The Business Owner's Guide to Registering a Company in Nepal

If you are a foreign investor planning to enter South Asia, private vs public company in Nepal is one of the first structural decisions you must make. It affects ownership control, capital flexibility, compliance burden, and long-term exit options.

Nepal offers a stable legal framework for foreign participation. Yet many overseas founders register the wrong entity type and later face restructuring costs. This guide gives you a clear, regulator-aligned comparison so you can choose correctly from day one.

We cover definitions, eligibility, incorporation steps, compliance obligations, and strategic use cases. Everything is written for foreign companies, not local founders.

Understanding company structures in Nepal

Under Nepalese corporate law, companies are primarily classified as private or public. Both can accept foreign shareholding, subject to sectoral rules and foreign investment approvals.

All companies are incorporated through Office of Company Registrar (OCR) and operate under approvals coordinated with Department of Industry for foreign investment.

The difference lies in scale, governance, and public participation.

What is a private company in Nepal?

A private company in Nepal is a closely held corporate entity designed for controlled ownership and operational flexibility.

Key characteristics of a private company

• Minimum shareholders: 1
• Maximum shareholders: 50
• Share transfer: Restricted
• Public invitation to invest: Not allowed
• Suitable for: Subsidiaries, joint ventures, back-office operations

Private companies are the most common choice for foreign investors entering Nepal for operational purposes.

What is a public company in Nepal?

A public company is structured to raise capital from a wider group of investors and, potentially, the public market.

Key characteristics of a public company

• Minimum shareholders: 7
• No maximum shareholder limit
• Can issue shares publicly
• Higher disclosure and governance standards
• Suitable for: Large infrastructure, banking, insurance, listed entities

Public companies face stricter scrutiny from regulators and financial authorities, including Nepal Rastra Bank where applicable.

Private vs public company in Nepal: side-by-side comparison

Insight: Over 90 percent of foreign investors in Nepal register private companies because public companies are rarely needed unless public capital is required.

Which structure should foreign companies choose?

Choose a private company if you want

• Full control over operations
• Lower compliance and audit costs
• Faster incorporation timelines
• A Nepal entity as a cost center or delivery hub

Choose a public company if you want

• Large-scale capital raising
• Public credibility and listing options
• Institutional investor participation
• Long-term domestic expansion

For most foreign companies, a private limited company is the correct entry vehicle.

Step-by-step: registering a company in Nepal

Foreign investors must follow a structured incorporation and approval process.

1. Name reservation

Submit proposed company names to OCR for approval.

2. Foreign investment approval

Apply through DOI for foreign investment clearance, including sector eligibility and capital structure.

3. Company incorporation

Register the entity at OCR with constitutional documents and shareholder details.

4. Capital inflow

Inject foreign capital through a Nepalese bank, aligned with Nepal Rastra Bank requirements.

5. Tax and statutory registration

Obtain PAN, VAT (if applicable), and local registrations.

This process typically takes 3 to 6 weeks if documents are well prepared.

Compliance obligations: private vs public companies

Private company compliance

• Annual audit
• Annual return filing
• Basic board governance
• Tax filings and payroll compliance

Public company compliance

• Quarterly disclosures
• Independent directors
• Audit and risk committees
• Enhanced reporting standards

Foreign investors should budget 2–3x higher annual compliance costs for public companies.

Common mistakes foreign companies make

1. Registering a public company “for credibility” without capital needs
2. Underestimating ongoing compliance costs
3. Misaligning shareholding with foreign investment approvals
4. Ignoring exit and repatriation planning

A clean private structure can always be converted later if growth requires it.

Tax and profit repatriation considerations

Both private and public companies can repatriate profits, dividends, and capital, subject to tax clearance and banking approvals.

Key points for foreign investors:

• Corporate income tax applies equally
• Dividend withholding tax applies
• Capital repatriation must align with approved structure

Structure selection does not change tax rates, but it affects documentation complexity.

Strategic use cases for foreign companies

Private companies are ideal for

• Offshore back-office operations
• IT and technology delivery centers
• Regional support hubs
• Wholly owned subsidiaries

Public companies are used for

• Banking and financial services
• Hydropower and infrastructure
• Telecom and regulated industries

If you are not legally required to be public, stay private.

Why private companies dominate foreign investment in Nepal

• Faster setup
• Lower regulatory friction
• Predictable compliance
• Easier exit or restructuring

This is why most international firms entering Nepal start private and scale later.

Final verdict: private vs public company in Nepal

For foreign investors, private vs public company in Nepal is not a theoretical choice. It is a strategic decision with cost, control, and compliance consequences.

In over nine out of ten cases, a private limited company is the correct structure for market entry. Public companies should only be used when capital markets or regulatory requirements demand it.

If you choose correctly at incorporation, Nepal can be a stable, cost-efficient base for long-term growth.

Frequently Asked Questions 

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

For most foreign investors, yes. Private companies offer lower compliance, faster setup, and stronger control.

Can a foreigner own 100 percent of a Nepal company?

Yes. Full foreign ownership is allowed in approved sectors with proper investment clearance.

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

Public companies generally require higher capital thresholds, depending on sector regulations.

Can a private company convert into a public company later?

Yes. Conversion is legally permitted after meeting regulatory and capital requirements.

Which company type is best for foreign subsidiaries?

A private limited company is the preferred structure for foreign subsidiaries in Nepal.