Unraveling the Costs: Company Formation Fees in Nepal

If you are a foreign company planning to enter Nepal, understanding private vs public company in Nepal is one of the most important early decisions you will make. The choice directly affects your setup cost, regulatory burden, fundraising ability, and long-term scalability.

Many investors assume that public companies are only for very large enterprises. In Nepal, however, the distinction is more nuanced. Costs vary not only at registration, but also every year thereafter through audits, disclosures, and compliance obligations.

This guide breaks down the real costs, legal requirements, and strategic implications so you can confidently choose the right structure.

Understanding Company Structures in Nepal

Nepal’s corporate framework is governed primarily by the Companies Act, 2006, with oversight by the Office of the Company Registrar (OCR). Under this framework, companies are broadly classified as private or public.

What Is a Private Company in Nepal?

A private company in Nepal is designed for closely held businesses, subsidiaries, and foreign-owned operating entities.

Key characteristics

• Minimum 1 shareholder, maximum 50 shareholders

• Shares cannot be offered to the public

• No requirement to issue a prospectus

• Lower disclosure and compliance burden

This structure is overwhelmingly preferred by foreign investors, especially for:

• Wholly owned subsidiaries

• Back-office and support centers

• Technology and service companies

What Is a Public Company in Nepal?

A public company is intended for large-scale operations that may raise capital from the public or institutional investors.

Key characteristics

• Minimum 7 shareholders

• Shares can be offered to the public

• Mandatory prospectus approval

• Higher capital, governance, and reporting standards

Public companies are common in banking, insurance, hydropower, telecom, and infrastructure sectors.

Private vs Public Company in Nepal: Core Differences at a Glance

Before diving into costs, it helps to see how the two structures differ structurally.

Company Formation Costs in Nepal: What You Actually Pay

When comparing private vs public company in Nepal, formation costs are often the deciding factor.

Government Registration Fees

Company registration fees are calculated based on authorized capital and paid to the Office of the Company Registrar.

Private Company Registration Fees (Indicative)

• NPR 1 million capital: approx. NPR 1,000

• NPR 10 million capital: approx. NPR 9,500

• NPR 100 million capital: approx. NPR 19,000

Private companies benefit from lower marginal increases as capital rises.

Public Company Registration Fees (Indicative)

• NPR 10 million capital: approx. NPR 15,000

• NPR 100 million capital: approx. NPR 40,000+

• Additional prospectus and approval costs apply

Public company registration is materially more expensive, even before professional fees.

Legal, Advisory, and Professional Fees

Foreign companies rarely register alone. Professional support is critical.

Typical Professional Costs for Private Companies

• Legal structuring and incorporation

• Shareholding and foreign investment documentation

• Articles and memorandum drafting

Estimated range: USD 1,500–3,000

Typical Professional Costs for Public Companies

• Prospectus drafting and vetting

• Regulatory liaison

• Corporate governance setup

Estimated range: USD 5,000–10,000+

The gap widens significantly when compliance advisory is included.

Capital Requirements: Private vs Public Company in Nepal

Capital planning is another area where costs diverge.

Private Company Capital Rules

• No statutory minimum capital (except in regulated sectors)

• Foreign investment thresholds apply under FITTA

• Capital can be injected gradually

This flexibility makes private companies ideal for phased market entry.

Public Company Capital Rules

• Higher minimum capital norms in practice

• Often sector-specific thresholds

• Capital must often be fully subscribed upfront

For foreign investors, this ties up cash early.

Annual Compliance Costs: The Hidden Long-Term Expense

Formation costs are only the beginning. Annual compliance is where public companies become significantly more expensive.

Annual Compliance for Private Companies

A private company must typically prepare:

• Annual financial statements

• Annual return to OCR

• Tax filings and withholding compliance

• Statutory audit

Annual cost range: USD 1,000–2,500

Annual Compliance for Public Companies

Public companies must additionally:

• Publish audited financials

• File detailed annual reports

• Maintain stricter governance records

• Comply with sector regulators (where applicable)

Annual cost range: USD 3,000–6,000+

Governance and Disclosure: Cost Through Complexity

Private Company Governance

Private companies enjoy simpler governance:

• Fewer board formalities

• Limited public disclosures

• Faster decision-making

This translates to lower legal and advisory spend.

Public Company Governance

Public companies require:

• Independent directors

• Formal board committees

• Public disclosures and notices

These requirements add recurring professional costs.

Tax Treatment: Is There Any Difference?

A common misconception is that tax rates differ.

Reality:
Both private and public companies are generally subject to the same corporate income tax rates under Nepal’s Income Tax Act.

The difference lies in:

• Compliance intensity

• Audit scope

• Documentation standards

Public companies incur higher tax compliance costs, not higher tax rates.

Which Structure Do Foreign Companies Usually Choose?

For most foreign investors, the answer is clear.

Private Company Is Ideal If You Are

• Setting up a wholly owned subsidiary

• Operating a back-office or service center

• Testing the Nepal market

• Seeking cost control and flexibility

Public Company Makes Sense If You Are

• Raising capital from the public

• Operating in regulated infrastructure sectors

• Planning a future IPO in Nepal

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

Here is a simplified view of what foreign companies typically go through.

1. Name reservation with OCR

2. Preparation of constitutional documents

3. Foreign investment approvals (if applicable)

4. Company registration

5. Tax and statutory registrations

This streamlined process keeps time and cost under control.

Common Cost Mistakes Foreign Companies Make

Avoid these frequent errors:

• Over-capitalizing at incorporation

• Choosing a public company unnecessarily

• Underestimating annual compliance costs

• Ignoring foreign investment structuring rules

Each mistake can add years of avoidable expense.

Private vs Public Company in Nepal: Strategic Cost Comparison

Frequently Asked Questions 

Is a private company cheaper than a public company in Nepal?

Yes. A private company has lower registration fees, fewer disclosures, and lower annual compliance costs.

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

Yes, subject to foreign investment approval under applicable laws.

Is minimum capital required for private companies in Nepal?

Generally no, unless operating in regulated sectors.

Why would anyone choose a public company in Nepal?

To raise capital from the public or operate in sectors that require public company status.

Can a private company be converted into a public company later?

Yes. Conversion is allowed, but it involves additional approvals and costs.

Conclusion: Choosing Between Private vs. Public Company in Nepal

When weighing private vs. public company in Nepal, cost is not just an entry-level concern. It shapes your cash flow, governance burden, and long-term flexibility.

For most foreign companies, a private company offers the optimal balance of low cost, control, and compliance efficiency. Public companies remain a powerful tool, but only when scale and capital strategy justify the expense.

If you are planning to enter Nepal and want clarity on costs, structure, and compliance, professional guidance can save you significant time and money.