The Complete Guide to Registering a New Company in Nepal

If you are a foreign company planning to enter Nepal, one decision will shape everything that follows. That decision is private vs public company in Nepal.

Your choice affects ownership control, compliance burden, capital strategy, exit options, and even how regulators view your business. Many foreign investors assume a public company offers credibility. In Nepal, that assumption is often wrong.

This guide gives you a clear, practical, and legally grounded explanation. It is written for decision-makers who want certainty before committing capital.

Why Company Structure Matters When Registering a New Company in Nepal

Nepal’s corporate framework is built to encourage private investment first, with public companies reserved for scale, capital markets, or regulated sectors.

Choosing the wrong structure can lead to unnecessary approvals, higher costs, and operational friction. The right structure accelerates market entry and protects investor control.

Foreign companies typically fall into one of three goals:

• Establish a wholly owned operating subsidiary

• Create a controlled joint venture

• Prepare for long-term capital raising or listing

Each goal aligns differently with private and public companies.

Legal Framework Governing Companies in Nepal

Company registration and governance in Nepal are primarily regulated under:

• Office of Company Registrar

• Companies Act 2006

• Foreign Investment and Technology Transfer Act 2019

• Industrial Enterprises Act 2020

• Income Tax Act 2002

These laws clearly distinguish private vs public company in Nepal in terms of ownership, fundraising, disclosure, and compliance.

What Is a Private Company in Nepal?

A private company in Nepal is designed for closely held ownership and operational control. It is the most common structure for foreign investors.

Key Characteristics of a Private Company

• Minimum shareholders: 1

• Maximum shareholders: 101

• Share transfer restricted

• No public invitation for shares

• Lower compliance obligations

Foreign investors can own up to 100 percent, subject to sector rules under FITTA.

What Is a Public Company in Nepal?

A public company is designed for large-scale capital mobilization and public participation.

Key Characteristics of a Public Company

• Minimum shareholders: 7

• No maximum shareholders

• Mandatory public disclosures

• Can issue shares to the public

• Heavier governance and reporting

Public companies are common in banking, hydropower, insurance, and listed entities.

Private vs Public Company in Nepal: Core Differences

Structural and Regulatory Comparison

This table alone explains why most foreign companies choose private entities.

Which Structure Is Best for Foreign Companies?

Private Company Is Best If You:

• Want full ownership control

• Are entering Nepal for operations or services

• Do not need public capital

• Want faster registration

Public Company Is Best If You:

• Plan IPO or public fundraising

• Operate in regulated infrastructure sectors

• Require large local capital participation

For over 90 percent of foreign investors, a private company is the optimal choice.

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

1. Name Reservation

Submit proposed company names to the Office of Company Registrar.

2. Document Preparation

• Memorandum of Association

• Articles of Association

• Shareholder and director details

• Parent company documents for foreign investors

3. OCR Registration

Documents are filed digitally and physically with OCR.

4. Foreign Investment Approval

Approval under FITTA via the Department of Industry or IBN, depending on project size.

5. Tax and Bank Setup

• PAN registration

• Local bank account

• Capital inflow compliance

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

Public company registration follows similar steps but adds:

1. Regulatory scrutiny of capital structure

2. Approval of prospectus

3. Mandatory board composition

4. Ongoing public disclosures

This process is longer, costlier, and rarely justified for market entry.

Compliance Burden: What Foreign Investors Often Underestimate

A critical factor in private vs public company in Nepal is ongoing compliance.

Private Company Compliance Includes

• Annual returns

• Tax filings

• Basic corporate governance

Public Company Compliance Includes

• Quarterly disclosures

• Auditor rotation

• Public notices

• Shareholder reporting

• Regulatory inspections

This difference impacts long-term operating cost.

Capital, Repatriation, and Exit Considerations

Private companies allow simpler dividend repatriation, share transfers, and exits. Public companies require regulatory approvals and public disclosures at every stage.

For foreign investors focused on flexibility, private companies are superior.

Common Mistakes Foreign Companies Make

1. Assuming public company equals credibility

2. Overestimating local capital needs

3. Underestimating compliance costs

4. Ignoring sector-specific restrictions

Avoiding these mistakes starts with choosing the correct structure.

Practical Recommendation for Foreign Companies

If your goal is to operate, hire, deliver services, or build a long-term Nepal presence, register a private company.

Public companies should only be used when capital markets participation is essential.

Frequently Asked Questions: Private vs Public Company in Nepal

Is a private company allowed for foreign investors in Nepal?

Yes. Foreign investors can own up to 100 percent of a private company, subject to sector approval.

Can a private company convert into a public company later?

Yes. Conversion is legally permitted once regulatory conditions are met.

Is a public company mandatory for foreign investment?

No. Most foreign investments in Nepal use private companies.

Which company type is faster to register?

A private company is significantly faster and simpler to register.

Does a public company offer tax benefits?

No. Tax rates apply equally. Public companies only differ in governance.

Conclusion: Making the Right Choice in Private vs Public Company in Nepal

Choosing between a private vs public company in Nepal is a strategic decision. For foreign companies, the private company structure offers control, speed, compliance efficiency, and flexibility.

Public companies serve a purpose, but only for specific capital-intensive strategies. For most foreign investors, they add cost without value.

If you want a smooth, compliant, and scalable entry into Nepal, start with a private company.