Types of Companies in Nepal: Private, Public & Non-Profit (2026)

Types of companies recognized in Nepal

For most founders choosing a company under the Company Act, 2063, the practical options are a private company, a public company or a company not distributing profits. These forms differ in ownership, fundraising, governance and the use of profits. The Office of the Company Registrar registers and administers these companies.

A foreign company may also register a branch office or contact office in Nepal after obtaining the approvals required for its proposed activity. That registration is different from incorporating a new Nepali subsidiary. Sole proprietorships, private firms, partnerships and cooperatives are also separate legal structures and are not company types under this comparison.

Quick comparison of company types in Nepal

A private limited company can have one to 101 shareholders and cannot invite the general public to subscribe for its shares or debentures. It is normally the most practical form for startups, family businesses, closely held ventures and Nepali subsidiaries.

A public limited company generally requires at least seven founders, may have an unlimited number of shareholders and is designed for wider ownership and public fundraising subject to company and securities law. The Company Act states a minimum paid-up capital of NPR 10 million unless another applicable law or government notice requires more.

A company not distributing profits generally requires at least five promoters. It must apply its income and savings toward its stated objectives rather than distribute dividends or profits to members. It is suitable only where the purpose is genuinely non-profit.

1. Private limited company

A private limited company is the usual choice for a business whose ownership will remain with a defined group. Nepal permits a single-shareholder private company, while the maximum is 101 shareholders. Employee shareholders holding shares under an employee share scheme may be treated differently for the statutory count under the Act.

A private company cannot sell its shares or debentures openly to the public. Its memorandum of association, articles of association and any unanimous agreement can regulate share transfers, director powers, voting, reserved matters and shareholder exits. These documents should be drafted for the actual ownership arrangement instead of copied from an unrelated company.

The private form usually provides simpler internal governance than a public company, but it is not compliance-free. The company must maintain statutory and accounting records, appoint an auditor as applicable, complete tax obligations and submit the returns and financial statements required by law.

Who should choose a private company?

A private company is commonly suitable for a founder-owned startup, family enterprise, consultancy, technology company, trading business, joint venture with a limited group of investors or a subsidiary whose shares will not be offered publicly. It is also the only company form among the three that can begin with one shareholder.

Founders expecting venture capital or strategic investment can still use a private company. The articles and shareholder arrangements should anticipate later share issues, investor rights, board representation, transfer restrictions and exits.

2. Public limited company

A public company is a company other than a private company. It generally needs at least seven promoters and may have seven or more shareholders without the private-company ceiling. It is the appropriate form where the business intends to invite public investment or where the nature of the regulated activity legally requires a public company.

Under section 11 of the Company Act, the general minimum paid-up capital is NPR 10 million, unless prevailing law or a Nepal Gazette notice prescribes a higher amount for a particular company. Banks, financial institutions, insurers, securities-market businesses and certain other regulated activities are subject to additional sector laws, regulatory capital and licensing conditions.

Public companies have more extensive governance and disclosure duties. They require a board of three to eleven directors. Independent-director requirements apply, and a public company with female shareholders must have at least one female director. Securities cannot be offered to the public merely because the OCR has issued an incorporation certificate; securities-law approvals and procedures also apply.

When is a public company appropriate?

A public company may be appropriate for a large enterprise seeking broad ownership, a future public share offering, or a business that must operate in public-company form under sector legislation. It is usually not the efficient starting structure for a small, closely held business because its capital, board, disclosure and meeting requirements are more demanding.

A public company must obtain approval to commence transactions after satisfying the statutory requirements. This differs from a private company, which does not require a separate OCR commencement approval, although both forms must obtain any sector licence required for their activities.

3. Company not distributing profits

A company not distributing profits is established for permitted objectives where income or savings will not be distributed to members as dividends or private profit. OCR guidance identifies a minimum of five promoters for registration. There is no maximum member limit stated in the same way as for a private company.

The company must use its resources for its constitutional objectives. Subject to the limited exceptions allowed by law, it cannot distribute dividends or pay its members or their close relatives from company funds. A member generally does not acquire a transferable ownership interest comparable to an ordinary shareholder's investment in a profit-making company.

This form can be appropriate for professional development, social welfare, education, research, culture, public-interest initiatives or membership-based activities where profits will be retained for the mission. It should not be chosen merely to seek tax benefits. Tax treatment, Social Welfare Council requirements and sector approvals must be assessed separately.

Private company vs public company

The central difference is not simply company size. A private company restricts public participation and keeps ownership within a limited shareholder group. A public company can support wider ownership and potential public fundraising, but it carries substantially greater capital, governance, reporting and regulatory obligations.

For most ordinary startups and closely held businesses, a private company is the practical choice. A public company becomes relevant when public capital, a legally required structure or the scale and ownership plan justify its additional obligations.

Private company vs not-for-profit company

Choose a private company when shareholders expect ownership rights and may lawfully receive dividends from distributable profits. Choose a company not distributing profits only when the organisation's income will remain dedicated to its stated objectives and members will not receive profit distributions.

Calling an activity socially useful does not by itself make the non-profit form appropriate. The funding model, payments to founders, asset use, governance, tax position and treatment of any surplus must match the non-distribution requirement.

Foreign company, branch office and Nepali subsidiary

A company incorporated outside Nepal may apply to register a branch office or contact office where foreign-investment and sector rules permit it. A branch remains part of the foreign legal entity; a contact or liaison office is generally limited to the activities authorised by its approval and should not conduct unapproved revenue-generating business.

A Nepali subsidiary is different. It is a separate company incorporated in Nepal, commonly as a private company, with the foreign investor holding approved shares. Foreign investment approval, authenticated corporate documents, banking channels and sector restrictions must be addressed before or alongside incorporation as required.

How to choose the right company structure

Start with six questions: Will profits be distributed to owners? How many owners are there? Will shares be offered to the public? Is the proposed activity legally required to use a public company? Is any owner foreign? What investment, control and exit rights will be needed later?

Also consider the proposed capital, board structure, decision-making thresholds, transfer restrictions, licensing, tax position and annual compliance cost. The cheapest or simplest structure on registration day may become expensive if it conflicts with fundraising, foreign-investment or governance plans.

Common mistakes to avoid

Do not register a not-for-profit company while planning to distribute earnings to founders. Do not select a public company solely because the business hopes to become large. Do not treat a foreign branch as if it were a Nepali subsidiary. Do not assume incorporation replaces industry, foreign-investment, tax or local approvals.

Before filing, align the selected form with the promoters, objectives, capital plan and constitutional documents. A structure-specific legal review can prevent later conversion costs, shareholder disputes and regulatory delays.

Legal update and practical caution

This guide was reviewed in July 2026 using the Company Act, 2063 and current Office of the Company Registrar guidance. Laws, Gazette notices, regulatory capital requirements and electronic filing procedures can change. Confirm the latest official requirements before submitting an application or committing investment funds.