The Comprehensive Guide to Intellectual Property Rights in Nepal

If you are evaluating Private vs public company in Nepal, you are already thinking like a serious foreign investor. Structure determines control, tax exposure, fundraising ability, and regulatory burden. But structure alone is not enough. Intellectual property protection in Nepal can quietly determine whether your market entry creates long-term value or long-term risk.

This comprehensive guide explains both. We walk through company structure under the Companies Act 2006 and intellectual property protection under the Patent, Design and Trade Mark Act 1965. If you are planning FDI under the Foreign Investment and Technology Transfer Act 2019, this guide is written for you.

Let’s start with structure.

Understanding Private vs Public Company in Nepal

Under Nepal’s Companies Act 2006, companies are primarily categorized as:

• Private Limited Company
• Public Limited Company

Both structures can receive foreign investment, subject to regulatory approvals. However, their governance models differ significantly.

Key Features of a Private Limited Company

A private company in Nepal:

• Limits the number of shareholders (maximum 101)
• Restricts share transfer
• Cannot invite the public to subscribe to shares
• Has simplified reporting obligations

For most foreign investors, this is the preferred entry vehicle. It offers control and flexibility.

Key Features of a Public Limited Company

A public company:

• Requires a minimum of 7 shareholders
• Has no maximum shareholder limit
• May raise capital from the public
• Is subject to stricter disclosure and compliance standards

Public companies may list on the Nepal Stock Exchange (NEPSE) if they meet regulatory requirements.

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

Here is a practical comparison for foreign investors:

Insight:
For 80% of foreign investors entering Nepal, a private limited company provides the right balance of control, compliance efficiency, and scalability.

Intellectual Property Rights in Nepal: Why Structure Alone Is Not Enough

Choosing between a private or public company solves governance. But intellectual property protection safeguards your brand, product, and technology.

Nepal’s IP framework is governed primarily by:

• Patent, Design and Trade Mark Act 1965
• Department of Industry (IP registration authority)

Nepal follows a “first to file” principle. Registration determines ownership, not first use.

If you delay filing your trademark, someone else may register it first.

Types of Intellectual Property in Nepal

1. Trademarks

A trademark protects:

• Brand names
• Logos
• Symbols
• Packaging identifiers

Registered trademarks are valid for 7 years and renewable.

2. Patents

Patents protect inventions. Protection typically lasts 7 years under current law, subject to renewal.

3. Industrial Designs

Design registration protects product appearance.

How Company Structure Impacts IP Ownership

Here’s where Private vs public company in Nepal connects to IP strategy.

In a Private Company:

• IP can be tightly controlled.
• Shareholder agreements can restrict licensing.
• Founder ownership structures are easier to manage.

In a Public Company:

• Disclosure obligations may require transparency.
• IP valuation affects share price.
• Investor scrutiny increases.

Foreign investors entering under the Foreign Investment and Technology Transfer Act 2019 must also ensure technology transfer agreements are documented properly.

Step-by-Step: Trademark Registration Process in Nepal

1. Conduct name availability search.
2. File application with the Department of Industry.
3. Examination process.
4. Publication.
5. Issuance of registration certificate.

Processing time varies but may take 6–12 months.

Compliance Risks Foreign Companies Overlook

Many foreign companies focus only on incorporation. That is risky.

Common mistakes include:

• Registering company before securing trademark.
• Not aligning shareholder agreements with IP ownership.
• Failing to document technology transfer.
• Assuming global trademark coverage applies to Nepal.
• Ignoring renewal deadlines.

Under the Income Tax Act 2002, IP licensing income may also have tax implications.

When Should You Choose a Public Company in Nepal?

Public structure makes sense when:

• Capital requirements exceed internal funding.
• Infrastructure or manufacturing scale is large.
• You intend to list on the Nepal Stock Exchange.
• Government contracts require public status.

However, compliance burden is heavier.

The Strategic Decision Matrix for Foreign Investors

Below is a simplified framework.

Choose a Private Company if:

• You want 100% foreign ownership.
• You prioritize control.
• You plan phased scaling.
• You are protecting proprietary IP.

Choose a Public Company if:

• You need large domestic capital.
• You seek public credibility.
• You aim for stock exchange listing.

Regulatory Authorities Involved

• Office of the Company Registrar
• Department of Industry
• Nepal Rastra Bank
• Nepal Stock Exchange

Each authority plays a distinct role in FDI approval, registration, IP protection, and capital market oversight.

Tax and IP Considerations

Under the Income Tax Act 2002:

• Corporate tax generally applies at standard rates.
• Royalty payments may attract withholding tax.
• Transfer pricing rules may apply to related party IP transactions.

This is critical for multinational groups.

Why Foreign Investors Prefer Private Companies for IP-Heavy Businesses

Tech firms, SaaS providers, and brand-driven businesses prefer private structures because:

• Easier IP centralization.
• Lower disclosure exposure.
• Simplified governance.
• Better control over licensing agreements.

In emerging markets like Nepal, control equals risk mitigation.

Frequently Asked Questions (FAQ)

1. What is the main difference between a private and public company in Nepal?

A private company restricts share transfers and has up to 101 shareholders. A public company can raise capital from the public and has unlimited shareholders.

2. Can foreign investors own 100% of a private company in Nepal?

Yes, subject to sectoral restrictions under the Foreign Investment and Technology Transfer Act 2019.

3. How long does trademark registration take in Nepal?

Typically 6–12 months, depending on objections and publication process.

4. Is Nepal a first-to-file country for trademarks?

Yes. Ownership is granted to the first applicant who files successfully.

5. Does IP income get taxed in Nepal?

Yes. Royalty income and licensing fees may attract corporate tax and withholding tax under the Income Tax Act 2002.

Conclusion: Private vs Public Company in Nepal -The Decision That Shapes Everything

Choosing between Private vs public company in Nepal is not merely a legal formality. It shapes governance, tax exposure, investor relations, and intellectual property control.

For most foreign investors entering Nepal, a private limited company offers flexibility and protection. When combined with a structured IP registration strategy, it creates a defensible and scalable market entry platform.

If you are planning to incorporate or protect intellectual property in Nepal, the right advisory partner can reduce risk and accelerate approvals.

Ready to structure your Nepal entry correctly?
Speak with our regulatory and IP specialists today.