The Ultimate Trademark Guide for Nepal: 2026 Edition

If you are evaluating private vs public company in Nepal, you are already thinking strategically.

Your company structure affects ownership, fundraising, compliance, taxation, and even trademark protection.

Foreign investors often focus on registration speed. But the smarter question is this:

Which structure protects your capital and brand in the long run?

In this 2026 guide, we break down:

• The legal differences under the Companies Act 2006
• Compliance and tax implications under the Income Tax Act 2002
• Trademark protection under the Patent, Design and Trademark Act 1965
• Strategic considerations for foreign companies entering Nepal

This is not a generic overview.
It is a board-level decision guide.

Why Private vs Public Company in Nepal Matters for Foreign Investors

Under the Companies Act 2006, companies are broadly categorized as:

• Private Limited Company
• Public Limited Company

Both structures can operate in Nepal.
But they serve different strategic purposes.

Your choice affects:

1. Share transfer restrictions
2. Minimum capital requirements
3. Regulatory filings
4. Public fundraising rights
5. Governance structure
6. Brand credibility

And importantly — how your intellectual property is held and protected.

Legal Framework Governing Companies in Nepal

Nepal’s corporate structure is governed primarily by:

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

Foreign investors must also comply with approvals from the Department of Industry (DOI) or Investment Board Nepal, depending on project size.

Private Company in Nepal: Structure, Control & Flexibility

A Private Limited Company is the most common structure for foreign direct investment.

Key Features

• Minimum 1 director
• 1–101 shareholders
• No public share issuance
• Restriction on share transfer
• Limited liability protection

Why Foreign Investors Prefer Private Companies

• Faster incorporation
• Stronger ownership control
• Lower compliance burden
• Easier governance structure

For startups, subsidiaries, back-office operations, and service centers, this structure is usually optimal.

Public Company in Nepal: Scale, Credibility & Capital Access

A Public Limited Company is designed for larger ventures.

Key Features

• Minimum 7 shareholders
• Minimum 3 directors
• Can issue shares to the public
• Higher compliance obligations
• Mandatory corporate governance framework

Public companies are regulated more strictly.
They may eventually list on the Nepal Stock Exchange.

This structure is typically used for:

• Banks and financial institutions
• Large manufacturing
• Infrastructure projects
• Businesses seeking IPO funding

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

Strategic Insight:
90% of foreign companies entering Nepal begin with a private company structure. Public conversion may happen later.

Trademark Strategy: Why Structure Matters

Many foreign investors overlook this.

Trademark ownership must align with your corporate structure.

Nepal’s intellectual property regime is governed by the Patent, Design and Trademark Act 1965.

If you register your trademark under the wrong entity:

• Ownership disputes can arise
• Repatriation of royalty becomes complex
• Licensing agreements may trigger tax exposure

Best Practice

• Register trademarks under the operating entity
• Or structure IP holding carefully with clear licensing agreements

This becomes especially important for:

• Technology companies
• Consumer brands
• Franchises
• Manufacturing exporters

Tax Implications: Private vs Public Company in Nepal

Under the Income Tax Act 2002:

• Corporate tax is generally 25%
• Special sectors may have different rates
• Dividend tax is applicable
• Withholding tax applies to certain payments

Public companies do not automatically receive tax advantages.

However, sector-specific incentives under the Industrial Enterprises Act 2020 may apply.

Compliance Obligations You Must Not Ignore

Both company types must maintain:

• Annual general meetings
• Audited financial statements
• Tax filings
• Shareholder registers
• Statutory books

Public companies face additional reporting requirements.

Failure to comply may result in penalties or restrictions on capital repatriation.

When Should a Foreign Company Choose Private Structure?

Choose a private company if:

• You want full ownership control
• You are not seeking IPO funding
• You are entering Nepal as a subsidiary
• You prioritize operational flexibility

This is ideal for:

• IT outsourcing hubs
• Mortgage processing centers
• Manufacturing units under SEZ
• Representative offices transitioning to full operations

When Should You Choose Public Structure?

Choose a public company if:

• You plan to raise capital locally
• You aim to list shares
• You are entering regulated sectors
• Your business model requires broad public investment

Common Mistakes Foreign Investors Make

1. Registering without FDI approval
2. Ignoring sectoral restrictions
3. Misaligning trademark ownership
4. Underestimating compliance cost
5. Confusing branch office with company structure

Avoid these early errors.
They are expensive to correct.

Step-by-Step: Incorporating a Private Company in Nepal

1. Name reservation
2. Drafting Memorandum and Articles
3. FDI approval (if foreign-owned)
4. Registration under Companies Act
5. PAN/VAT registration
6. Bank account opening
7. Industry registration

Public company formation follows a similar process but with higher capital and compliance thresholds.

How Trademark Registration Works in Nepal (2026 Update)

Under the Patent, Design and Trademark Act 1965:

• Application filing
• Examination
• Publication
• Opposition period
• Registration certificate issuance

Trademark protection is valid for 7 years and renewable.

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Cost Considerations

Private company incorporation is generally more cost-efficient.

Public company costs increase due to:

• Higher paid-up capital
• Corporate governance obligations
• Additional reporting requirements

For most foreign SMEs, private structure provides better ROI.

Governance and Risk Architecture

Foreign investors should design:

• Clear shareholder agreements
• IP ownership clarity
• Dividend policy
• Repatriation mechanism
• Compliance calendar

Your entry structure determines your future flexibility.

Final Recommendation for 2026

If you are debating private vs public company in Nepal, the answer for most foreign companies is clear:

Start private.
Scale smart.
Convert later if capital markets demand it.

Align your trademark, tax, and governance framework from day one.

FAQs (People Also Ask)

1. Can a foreigner own 100% of a private company in Nepal?

Yes, subject to sectoral approval under FITTA 2019. Certain sectors remain restricted.

2. Is there a minimum capital requirement?

Private companies generally have no high statutory minimum, but sectoral thresholds may apply.

3. Can a private company become public later?

Yes. Conversion is possible by amending structure and meeting regulatory requirements.

4. Which is better for trademark ownership?

Both can hold trademarks, but ownership structure must align with tax and licensing strategy.

5. Is tax different for private and public companies?

Corporate tax rates are generally the same. Incentives depend on industry, not structure.

Conclusion

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

It is a strategic architecture decision.

For most foreign investors, a private company offers control, flexibility, and efficient trademark management.

Public structures make sense when large-scale capital raising becomes essential.

If you are planning entry into Nepal in 2026, consult experienced advisors who understand corporate law, tax, and IP integration.