The Digital Route to Company Registration in Nepal

If you are a foreign company exploring South Asia, private vs public company in Nepal is one of the first strategic decisions you must get right. Nepal has quietly modernized its company registration process, introduced digital filing systems, and clarified foreign investment rules under FITTA 2019.

The choice between a private company and a public company affects everything. Capital requirements. Ownership flexibility. Compliance cost. Exit options. Even how fast you can start operations.

This guide gives you the most authoritative, practical, and investor-friendly explanation available. It is written specifically for foreign companies planning market entry, outsourcing, or long-term investment in Nepal.

Why Nepal Is on the Radar for Foreign Companies

Before comparing structures, it helps to understand why Nepal is attracting attention.

Key macro and regulatory drivers

• Strategic location between India and China
• Competitive labor costs with strong English proficiency
• Liberalized foreign investment regime under FITTA 2019
• 100 percent foreign ownership allowed in many sectors
• Digitized company registration via the Office of Company Registrar

Nepal is no longer a paperwork-heavy outlier. For many investors, it is now a low-cost, compliant, and scalable entry market.

Understanding Company Structures in Nepal

Nepal primarily recognizes two company types for commercial operations.

1. Private Limited Company

2. Public Limited Company

Both are governed by the Companies Act, 2006, but they serve very different strategic purposes.

What Is a Private Company in Nepal?

A private company in Nepal is the most common structure chosen by foreign investors.

Core characteristics

• Shareholders: 1 to 50
• Share transfer: Restricted
• Public offering: Not allowed
• Liability: Limited to share capital
• Foreign ownership: Allowed up to 100 percent in approved sectors

Private companies are designed for control, speed, and operational efficiency.

Why foreign companies prefer private companies

• Faster registration timeline
• Lower compliance burden
• No requirement to issue a prospectus
• Easier governance and decision-making

For most foreign market entry strategies, this structure wins.

What Is a Public Company in Nepal?

A public company in Nepal is built for capital raising and scale.

Core characteristics

• Minimum shareholders: 7
• No upper limit on shareholders
• Can issue shares to the public
• Higher minimum capital requirements
• Subject to securities regulations

Public companies are typically used by banks, hydropower companies, insurance firms, and large infrastructure projects.

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

The table below highlights the real-world differences that matter to foreign investors.

Original insight:
For over 90 percent of foreign investors entering Nepal, a private company provides all required legal rights without the cost and rigidity of a public structure.

Capital Requirements: What You Actually Need to Invest

Capital is often misunderstood in the private vs public company in Nepal debate.

Private company capital

• No universal minimum under company law
• FDI threshold often starts at NPR 20 million under FITTA
• Sector-specific capital rules may apply

Public company capital

• Minimum NPR 10 million or more
• Much higher in regulated industries
• Capital adequacy norms apply in finance sectors

Practical takeaway:
Private companies allow staged capital infusion. Public companies require upfront commitment.

Compliance and Governance Obligations

Compliance is where cost differences become visible.

Private company compliance

• Annual general meeting
• Annual return filing
• Tax filings and audit
• SSF and labor compliance

Public company compliance

• All private company obligations
• Securities disclosure requirements
• Prospectus and shareholder reporting
• Regulatory audits

Foreign companies focused on cost control strongly prefer private companies.

Registration Process: The Digital Route to Company Registration in Nepal

Nepal’s digital transformation has simplified incorporation.

Step-by-step registration process

1. Name reservation via the OCR online portal
2. MOA and AOA preparation
3. FDI approval (if applicable)
4. Company registration certificate issuance
5. PAN and tax registration
6. Bank account and capital inflow reporting

Most private companies can be registered faster than public companies due to fewer approvals.

Foreign Investment Rules You Must Know

Foreign companies must comply with multiple laws.

Key legislation governing investment

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

These laws collectively define ownership limits, profit repatriation, and sector eligibility.

When a Public Company Actually Makes Sense

Despite the advantages of private companies, public companies have a role.

Choose a public company in Nepal if:

• You plan to raise capital from the public
• You operate in regulated infrastructure sectors
• You need large-scale domestic funding
• You aim for future stock exchange listing

For most foreign service companies, these conditions do not apply.

Taxation Differences Between Private and Public Companies

Tax rates are largely the same, but administration differs.

Shared tax obligations

• Corporate income tax
• VAT where applicable
• Withholding taxes
• Payroll and social security contributions

Practical difference

Public companies face greater scrutiny and disclosure, increasing compliance cost without tax benefits.

Common Mistakes Foreign Companies Make

Avoid these frequent errors.

• Choosing a public company unnecessarily
• Over-capitalizing at entry stage
• Ignoring sector-specific FDI rules
• Underestimating compliance timelines

A private company offers flexibility to correct course.

Strategic Recommendation for Foreign Companies

If your goal is:

• Market entry
• Back-office operations
• Tech development
• Professional services
• Long-term controlled investment

Then a private company in Nepal is almost always the correct starting point.

You can later convert to a public company if your growth strategy requires it.

Conclusion: Private vs Public Company in Nepal; The Smart Entry Choice

Choosing between a private vs public company in Nepal is not about prestige. It is about strategy, cost, and control.

For foreign companies, private companies deliver faster setup, lower risk, and operational freedom. Public companies are powerful tools, but only when scale and capital markets demand them.

Start private. Stay compliant. Scale intentionally.

Frequently Asked Questions 

1. Can a foreign company fully own a private company in Nepal?

Yes. Up to 100 percent foreign ownership is allowed in many sectors under FITTA 2019.

2. Is a public company mandatory for foreign investors in Nepal?

No. Most foreign investors operate legally through private companies.

3. What is the minimum investment for foreign companies in Nepal?

Typically NPR 20 million, but this varies by sector and structure.

4. Can a private company be converted into a public company later?

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

5. Which company type is easier to manage in Nepal?

Private companies are significantly easier and cheaper to manage.