The Process of Company Registration in Nepal: From Start to Finish

Choosing between a private vs public company in Nepal is one of the most strategic decisions a foreign business will make. The structure you select shapes ownership, compliance, capital requirements, and long-term scalability. For overseas investors, Nepal offers a regulated but welcoming environment, backed by clear legislation and improving ease-of-doing-business practices.

This guide walks you through the entire company registration process in Nepal, from structure selection to post-incorporation compliance, with a sharp focus on what foreign companies actually need to know.

Understanding Company Types in Nepal

Before diving into registration, it is critical to understand the two primary corporate forms available under Nepalese law.

What Is a Private Company in Nepal?

A private company in Nepal is the most common entry route for foreign investors.

Key characteristics:

• Minimum 1 shareholder, maximum 101
• Share transfer restrictions
• No public share issuance
• Faster incorporation and lower compliance burden

Private companies are governed by the Companies Act 2006 and are ideal for:

• Subsidiaries
• Joint ventures
• Offshore back-office operations
• Market entry pilots

What Is a Public Company in Nepal?

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

Key characteristics:

• Minimum 7 shareholders
• Mandatory public disclosure
• Can issue shares to the public
• Higher regulatory oversight

Public companies are typically chosen by:

• Infrastructure projects
• Banks and financial institutions
• Large manufacturing or hydropower ventures

Private vs Public Company in Nepal: Core Differences

Original insight:
Over 90% of foreign-owned entities incorporated in Nepal opt for the private company structure due to speed, flexibility, and lower regulatory friction.

Step-by-Step Process of Company Registration in Nepal

This section explains the company registration process in Nepal from start to finish, tailored for foreign companies.

Step 1: Company Structure & Investment Planning

Foreign investors must first determine:

• Private vs public company
• Shareholding ratio
• Paid-up capital
• Sector eligibility

Certain sectors require approval under foreign investment laws, especially for service-based or regulated industries.

Relevant framework:

• Foreign Investment and Technology Transfer Act 2019

Step 2: Name Reservation at the Office of Company Registrar

The proposed company name must be unique and compliant with Nepalese standards.

Authority involved:

• Office of Company Registrar

Key checks:

• No similarity with existing entities
• No restricted or misleading terms
• English or Nepali names accepted

Step 3: Preparation of Constitutional Documents

Two core documents are required:

• Memorandum of Association (MOA)
• Articles of Association (AOA)

These define:

• Business objectives
• Capital structure
• Governance rules

Foreign investors must ensure alignment with:

• Profit repatriation rules
• Board control provisions
• Exit clauses

Step 4: Foreign Investment Approval (If Applicable)

Foreign shareholding requires approval from:

• Department of Industry

Documents reviewed include:

• Shareholder credentials
• Business plan
• Capital commitment

Step 5: Company Incorporation Certificate

Once approved, the OCR issues:

• Certificate of Incorporation
• Company Registration Number

At this point, the entity legally exists in Nepal.

Step 6: Tax and Statutory Registrations

After incorporation, companies must register with:

• Inland Revenue Department for PAN/VAT
• Local municipality
• Social Security Fund

These steps activate the company for lawful operations.

Compliance Obligations: Private vs Public Company

Ongoing Compliance for Private Companies

• Annual financial statements
• Tax filings
• Board resolutions
• Audit (if applicable)

Ongoing Compliance for Public Companies

• Quarterly disclosures
• Public audits
• AGM and EGM filings
• Regulatory reporting

Public companies face materially higher governance costs.

Capital Requirements and Cost Considerations

Capital Expectations

Nepal does not impose a fixed minimum capital for most private companies, but foreign-owned entities typically commit sufficient capital to justify operations.

Public companies often require substantial capitalization to meet regulatory expectations.

Cost Drivers

• Legal drafting
• Government fees
• Compliance setup
• Banking and audit

Private companies remain significantly more cost-efficient.

Key Advantages for Foreign Companies

Why Nepal continues to attract foreign entities:

• Competitive labor costs
• English-speaking talent pool
• Strategic South Asian access
• Clear foreign investment framework

Common Mistakes Foreign Investors Make

1. Choosing a public company without capital rationale
2. Underestimating compliance timelines
3. Poorly drafted MOA/AOA
4. Ignoring repatriation structuring

Expert guidance at entry prevents long-term friction.

Conclusion

When comparing private vs public company in Nepal, the private company structure remains the most practical, efficient, and scalable choice for foreign companies. It balances regulatory compliance with operational flexibility while enabling full foreign ownership in permitted sectors.

Understanding the company registration process in Nepal from start to finish empowers foreign investors to enter the market confidently, compliantly, and strategically.

Frequently Asked Questions 

Is a private company better than a public company in Nepal for foreign investors?

Yes. Private companies offer faster setup, lower compliance, and greater control, making them ideal for foreign market entry.

Can a foreign company own 100% of a Nepalese company?

Yes, in permitted sectors, full foreign ownership is allowed under Nepalese law.

How long does company registration take in Nepal?

Private company registration typically takes 2–4 weeks, depending on approvals.

Is public company registration mandatory for large investments?

No. Size alone does not mandate a public company unless public fundraising is planned.

Can a private company convert into a public company later?

Yes. Conversion is allowed with regulatory approval and compliance upgrades.