If you are evaluating private vs public company in Nepal, you are already asking the right strategic question. Your entry structure will shape taxation, control, fundraising, compliance, and even exit value.
Nepal is attracting increasing foreign direct investment under the Foreign Investment and Technology Transfer Act (FITTA) 2019. The country offers sector incentives under the Industrial Enterprises Act 2020 and corporate governance clarity under the Companies Act 2006. Yet many foreign investors underestimate how much their choice between a private limited and public limited company affects long-term outcomes.
This guide is written for foreign companies. It combines regulatory precision with commercial strategy. By the end, you will know exactly which structure aligns with your capital model, risk appetite, and scaling plan.
Before comparing structures, you need context.
Company registration and governance in Nepal are primarily regulated by:
Foreign investors typically register through the Department of Industry or Investment Board, depending on project size.
Nepal allows 100% foreign ownership in most sectors, except restricted industries such as small-scale retail and certain agriculture activities.
Now, let us break down the core comparison.
Under the Companies Act 2006, both private and public companies are limited liability entities. However, their operational and capital structures differ significantly.
For foreign investors, this distinction is not cosmetic. It determines capital raising flexibility and compliance exposure.
| Criteria | Private Company in Nepal | Public Company in Nepal |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | No limit |
| Public Share Offering | Not allowed | Allowed |
| SEBON Regulation | No | Yes |
| Compliance Burden | Moderate | High |
| Capital Raising Flexibility | Limited | Strong |
| Ideal For | Subsidiaries, JV structures, controlled FDI | Large infrastructure, IPO-bound entities |
| Governance Requirements | Standard board | Strong independent governance norms |
| Conversion Option | Can convert to public | Already public |
Strategic Insight:
Most foreign investors begin with a private company for control and later convert to public if capital markets become relevant.
A private company is the most common entry structure for foreign direct investment in Nepal.
Under FITTA 2019, repatriation of dividends and capital is allowed subject to Nepal Rastra Bank approval.
If your strategy prioritizes operational efficiency and profit repatriation over public capital markets, a private structure is typically optimal.
A public company becomes relevant when scale and capital access matter more than control concentration.
Public companies must comply with SEBON regulations. They must issue a prospectus and maintain public disclosures.
Governance standards are stricter. Independent directors are often required. Financial transparency is mandatory.
This increases compliance cost but improves credibility and valuation potential.
Let us talk strategy.
If your long-term vision includes listing on Nepal Stock Exchange, early structural planning is critical.
Conversion from private to public is possible under the Companies Act 2006. However, governance restructuring is required.
Compliance affects cost and risk exposure.
Public entities face greater scrutiny but gain institutional credibility.
Corporate tax rates under Nepal’s Income Tax Act 2002 are generally:
Tax rates do not differ based on private or public classification. However, capital structure and dividend distribution planning differ.
Foreign investors should structure profit repatriation carefully under Nepal Rastra Bank guidelines.
Private companies may operate with a simple board structure.
Public companies require stronger governance architecture.
Foreign investors seeking long-term institutional investors benefit from public governance standards.
Your company structure affects exit flexibility.
If your business model anticipates acquisition, a private company may provide cleaner negotiations.
If liquidity and valuation transparency matter, public listing adds leverage.
Here is what experienced investors analyze before choosing structure:
In Nepal, many infrastructure projects are structured as public companies due to capital pooling needs.
Technology and service companies almost always begin as private entities.
Private structure is common initially. SEZ incentives include income tax concessions under Industrial Enterprises Act 2020.
Often structured as public companies to mobilize domestic capital participation.
Banking Act requirements may mandate public structure.
Private subsidiaries are preferred for FDI flexibility.
Here is a simplified decision approach:
Under Companies Act 2006 provisions:
Strategic conversion planning should begin early.
The decision between private vs public company in Nepal is not simply legal. It is strategic.
For most foreign investors entering Nepal, a private limited company offers optimal control, manageable compliance, and flexibility.
Public companies are powerful vehicles for capital-intensive sectors and long-term domestic participation.
Your structure should align with capital strategy, governance appetite, sector regulations, and exit vision.
If you are planning entry into Nepal, structured advisory is essential. Regulatory misalignment at incorporation stage can create long-term inefficiencies.
Yes. FITTA 2019 permits 100% foreign ownership in most sectors, except restricted industries. Approval from the Department of Industry is required.
Not always. However, infrastructure and banking sectors often require public structure due to regulatory frameworks.
Yes. Conversion is allowed under Companies Act 2006. Governance and capital restructuring is required.
No. Corporate tax rates are generally the same. Incentives depend on sector, not company type.
A public company structure is required for IPO. Many companies convert from private before listing.