Simplifying Your Business Setup: Online Registration in Nepal

Choosing between a private vs public company in Nepal is one of the first strategic decisions a foreign investor must make.
It affects ownership control, capital structure, compliance burden, and long-term scalability.

Nepal has simplified online company registration, but the entity type still defines how smoothly you can operate, raise funds, and exit.
This guide explains the difference in clear, practical terms without legal jargon.

If you are a foreign company entering Nepal, this article gives you the full picture.

Nepal’s Corporate Framework at a Glance

All companies in Nepal are incorporated under the Companies Act, 2006 and administered by the Office of Company Registrar (OCR).

For foreign investors, company formation usually sits alongside approvals under:

• Foreign Investment and Technology Transfer Act (FITTA) 2019
• Industrial Enterprises Act 2020
• Approvals from Department of Industry (DOI) or IBN for large projects

The two most common structures are:

1. Private Limited Company
2. Public Limited Company

What Is a Private Company in Nepal?

A private limited company is the most common structure for foreign investors entering Nepal.

It is designed for closely held businesses, subsidiaries, and operational entities.

Key Characteristics of a Private Company

• 1 to 101 shareholders
• Share transfer is restricted
• Cannot invite the public to subscribe for shares
• Minimum paid-up capital is flexible
• Faster incorporation and lower compliance

Most foreign-owned companies in Nepal choose this structure.

What Is a Public Company in Nepal?

A public limited company is designed for large-scale operations and capital raising from the public.

It is commonly used by banks, hydropower companies, and listed enterprises.

Key Characteristics of a Public Company

• Minimum 7 shareholders
• Can invite public subscription
• Higher minimum capital requirements
• Mandatory corporate governance frameworks
• Subject to market regulator oversight

For most foreign entrants, this structure is not required at entry stage.

Private vs Public Company in Nepal: Side-by-Side Comparison

Original insight:
Over 90% of foreign investments registered in Nepal use the private company structure due to control and compliance efficiency.

Why Foreign Companies Prefer Private Companies in Nepal

Foreign investors prioritize speed, control, and regulatory predictability.

A private company delivers all three.

Top Reasons Foreign Companies Choose Private Entities

• Full ownership control
• Easier dividend repatriation
• Lower audit and reporting obligations
• Faster regulatory approvals
• Simple exit through share transfer

This structure aligns well with Nepal’s FDI framework.

Online Company Registration in Nepal: How It Works

Nepal has digitized company registration through the OCR portal.

Step-by-Step Online Registration Process

1. Name reservation via OCR system
2. MOA and AOA submission
3. Foreign investment approval (if applicable)
4. Company registration certificate issued
5. PAN registration with tax office
6. Bank account and capital injection

Most private companies are incorporated within 7–15 working days, excluding FDI approval time.

Capital Requirements: Private vs Public Company in Nepal

Capital requirements vary based on sector and investment route.

Private Company Capital Norms

• No statutory minimum for local companies
• FDI minimum typically NPR 20 million
• Capital injected after registration

Public Company Capital Norms

• Minimum NPR 10 million+ depending on sector
• Paid-up capital required before operation
• Subject to sector regulators

For most foreign service or tech firms, private companies are more practical.

Compliance and Governance Differences

Compliance is where the difference becomes significant.

Private Company Compliance

• Annual returns to OCR
• Annual audit
• Tax filings
• Board meetings as needed

Public Company Compliance

• Mandatory independent directors
• Quarterly reporting
• AGM compliance
• Public disclosures
• Market regulator oversight

Foreign investors usually avoid public company compliance unless required.

Taxation: Is There a Difference?

From a corporate tax perspective, both structures are treated similarly.

Key Tax Points

• Corporate income tax applies equally
• Dividend tax applies equally
• Withholding tax obligations are identical

The difference is administrative, not fiscal.

When Does a Public Company Make Sense for Foreign Investors?

A public company may be appropriate if:

• You plan to raise capital locally
• Your sector legally requires it
• You intend to list on NEPSE
• You operate infrastructure-scale projects

For most foreign companies, this comes after years of operation, not at entry.

Common Mistakes Foreign Companies Make

Avoid these frequent errors:

• Choosing public company “for credibility”
• Underestimating compliance costs
• Ignoring FDI approval sequencing
• Delaying capital injection documentation
• Misunderstanding share transfer rules

Correct structuring at the start saves years later.

Private vs Public Company in Nepal: Strategic Recommendation

For foreign companies entering Nepal, the optimal path is:

• Start with a private limited company
• Maintain operational flexibility
• Upgrade to public structure only if needed

This approach aligns with Nepal’s regulatory reality.

Conclusion: Choosing Between Private vs Public Company in Nepal

The private vs public company in Nepal decision is not about size—it is about strategy.

For foreign investors, private companies offer:

• Faster entry
• Lower risk
• Full control
• Easier exit

Public companies serve a purpose, but rarely at market entry.

If your goal is to test, operate, and scale in Nepal, private company registration is the clear winner.

Frequently Asked Questions 

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

Yes. Foreign investors can own 100% under FITTA 2019, subject to sector eligibility and approval.

2. Is online company registration in Nepal fully digital?

Yes. Name reservation and incorporation are online, but approvals still require document review.

3. Is a public company mandatory for foreign investment?

No. Most foreign investments operate through private companies.

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

Yes. Conversion is allowed after meeting capital and compliance requirements.

5. Which structure is faster to register in Nepal?

Private companies are significantly faster and simpler to register.