The Role of the Department of Industries in Nepal's Trademark Registration

If you are evaluating private vs public company in Nepal, your decision affects everything. It shapes ownership, compliance, capital raising, and even how you protect your trademark.

For foreign companies entering Nepal, the structure you choose determines your regulatory pathway under the Department of Industries (DOI), the Office of the Company Registrar (OCR), and the Department of Industry responsible for intellectual property filings.

This guide breaks down the legal, operational, and trademark implications of choosing between a private and public company in Nepal. It is written specifically for foreign investors who want clarity, compliance, and long-term scalability.

Let’s simplify it.

Understanding the Legal Framework in Nepal

Foreign investors must navigate three core legal frameworks:

• Companies Act 2006
• Foreign Investment and Technology Transfer Act 2019 (FITTA)
• Industrial Property (Patent, Design and Trademark) Act 1965

Each law plays a role in company formation and trademark registration.

Key Authorities Involved

1. Office of the Company Registrar (OCR) – Incorporation and corporate governance.
2. Department of Industries (DOI) – Foreign investment approval and industrial licensing.
3. Department of Industry (IP Section) – Trademark registration authority.
4. Inland Revenue Department (IRD) – PAN/VAT and tax compliance.

Foreign companies must often interact with multiple regulators. Coordination matters.

Private vs Public Company in Nepal: Core Differences

Under the Companies Act 2006, Nepal recognizes:

• Private Limited Company
• Public Limited Company

Both can be used by foreign investors. However, their suitability differs significantly.

Private Limited Company in Nepal

A private company:

• Requires minimum 1 shareholder.
• Limits shareholders to 101.
• Cannot publicly invite share subscriptions.
• Has lower compliance burdens.
• Is ideal for SMEs and foreign subsidiaries.

Public Limited Company in Nepal

A public company:

• Requires minimum 7 shareholders.
• Can raise capital from the public.
• Requires higher disclosure and governance standards.
• Suitable for large-scale capital-intensive industries.

Comparison Table: Private vs Public Company in Nepal

Insight:
For 90% of foreign investors entering Nepal, a private limited company is the preferred vehicle due to flexibility and lower regulatory friction.

The Role of the Department of Industries in Nepal's Trademark Registration

While the DOI primarily handles foreign investment approvals under FITTA 2019, it indirectly influences trademark registration in two ways:

1. It approves foreign investment structures.
2. It validates technology transfer agreements.

However, trademark registration itself is handled by the Department of Industry (IP Section) under the Industrial Property Act 1965.

This distinction is critical.

Why This Matters for Foreign Companies

If you are comparing private vs public company in Nepal, trademark ownership must align with your approved entity structure.

For example:

• If the foreign parent owns the trademark, you may need a technology transfer agreement.
• If the Nepal company owns the trademark, it must reflect in the DOI approval documentation.
• If licensing is involved, it must comply with FITTA.

Poor structuring leads to:

• Repatriation issues.
• Royalty approval delays.
• Tax exposure.

Trademark Registration Process in Nepal

Step-by-Step Process

1. Trademark search.
2. Application filing at Department of Industry.
3. Formal examination.
4. Publication in Industrial Property Bulletin.
5. Opposition period (90 days).
6. Registration certificate issuance.

Documents Required

• Application form.
• Applicant details.
• Logo or wordmark representation.
• Power of Attorney (if filed through agent).
• Company registration certificate.

If foreign investment is involved, DOI approval may be referenced to validate ownership.

How Company Structure Impacts Trademark Strategy

Choosing between private and public company structures influences:

1. Ownership Model

• Parent-owned trademark.
• Nepal subsidiary-owned trademark.
• Joint venture ownership.

2. Royalty Repatriation

Under FITTA 2019, royalties require:

• DOI approval.
• Compliance with NRB directives.
• Tax withholding compliance under Income Tax Act 2002.

3. Risk Management

A private limited structure allows easier internal IP management.
A public company requires higher transparency and disclosure.

When Should a Foreign Company Choose a Private Limited Company?

A private limited company is ideal if:

• You want full control.
• You are setting up a branch-like subsidiary.
• You do not intend to go public.
• You are testing the Nepal market.
• You want faster decision-making.

It aligns well with tech companies, service providers, and back-office models.

When Does a Public Limited Company Make Sense?

Public limited companies are appropriate when:

• Planning large-scale manufacturing.
• Raising capital from Nepal’s capital market.
• Operating regulated industries like banking.
• Planning an IPO through the Securities Board of Nepal.

For most trademark-centric businesses, public structure is unnecessary.

Compliance Considerations for Foreign Investors

Annual Corporate Compliance

• Annual General Meeting.
• Annual return filing with OCR.
• Tax return under Income Tax Act 2002.
• Audit requirement.

Trademark Maintenance

• Renewal every 7 years under Industrial Property Act.
• Monitor for infringement.
• Maintain licensing records.

Common Mistakes Foreign Companies Make

1. Registering trademark under individual name instead of company.
2. Failing to align DOI approval with IP ownership.
3. Ignoring royalty approval procedures.
4. Choosing public company unnecessarily.
5. Not conducting prior trademark search.

Avoiding these errors saves time and capital.

Strategic Insight: Structure Determines Control

When evaluating private vs public company in Nepal, remember this:

Your structure controls:

• Capital flexibility.
• IP ownership.
• Repatriation ability.
• Exit strategy.
• Governance obligations.

A private company offers control.
A public company offers capital access.

For foreign investors prioritizing brand protection and operational control, private limited companies usually win.

EEAT: Why This Analysis Is Reliable

This article is based on:

• Companies Act 2006.
• FITTA 2019.
• Industrial Property Act 1965.
• Income Tax Act 2002.
• Regulatory practices of DOI and OCR.

These frameworks govern foreign investment and trademark law in Nepal.

Frequently Asked Questions (FAQ)

1. Can a foreign company directly register a trademark in Nepal?

Yes. A foreign entity can register a trademark without incorporating locally. However, commercial operations may still require DOI approval.

2. Is a private limited company better than a public company in Nepal?

For most foreign SMEs, yes. It offers flexibility, fewer shareholders, and lower compliance burdens.

3. Does the Department of Industries register trademarks?

No. The Department of Industry (IP Section) handles trademark registration. DOI handles foreign investment approvals.

4. How long does trademark registration take in Nepal?

Typically 12–18 months, depending on objections and opposition.

5. Can royalties be repatriated from Nepal?

Yes, under FITTA 2019 and NRB regulations, subject to approval and tax compliance.

Conclusion: Private vs Public Company in Nepal – Choose Strategically

Choosing between a private vs public company in Nepal is not just a corporate decision.

It affects trademark ownership, regulatory exposure, royalty flows, and long-term scalability.

For most foreign investors entering Nepal to build brand presence, a private limited company provides flexibility, speed, and better IP alignment.

If you are considering market entry, trademark protection, or restructuring your investment model, professional structuring advice is essential.

Ready to structure your Nepal entry correctly?
Contact our advisory team for a tailored compliance and trademark strategy roadmap.