Understanding the private vs public company in Nepal decision is one of the first and most important steps for foreign companies entering the Nepali market. The structure you choose affects ownership control, compliance, fundraising, and long-term scalability.
Nepal offers strong opportunities in IT, outsourcing, manufacturing, hydropower, tourism, and professional services. However, its company law framework is distinct. This guide gives foreign investors a clear, authoritative, and practical explanation without legal jargon so you can choose the right structure confidently.
Foreign founders often underestimate how much structure impacts operations. In Nepal, the wrong entity choice can slow approvals, limit profit repatriation, or increase regulatory exposure.
Your structure determines:
Whether foreign shareholding is allowed
Capital requirements and disclosure rules
Ability to raise funds locally
Ongoing compliance costs
Exit and expansion flexibility
For most foreign investors, the decision comes down to private vs public company in Nepal.
Nepal’s Companies Act recognizes several entity forms, but foreign investors mainly consider the following:
Private Limited Company
Public Limited Company
Branch Office
Liaison / Representative Office
This article focuses on the private vs public company in Nepal, as these are the only structures that allow long-term commercial operations.
A private company in Nepal is a closely held entity designed for founders, families, or strategic investors.
Minimum shareholders: 1
Maximum shareholders: 101
No public share issuance
Restricted share transfer
Lower compliance burden
Private companies are governed primarily by their Memorandum and Articles of Association.
Private companies are the most common choice for foreign investors because they offer:
Full operational control
Faster incorporation timelines
Lower regulatory scrutiny
Flexible shareholder arrangements
For most foreign-owned startups, IT firms, and service companies, a private company is the default structure.
A public company in Nepal is designed for large-scale enterprises seeking capital from the public or institutional investors.
Minimum shareholders: 7
No maximum shareholder limit
Mandatory minimum paid-up capital
Can issue shares to the public
Heavily regulated
Public companies are subject to stricter reporting and governance standards.
Foreign investors typically choose public companies when:
Planning an IPO in Nepal
Raising capital from Nepali investors
Operating in capital-intensive sectors
Partnering with government or SOEs
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Foreign ownership | Allowed (FDI route) | Allowed (sector-specific) |
| Capital requirement | No statutory minimum | NPR 10 million+ |
| Public fundraising | Not allowed | Allowed |
| Compliance burden | Low | High |
| Audit & disclosure | Annual audit | Enhanced disclosures |
| Ideal for | SMEs, startups, outsourcing | Large enterprises, IPO plans |
Original insight:
Over 90% of foreign owned companies registered in Nepal choose the private company model due to speed, cost, and flexibility.
Foreign investors should be aware of the primary laws that apply:
Companies Act, 2006
Foreign Investment and Technology Transfer Act (FITTA), 2019
Income Tax Act, 2002
Labor Act, 2017
Social Security Act, 2018
Together, these laws regulate ownership, capital, taxation, employment, and profit repatriation.
Submit proposed names to the Office of the Company Registrar
Ensure no similarity with existing entities
Decide between private vs public company in Nepal
Finalize shareholding and capital structure
Memorandum of Association
Articles of Association
Shareholder resolutions
Passport and incorporation documents
Apply to the Department of Industry or Investment Board Nepal
Minimum foreign investment generally NPR 20 million
Submit documents to the Registrar
Obtain incorporation certificate
Permanent Account Number (PAN)
VAT registration (if applicable)
Social Security Fund enrollment
No statutory minimum capital
Capital determined by business needs
Flexible contribution timelines
Minimum paid-up capital usually NPR 10 million or more
Sector-specific thresholds may apply
Foreign investors should align capital with visa, banking, and repatriation planning.
Both structures require compliance, but the scale differs.
Annual audit
Tax filings
Board and shareholder meetings
Quarterly disclosures
Public reporting standards
Securities compliance
This is why private vs public company in Nepal is often a risk-management decision, not just a legal one.
Corporate tax rate: generally 25%
Withholding tax on dividends
VAT: 13% on taxable supplies
Repatriation subject to tax clearance
Private and public companies are taxed similarly, but compliance complexity differs.
Foreign companies must comply with Nepal’s labor laws regardless of structure.
Key obligations include:
Written employment contracts
Minimum wage compliance
Social Security Fund contributions
Leave and termination rules
Private companies often outsource HR compliance to local advisors.
Ask yourself:
Do I need local public capital?
How fast do I want to incorporate?
How much compliance can I manage?
Is long-term listing planned?
Private company: 95% of foreign investors
Public company: Strategic, capital-intensive cases
Choosing a public company too early
Underestimating compliance workload
Misaligning capital with visa planning
Ignoring repatriation structuring
Avoiding these mistakes saves months of delay.
For most foreign investors, yes. Private companies offer faster setup, lower compliance, and full control. Public companies suit large capital-raising plans.
Yes, 100% foreign ownership is allowed in permitted sectors through the FDI approval process.
Generally NPR 20 million, though sector-specific rules may apply.
Yes. Conversion is legally allowed once capital and compliance thresholds are met.
Typically, 3–6 weeks for a private company, longer if FDI approvals are complex.
Choosing between a private vs public company in Nepal is a strategic decision that shapes your market entry, risk exposure, and growth trajectory. For most foreign companies, a private limited company delivers the best balance of control, speed, and compliance efficiency.