The Ultimate Guide to Company Registration in Nepal: What You Need to Know

Choosing between a private vs public company in Nepal is one of the most important decisions foreign companies make before entering the market. The wrong structure can slow approvals, raise compliance costs, and restrict growth. The right structure can unlock faster registration, easier governance, and long-term scalability.

This guide gives foreign investors a clear, practical, and legally grounded comparison. It reflects Nepal’s current regulatory framework and real-world investor experience. By the end, you will know which structure fits your entry strategy and what to do next.

Why Company Structure Matters for Foreign Companies in Nepal

Nepal welcomes foreign investment, but it is a regulated jurisdiction. Your company type determines:

• Eligibility for foreign direct investment approval

• Shareholding limits and transferability

• Ongoing compliance and reporting burden

• Capital raising and exit options

Foreign investors most commonly choose a private limited company. Public companies are used only in specific growth or capital market scenarios.

Understanding the private vs public company in Nepal distinction early prevents costly restructuring later.

Legal Framework Governing Companies in Nepal

Company formation and governance are primarily regulated by:

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act, 2019

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

All companies are incorporated through the Office of Company Registrar. Foreign investment approvals are coordinated with the Department of Industry or Investment Board Nepal, depending on project size.

What Is a Private Company in Nepal

Definition Under Nepali Law

A private company in Nepal is a limited liability entity that restricts share transfers and limits the number of shareholders. It cannot invite the public to subscribe for shares.

Key Characteristics of a Private Company

• Minimum shareholders: 1

• Maximum shareholders: 101

• Share transfer restricted

• Cannot issue shares to the public

• Separate legal personality

For foreign investors, this is the default and most efficient entry vehicle.

What Is a Public Company in Nepal

Definition Under Nepali Law

A public company is permitted to offer shares to the public and may be listed on Nepal’s stock exchange. It is subject to stricter governance, disclosure, and capital requirements.

Key Characteristics of a Public Company

• Minimum shareholders: 7

• No maximum shareholders

• May issue shares to the public

• Higher paid-up capital requirements

• Mandatory compliance with securities laws

Public companies are rarely used at the entry stage by foreign businesses.

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

This table reflects why most foreign investors choose private companies when evaluating private vs public company in Nepal options.

Capital Requirements for Foreign Investors

Private Company Capital

There is no fixed statutory minimum capital. However, for foreign-owned entities, regulators expect capital aligned with the business plan. In practice, this usually starts from NPR 20 million for FDI projects, depending on sector.

Public Company Capital

Public companies require substantially higher paid-up capital. Additional capital thresholds apply if listing or issuing securities.

For market entry, private companies offer flexibility and faster approval.

Compliance and Governance Obligations

Private Company Compliance

Private companies must:

• Maintain statutory registers

• File annual returns and financials

• Conduct annual general meetings

• Comply with tax and labor laws

Public Company Compliance

Public companies must also:

• Publish audited financial statements

• Follow securities disclosure rules

• Appoint independent directors

• Comply with regulator inspections

From a compliance perspective, private vs public company in Nepal is a clear cost and complexity trade-off.

Taxation Considerations

Both private and public companies are taxed at the corporate income tax rate under the Income Tax Act, 2002. However, public companies may face additional disclosure scrutiny and compliance costs.

Foreign investors should focus more on operational tax planning than entity tax rates when choosing between private and public structures.

Which Structure Is Best for Foreign Companies

Choose a Private Company If You:

• Are entering Nepal for the first time

• Want full foreign ownership where permitted

• Plan controlled operations

• Prefer faster setup and lower compliance

Choose a Public Company If You:

• Plan large-scale capital raising in Nepal

• Intend to list shares publicly

• Have long-term local investor participation plans

For over 90 percent of foreign investors, a private company is the correct choice.

Step-by-Step: How to Register a Private Company in Nepal

1. Name reservation with the Office of Company Registrar

2. Preparation of Memorandum and Articles of Association

3. Foreign investment approval

4. Company incorporation filing

5. Tax registration and post-incorporation compliance

This process typically takes four to eight weeks when properly managed.

Common Mistakes Foreign Investors Make

Foreign companies often struggle due to:

• Choosing a public structure too early

• Underestimating compliance requirements

• Misaligning capital with business plans

• Ignoring sector-specific restrictions

These mistakes are avoidable with proper advisory support.

Private vs Public Company in Nepal for Long-Term Growth

Some investors start as private companies and later convert to public status. Nepalese law permits conversion, subject to approvals.

This staged approach offers flexibility without locking investors into high compliance costs early.

Frequently Asked Questions: Private vs Public Company in Nepal

Is a private company better than a public company in Nepal

For most foreign investors, yes. Private companies are faster, simpler, and more cost-effective for market entry.

Can a foreigner own 100 percent of a private company in Nepal

Yes, in sectors open to foreign investment, full foreign ownership is permitted.

Can a private company convert into a public company later

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

Is public company registration mandatory for large projects

No. Large projects may still operate as private companies unless public fundraising is planned.

How long does company registration take in Nepal

Private company registration usually takes four to eight weeks, depending on approvals.

Conclusion: Making the Right Choice

Choosing between a private vs public company in Nepal is a strategic decision. For foreign companies, private companies offer speed, control, and regulatory clarity. Public companies are best reserved for advanced growth stages.

If you want a smooth, compliant, and scalable entry into Nepal, start with the right structure.