What to Expect: Company Formation Fees in Nepal

If you are a foreign company evaluating market entry, private vs public company in Nepal is one of the first strategic decisions you must make. This choice directly affects company formation fees in Nepal, regulatory exposure, ownership flexibility, and long-term scalability.

Nepal welcomes foreign investment, but its corporate framework is precise. Understanding how private and public companies differ helps you avoid overpaying, over-complying, or choosing a structure that limits growth. This guide is written specifically for foreign founders, CFOs, and legal teams who need clarity, not theory.

We will walk through costs, legal thresholds, compliance obligations, and real-world use cases so you can choose confidently.

Nepal’s Corporate Framework at a Glance

Nepal’s company law is governed primarily by the Companies Act, 2006, supported by sectoral laws and foreign investment regulations.

For foreign companies, the most common incorporation choices are:

• Private Limited Company

• Public Limited Company

Both are registered in Nepal and regulated by the Office of the Company Registrar.

What Is a Private Company in Nepal?

A private limited company in Nepal is the most common structure for foreign investors entering the market.

Key Legal Characteristics

• Minimum shareholders: 1

• Maximum shareholders: 101

• Share transfer restrictions apply

• No public invitation to subscribe shares

• Can be 100 percent foreign-owned, subject to sector approval

Why Foreign Companies Prefer Private Companies

Private companies are simpler, faster, and cheaper to operate. They are ideal for subsidiaries, operating companies, holding entities, and service centers.

Typical use cases include:

• IT and software development subsidiaries

• Consulting and professional services firms

• Trading companies (where permitted)

• Back-office and support operations

What Is a Public Company in Nepal?

A public limited company is designed for large-scale enterprises that plan to raise capital from the public.

Key Legal Characteristics

• Minimum shareholders: 7

• No maximum shareholder limit

• Shares can be offered to the public

• Mandatory higher paid-up capital

• Heavily regulated disclosure regime

When Public Companies Make Sense

Public companies are rarely the right choice at market entry. They are suitable only if you plan to:

• Raise capital through public offerings

• Operate in regulated or infrastructure-heavy sectors

• Build a nationally scalable enterprise in Nepal

Private vs Public Company in Nepal: Core Differences

Quick Comparison Overview

This distinction alone explains why most foreign companies choose private incorporation.

Company Formation Fees in Nepal: Private vs Public

Understanding company formation fees in Nepal is critical for budgeting and approvals.

Government Registration Fees

Registration fees are linked to authorized capital.

Private Company (indicative):

• NPR 1 million capital: low registration fee

• NPR 10 million capital: moderate fee

• Scales progressively

Public Company:

• Higher base fees

• Additional regulatory charges

• Prospectus and approval costs

Professional and Advisory Costs

Foreign investors should also budget for:

• Legal drafting and compliance structuring

• Certified translations into Nepali

• Notarization and apostille of parent documents

• Tax and regulatory advisory

In practice, public company formation costs can be 2 to 3 times higher than private company setup.

Paid-Up Capital Requirements Explained

Private Company Capital

Nepal does not impose a universal minimum capital for private companies, except in regulated sectors.

This flexibility allows foreign investors to:

• Start lean

• Increase capital later

• Align capital with real operational needs

Public Company Capital

Public companies must meet statutory minimum paid-up capital thresholds, often running into tens or hundreds of millions of NPR depending on sector.

This alone excludes most early-stage foreign investors.

Compliance Obligations: What You Must Maintain

Private Company Compliance

A private company must handle:

• Annual financial statements

• Annual general meeting

• Income tax filings

• Statutory registers

• Audit (mandatory once thresholds apply)

Public Company Compliance

Public companies face everything above plus:

• Mandatory quarterly disclosures

• Prospectus compliance

• Continuous reporting obligations

• Stronger audit and governance requirements

For foreign companies, compliance effort directly translates into cost and management bandwidth.

Foreign Ownership Rules and Restrictions

Foreign investors are permitted to own up to 100 percent of a private company in Nepal, provided the sector is open under foreign investment laws.

Public companies often face:

• Sectoral caps

• Additional scrutiny

• Approval complexity

This is another reason the private route dominates foreign incorporations.

Taxation Perspective for Foreign Companies

Corporate Income Tax

Both private and public companies are taxed at standard corporate rates, depending on sector.

There is no tax advantage to choosing a public company purely from a corporate tax standpoint.

Dividend and Withholding Taxes

• Dividend distribution tax applies equally

• Withholding obligations remain the same

From a tax lens, structure choice should be driven by governance and funding, not rates.

Strategic Decision Guide: Which Structure Fits You?

Choose a Private Company if You:

1. Are entering Nepal for the first time

2. Want operational control

3. Need cost efficiency

4. Do not plan public fundraising

Choose a Public Company if You:

• Intend to raise public capital in Nepal

• Operate in infrastructure or finance-heavy sectors

• Have long-term, large-scale investment plans

For most foreign companies, the answer is clear.

Common Mistakes Foreign Investors Make

• Overestimating the need for a public company

• Assuming higher capital improves approval chances

• Ignoring long-term compliance costs

• Choosing structure based on home-country norms

Nepal’s legal environment rewards right-sized structuring, not overengineering.

Private vs Public Company in Nepal: Cost and Risk Perspective

From a risk-adjusted viewpoint:

• Private companies offer faster setup

• Lower sunk costs

• Easier exit or restructuring

• Cleaner governance for parent control

Public companies introduce regulatory risk before revenue certainty.

Conclusion: Making the Right Choice

Choosing between a private vs public company in Nepal is less about ambition and more about timing, risk, and capital efficiency. For foreign companies, private incorporation offers flexibility, speed, and cost control without sacrificing legitimacy or growth potential.

Public companies have their place, but rarely at entry stage.

If your goal is to establish operations, test the market, or build a long-term subsidiary, a private company is almost always the smarter first move.

Frequently Asked Questions

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

Yes. Foreigners can own 100 percent of a private company in Nepal if the sector is open to foreign investment.

2. Is a public company mandatory for large investments?

No. Large investments can be structured through private companies unless public fundraising is planned.

3. What is the minimum capital for company registration in Nepal?

There is no universal minimum for private companies. Capital depends on business needs and sector rules.

4. Are public companies taxed differently in Nepal?

No. Corporate tax rates are generally the same for private and public companies.

5. Which structure is faster to register?

Private companies register significantly faster due to simpler approvals and documentation.