If you are evaluating a private vs public company in Nepal, you are already thinking strategically.
The structure you choose will shape your tax exposure, governance burden, capital strategy, and even your exit options. For foreign companies entering Nepal in 2026, this decision is not administrative. It is foundational.
Nepal is experiencing renewed foreign investment interest. Policy reforms, sector liberalization, SEZ incentives, and digital infrastructure growth are accelerating cross-border capital flows. Yet many foreign investors still ask the same question:
Should we incorporate a private limited company or go public?
This guide provides a comprehensive answer grounded in Nepalese law, regulatory practice, and real investor behavior.
Foreign investment in Nepal is primarily governed by:
According to Nepal’s Department of Industry data, foreign investment commitments have consistently flowed into:
However, over 90% of foreign-backed entities register as private limited companies, not public companies.
Why?
Because structure determines:
Understanding the difference is critical before filing with the Office of Company Registrar.
Let us start with definitions under the Companies Act, 2006.
A private limited company:
It is the most common structure for foreign direct investment.
A public company:
Public companies are often used for large infrastructure or capital-intensive sectors.
Below is a practical comparison tailored to foreign investors.
| Criteria | Private Company | Public Company |
|---|---|---|
| Governing Law | Companies Act 2006 | Companies Act 2006 + SEBON |
| Min Shareholders | 1 | 7 |
| Max Shareholders | 101 | Unlimited |
| Public Share Issue | Not allowed | Allowed |
| Foreign Ownership | Permitted under FITTA | Permitted under FITTA |
| Compliance Burden | Moderate | High |
| Listing Option | No | Yes |
| Capital Raising | Private placement | Public offering |
| Typical FDI Use | SMEs, IT, services | Hydropower, banks, insurance |
For most foreign companies entering Nepal in 2026, a private limited company is operationally efficient and risk-controlled.
Several macro trends support private company registration:
Foreign investors prefer to:
Private companies offer that control.
Public companies face:
For early-stage foreign market entry, this can create avoidable overhead.
Nepal’s growth sectors in 2026 include:
Most of these begin as privately structured entities.
Despite higher compliance, public companies are ideal for:
Public listing allows access to Nepal’s capital market and retail investors.
If your investment exceeds NPR multi-billion levels and requires local capital mobilization, a public company may be necessary.
Includes everything above, plus:
Compliance intensity is significantly higher.
Under FITTA 2019, foreign investors may repatriate:
Both private and public companies can facilitate repatriation.
However, private companies often have cleaner dividend declaration structures due to simpler shareholding.
Public companies may face additional disclosure and minority shareholder complexities.
Corporate tax rates under the Income Tax Act, 2002 generally stand at:
Tax treatment does not fundamentally differ between private and public companies.
But operational complexity often increases effective compliance cost for public entities.
Here is a simplified decision checklist:
Private companies dominate.
Foreign tech firms use Nepal as a delivery center with controlled shareholding.
Often structured as public companies due to capital intensity.
Usually private initially.
May convert to public once scaling.
Public structure required.
The Companies Act allows conversion from private to public company.
Foreign investors often:
This staged approach minimizes early risk.
Many foreign companies underestimate:
A private structure allows tighter governance architecture.
Public companies increase scrutiny and transparency requirements.
For first-time market entry, strategic risk containment is crucial.
While exact costs vary, the relative comparison is clear:
| Cost Category | Private | Public |
|---|---|---|
| Registration Cost | Lower | Higher |
| Ongoing Compliance | Moderate | High |
| Audit Complexity | Standard | Enhanced |
| Disclosure Cost | Minimal | Significant |
| Legal Advisory Need | Periodic | Continuous |
In early years, private structures are more capital efficient.
Nepal’s capital market is growing.
If hydropower, green energy, and infrastructure investments surge, public registrations may rise.
However, SME-driven FDI will continue favoring private limited companies.
The structural reality of Nepal’s market supports private entry, public scaling.
Yes. Under FITTA 2019, 100% foreign ownership is permitted in most sectors, except restricted industries.
There is no strict statutory minimum for private companies, but practical FDI thresholds apply depending on sector.
Yes. It must convert into a public company first under the Companies Act.
Generally no. Corporate tax applies equally, unless sector incentives differ.
Private limited companies are significantly faster and simpler to incorporate.