The Roadmap to Incorporating Your Business in Nepal

If you are a foreign company planning to expand into Nepal, one of your first and most important decisions will be private vs public company structure. It may seem like a legal checkbox. In reality, it shapes everything—from FDI approval and banking to compliance, capital flexibility, and long-term exit strategy.

This guide is written specifically for foreign investors, multinational groups, and regional expansion teams entering Nepal. Whether you are setting up a tech subsidiary, manufacturing unit, liaison office upgrade, or joint venture, structure matters.

In this post, we’ll explain what private vs public company means in Nepal, why it matters for foreign companies, and provide a practical step-by-step roadmap to incorporate your business smoothly. I’ll also share common pitfalls we see when advising international investors so you can move forward confidently.

What Is Private vs Public Company, and Why Does It Matter?

Before incorporating in Nepal, you must decide between a private limited company and a public limited company.

Private Company in Nepal

A private company:

• Limits shareholders (maximum 101).
• Restricts share transfers.
• Cannot invite the public to subscribe to shares.
• Has simpler compliance requirements.
• Is the most common vehicle for FDI.

For most foreign investors, this is the preferred structure.

Public Company in Nepal

A public company:

• Requires a minimum of 7 shareholders.
• Can issue shares to the public.
• Has stricter reporting and governance requirements.
• Is required for certain regulated or large-scale sectors.

Why the Decision Matters

Choosing correctly impacts:

• FDI approval process
• Minimum capital planning
• Board structure
• Regulatory reporting
• Audit obligations
• Future fundraising
• Exit strategy

In practice, over 90% of foreign investors entering Nepal choose a private company unless they are planning public listing or regulated financial operations.

If you get this decision wrong, restructuring later can be costly and time-consuming.

How to Incorporate Your Business in Nepal (Step-by-Step Roadmap)

Below is a structured roadmap tailored for foreign companies.

Step 1: Decide Between Private vs Public Company

Start with clarity on your objective:

Ask yourself:

1. Are you raising capital from the public?
2. Is your sector legally required to be public?
3. Do you need complex shareholding flexibility?
4. What is your 5-year exit strategy?

Example:
An Australian mortgage tech company entering Nepal for back-office operations should use a private limited company. A large infrastructure project planning public fundraising may require a public company.

For most FDI-backed subsidiaries, private limited company is the efficient route.

Step 2: Conduct Name Reservation

Once structure is finalized:

• Submit company name application to the Office of Company Registrar (OCR).
• Ensure the name aligns with business objectives.
• Avoid restricted or misleading terms.

Tip: Always check trademark conflicts before finalizing.

Step 3: Prepare Constitutional Documents

You will need:

• Memorandum of Association (MOA)
• Articles of Association (AOA)
• Shareholding structure
• Director details
• Registered office details

For foreign investors, additional documentation includes:

• Parent company incorporation documents
• Board resolution approving Nepal investment
• Power of Attorney
• Passport copies of foreign directors

Accuracy at this stage prevents regulatory delays later.

Step 4: Apply for Foreign Direct Investment (FDI) Approval

This is the most critical step for foreign companies.

Depending on the sector and investment size, approval may come from:

• Department of Industry (DOI)
• Investment Board Nepal (IBN)
• Relevant sectoral authority

Documents typically required:

• Detailed project report
• Financial projection
• Source of funds declaration
• Parent company profile

Approval timelines vary from 2–8 weeks depending on documentation quality.

Practical insight: Incomplete financial projections are the #1 cause of delays.

Step 5: Company Registration with OCR

After FDI approval:

• Submit incorporation documents.
• Register share capital.
• Obtain Certificate of Incorporation.
• Obtain PAN (Permanent Account Number).

This officially creates your legal entity in Nepal.

Step 6: Capital Injection & Bank Compliance

Foreign investment must be:

• Remitted through formal banking channels.
• Recorded with Nepal Rastra Bank (NRB).
• Verified through SWIFT documentation.

Failure to document capital properly can create repatriation issues later.

Step 7: Post-Incorporation Compliance Setup

Once incorporated, you must:

• Register for VAT (if applicable)
• Enroll in Social Security Fund (SSF)
• Open statutory registers
• Appoint auditor
• Maintain accounting books

Compliance calendar includes:

• Annual audit
• Annual general meeting (for public companies mandatory)
• Tax filings
• Shareholder updates

This is where many foreign companies underestimate ongoing responsibilities.

Private vs Public Company in Nepal: Quick Comparison

For most foreign subsidiaries, a private limited company offers flexibility, lower compliance cost, and easier governance.

Tips and Reminders for Foreign Investors

1. Align Structure With Long-Term Strategy

Don’t choose public status just for “image.” Governance complexity increases significantly.

2. Plan Capital Carefully

Declared capital should reflect realistic operations. Over-declaration increases audit and compliance cost.

3. Prepare Clean Financial Projections

Regulators focus heavily on sustainability and foreign currency inflow.

4. Think About Repatriation Early

Dividend repatriation requires clean audit history and regulatory compliance.

5. Use Local Compliance Advisors

Cross-border misunderstandings cause delays more than regulation itself.

Final Verdict: private V.s Public Company

Incorporating in Nepal is not complicated but it requires precision. The decision between private vs public company sets the foundation for your regulatory relationship, operational flexibility, and long-term scalability.

For most foreign investors, a private limited company is the right starting point. But each business model is different. The key is alignment between structure, sector regulation, and strategic goals.

When done properly, Nepal offers strong opportunities in technology, manufacturing, outsourcing, infrastructure, and cross-border services.

The roadmap is clear. The execution must be deliberate.

Frequently Asked Questions (FAQ)

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

Yes, 100% foreign ownership is allowed in most sectors, subject to FDI approval. Certain industries remain restricted or capped.

2. Is a public company required for FDI in Nepal?

No. Most foreign investors use private limited companies. Public companies are generally required only for specific large-scale or regulated sectors.

3. How long does incorporation take in Nepal?

If documentation is complete, incorporation can take 3–6 weeks including FDI approval. Delays usually occur due to incomplete financial projections.

4. What is the minimum capital requirement?

There is no fixed minimum for most sectors, but regulators expect capital aligned with project scale and operational feasibility.

5. Can profits be repatriated?

Yes, dividends can be repatriated after tax clearance, audit completion, and central bank approval.

Call to Action

If you are evaluating private vs public company options for your Nepal entry strategy, our team works directly with foreign investors to:

• Structure compliant FDI setups
• Draft board resolutions and legal documents
• Handle regulatory approvals
• Design post-incorporation compliance systems

👉 Book a strategic consultation today to ensure your Nepal incorporation is structured correctly from day one.