Simplifying Company Registration in Nepal: A Comprehensive Guide

If you are a foreign company evaluating private vs public company in Nepal, the choice you make will shape everything that follows. Ownership, compliance burden, fundraising ability, and even exit options depend on this decision. Nepal’s company law framework is welcoming to foreign investors, but only when the structure aligns with your business objective.

This guide simplifies company registration in Nepal. It compares private and public companies clearly, using practical insights, legal references, and investor-focused guidance. By the end, you will know which structure fits your Nepal market entry strategy and why.

Understanding Company Structures in Nepal

Nepal primarily recognizes two corporate forms for investment-led businesses.
Private Limited Company and Public Limited Company.

Both are governed by the Companies Act, 2006, along with sector-specific laws like FITTA 2019 and the Industrial Enterprises Act 2020.

Before comparing them, it helps to understand the intent behind each.

What Is a Private Limited Company in Nepal

A private limited company in Nepal is designed for controlled ownership and operational efficiency.
It is the most common structure used by foreign investors.

Key characteristics:

• Shareholding is closely held
• Shares cannot be offered to the public
• Management control remains tight

Private companies are typically used for:

• Wholly owned foreign subsidiaries
• Joint ventures
• Back-office and outsourcing operations
• Technology and service companies

What Is a Public Limited Company in Nepal

A public limited company is designed for scale, capital raising, and wider ownership.
It allows public share issuance and listing.

Key characteristics:

• Shares can be offered to the public
• Higher governance and disclosure requirements
• Suitable for large capital-intensive projects

Public companies are usually used for:

• Hydropower and infrastructure
• Banking and financial services
• Manufacturing at national scale
• Businesses planning IPOs

Private vs Public Company in Nepal: Core Differences

1. Ownership and Shareholding

A private company can have between 1 and 50 shareholders.
A public company requires a minimum of 7 shareholders.

Foreign investors often prefer private companies because:

• Ownership can be 100% foreign
• Share transfers are controlled
• No public dilution risk

2. Capital Requirements

Private companies have no statutory minimum paid-up capital.
Capital is driven by business needs and regulatory approvals.

Public companies require:

• NPR 10 million minimum paid-up capital
• Higher capital thresholds for regulated sectors

This makes private companies far more accessible for market entry.

3. Compliance and Governance

Private companies enjoy lighter compliance.
Public companies face strict governance obligations.

Private company compliance includes:

• Annual returns
• Financial statements
• Tax filings

Public company compliance includes:

• Mandatory audits
• Public disclosures
• Board committees
• Securities regulations

Comparison Table: Private vs Public Company in Nepal

This table highlights why private vs public company in Nepal is not just a legal question.
It is a strategic one.

Registration Process Differences

Private Company Registration Process

Registering a private company in Nepal typically involves:

1. Name reservation at the Office of Company Registrar
2. Drafting MOA and AOA
3. Foreign investment approval if applicable
4. Company incorporation certificate
5. PAN and VAT registration

The process is streamlined and investor-friendly.

Public Company Registration Process

Public company registration includes all of the above, plus:

• Prospectus approval
• Capital subscription compliance
• Additional regulatory clearances

This adds time, cost, and complexity.

Compliance Burden: What Foreign Companies Should Know

When comparing private vs public company in Nepal, compliance is often the decisive factor.

Private Company Compliance Snapshot

• Annual general meeting
• Financial statements filing
• Tax compliance
• Labor and social security registration

Public Company Compliance Snapshot

• Quarterly disclosures
• Independent directors
• Audit committees
• Securities reporting

For most foreign investors entering Nepal for operations rather than fundraising, private companies offer clarity and control.

Taxation Considerations

Tax treatment is largely similar for both structures.
However, compliance cost differs.

Common taxes include:

• Corporate income tax
• Withholding taxes
• VAT if applicable

Private companies are easier to manage from a tax governance perspective.

Which Structure Should Foreign Investors Choose

Choose a private limited company if your goals include:

• Market entry
• Cost efficiency
• Operational control
• Back-office or service delivery

Choose a public limited company if your goals include:

• Large-scale capital raising
• Infrastructure development
• Public investment participation

For most foreign companies, the answer to private vs public company in Nepal is clear.
Private limited companies dominate foreign investment registrations.

Common Mistakes Foreign Investors Make

Many foreign companies misjudge Nepal’s structure options.

Avoid these mistakes:

• Over-structuring too early
• Assuming public company equals credibility
• Ignoring compliance costs
• Choosing scale before validation

Starting private does not limit future conversion.

Can a Private Company Convert into a Public Company

Yes.
Nepal allows conversion from private to public company.

This flexibility makes private companies an ideal entry vehicle.

EEAT: Legal and Regulatory References

This guide aligns with:

• Companies Act, 2006
• Foreign Investment and Technology Transfer Act, 2019
• Industrial Enterprises Act, 2020
• Income Tax Act, 2002

These laws govern company formation, ownership, and compliance in Nepal.

Conclusion

Choosing between private vs public company in Nepal is one of the most important decisions a foreign investor will make.

For most foreign companies, a private limited company offers:

• Faster registration
• Lower compliance burden
• Full ownership control
• Strategic flexibility

Public companies serve a purpose, but only when scale and capital markets demand it.

If your goal is efficient Nepal market entry, private is usually the right start.

Frequently Asked Questions 

Is private or public company better in Nepal for foreigners

Private companies are better for most foreign investors due to lower compliance and full ownership flexibility.

Can a foreigner fully own a private company in Nepal

Yes. 100% foreign ownership is permitted in most sectors, subject to approval.

What is the minimum capital for a private company in Nepal

There is no fixed statutory minimum capital requirement.

Is public company registration mandatory for large projects

Only for sectors requiring public investment or capital market participation.

Can a private company later go public in Nepal

Yes. Conversion from private to public company is legally permitted.