreign investment laws.

From an investor’s lens, Nepal offers:

• Competitive labor costs

• English-speaking talent

• Strategic access to South Asia

• Clear corporate law framework

The key is choosing the correct company structure at the outset.

What Is a Private Company in Nepal?

A private company in Nepal is the most commonly used structure for foreign-owned businesses.

Core Features

• Minimum shareholders: 1

• Maximum shareholders: 101

• Share transfer restrictions

• Cannot invite public subscriptions

Why Foreign Companies Prefer It

Private companies are simpler to register, cheaper to maintain, and faster to operate. Most foreign investors choose this route for subsidiaries, back-office operations, and wholly owned Nepal entities.

What Is a Public Company in Nepal?

A public company is designed for larger enterprises planning public fundraising or broad ownership.

Core Features

• Minimum shareholders: 7

• No maximum shareholder limit

• Can issue shares to the public

• Mandatory higher capital and governance standards

Typical Use Cases

• Large infrastructure projects

• Financial institutions

• Businesses planning IPOs

For most foreign companies, this structure is unnecessary at entry stage.

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

Insight: Over 90 percent of foreign-owned companies in Nepal are registered as private companies during initial entry.

Registration Costs in Nepal: What Foreign Companies Should Expect

Understanding true registration costs requires separating statutory fees from professional and compliance costs.

1. Government Registration Fees

Registration fees are based on authorized capital.

Indicative government fee range:

• NPR 1 million capital: low fee bracket

• NPR 10 million and above: higher tier fees

Public companies attract additional scrutiny and higher fees due to capital thresholds.

2. Professional and Advisory Costs

Foreign companies almost always require local advisors.

These costs typically cover:

• Legal structuring and incorporation

• Foreign investment approval coordination

• Tax registration and compliance setup

• Document notarization and translation

Private companies generally cost 30–40 percent less to set up than public companies at this stage.

3. Ongoing Compliance Costs

This is where the private vs public company in Nepal decision has long-term impact.

Private company compliance includes:

• Annual returns

• Financial statements

• Tax filings

Public company compliance additionally includes:

• Mandatory audits regardless of size

• Enhanced disclosure requirements

• Board governance rules

Step-by-Step: How Foreign Companies Register in Nepal

1. Name Reservation

Apply online through the registrar portal.

2. Entity Structuring

Decide shareholding, capital, and director composition.

3. Foreign Investment Approval

Required if there is foreign ownership.

4. Company Incorporation

Submission of constitutional documents.

5. Tax and Statutory Registration

PAN registration, local registrations, and bank account setup.

Common Mistakes Foreign Investors Make

Avoid these frequent issues:

• Choosing a public company unnecessarily

• Over-declaring authorized capital

• Ignoring long-term compliance costs

• Misunderstanding foreign investment thresholds

A private company almost always provides a safer, faster entry.

Private vs Public Company in Nepal: Which Is Right for You?

Choose a private company if you want:

• Faster setup

• Lower costs

• Full foreign ownership

• Back-office or service operations

Choose a public company only if:

• You plan public fundraising

• Regulatory requirements demand it

• Long-term IPO strategy exists

Regulatory and Legal Framework (EEAT Reinforcement)

Company formation and operation are governed by:

• Companies Act 2006

• Foreign Investment and Technology Transfer Act 2019

• Income Tax Act 2002

• Labour Act 2017

These laws define shareholder rights, compliance duties, and foreign investment conditions.

Cost Planning Tips for Foreign Companies

Use this numbered checklist before registering:

1. Start with minimum practical capital

2. Register as a private company unless legally required otherwise

3. Budget for annual compliance from year one

4. Engage advisors with foreign investment experience

This approach minimizes risk and preserves flexibility.

Frequently Asked Questions 

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

For most foreign companies, yes. Private companies are cheaper, faster, and easier to manage while meeting legal requirements.

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

Yes, subject to foreign investment approval and sector eligibility.

What is the minimum capital required?

There is no fixed minimum, but foreign investment approvals often require practical thresholds.

How long does registration take?

A private company typically takes 2–4 weeks once documents are ready.

Can a private company convert into a public company later?

Yes. Conversion is permitted if legal requirements are met.

Final Thoughts: Making the Right Entry Decision

Choosing between a private vs public company in Nepal is not just a legal decision. It is a cost, risk, and scalability decision. For foreign companies, private companies offer the optimal balance of compliance, control, and speed. Public companies make sense only at scale or for regulated industries.