If you are evaluating private vs public company in Nepal, you are already thinking like a serious investor.
The decision shapes ownership, tax exposure, compliance burden, and exit strategy.
For foreign companies, Nepal offers a structured but paperwork-heavy regime.
Choosing the wrong entity can slow approvals and increase costs.
This guide explains the private vs public company in Nepal from a legal, tax, and operational lens.
It also walks you through the step-by-step company registration process, written for international founders and CFOs.
Why Foreign Companies Care About the Private vs Public Company Choice
Foreign investors usually enter Nepal for one of four reasons:
- Cost-efficient back-office operations
- Market entry and distribution
- Technology and engineering teams
- Long-term strategic investment
Each objective maps differently to a private or public company structure.
Understanding this early reduces regulatory friction later.
Overview of Company Types in Nepal
Nepal primarily recognizes two corporate forms under company law:
- Private Limited Company
- Public Limited Company
Both are registered with the Office of Company Registrar (OCR).
Both provide limited liability protection.
However, their governance, disclosure, and capital rules differ significantly.
What Is a Private Limited Company in Nepal?
A private limited company is the default choice for foreign investors.
It is flexible, faster to register, and easier to manage.
Key Characteristics
- Minimum shareholders: 1
- Maximum shareholders: 50
- Share transfer restrictions apply
- No public share issuance
- Lower compliance intensity
Common Use Cases
- Foreign back-office or captive centers
- IT and software development hubs
- Professional services entities
- Wholly owned FDI subsidiaries
What Is a Public Limited Company in Nepal?
A public company is designed for large-scale capital raising and broad ownership.
Key Characteristics
- Minimum shareholders: 7
- No maximum shareholder limit
- Shares can be publicly offered
- Mandatory board committees
- Higher disclosure standards
Common Use Cases
- Banks and financial institutions
- Insurance companies
- Hydropower and infrastructure projects
- Companies planning IPOs in Nepal
Private vs Public Company in Nepal: Core Differences
Structural Comparison
| Aspect |
Private Company |
Public Company |
| Minimum shareholders |
1 |
7 |
| Maximum shareholders |
50 |
Unlimited |
| Public share issue |
Not allowed |
Mandatory or permitted |
| Compliance burden |
Moderate |
High |
| Typical FDI choice |
Yes |
Rare |
This table alone answers many private vs public company in Nepal questions for foreign firms.
Capital Requirements for Foreign Companies
Foreign investment is governed by FITTA 2019 and central bank rules.
Minimum Capital Threshold
- Standard foreign investment: NPR 20 million
- Sector-specific thresholds may apply
- Capital must enter via formal banking channels
The Nepal Rastra Bank (NRB) monitors capital inflow and repatriation.
Step-by-Step Guide to Company Registration in Nepal
This section applies whether you choose a private or public company.
Step 1: Name Reservation
- Submit proposed company names to OCR
- Names must not conflict with existing entities
- Approval usually takes 1–3 working days
Step 2: Draft Constitutional Documents
You must prepare:
- Memorandum of Association
- Articles of Association
- Shareholding structure
- Capital schedule
Foreign parent documents require notarization and consular legalization.
Step 3: Foreign Investment Approval (If Applicable)
Foreign investors must obtain approval before incorporation.
Authorities involved may include:
- Department of Industry
- Investment Board Nepal
- Sector regulators
This step is critical for FDI entities.
Step 4: Company Incorporation at OCR
Once approvals are secured:
- Submit incorporation documents
- Pay statutory registration fees
- Obtain Certificate of Incorporation
The company legally exists at this point.
Step 5: Tax and Statutory Registrations
Post-incorporation registrations include:
- PAN and VAT with the Inland Revenue Department
- Social Security Fund enrollment
- Local ward registration
These steps activate the entity operationally.
Taxation: Private vs Public Company in Nepal
Tax treatment is largely entity-neutral, but incentives differ.
Corporate Income Tax Rates
- Standard rate: 25%
- Banks and certain sectors: higher rates apply
- Special industries may receive concessions
Dividend Distribution
- Subject to withholding tax
- Repatriation requires NRB clearance
Private companies often manage tax compliance more efficiently.
Compliance and Reporting Obligations
Private Company Compliance
- Annual financial statements
- Annual return filing
- Tax filings and audits
Public Company Compliance
- All private company obligations, plus:
- Public disclosures
- Board and committee reporting
- Regulator-specific filings
This difference heavily influences private vs public company in Nepal decisions.
Governance and Control Considerations
Foreign investors usually want control clarity.
Private Company Advantages
- Tight shareholder agreements
- Easier board structuring
- Faster decision-making
Public Company Challenges
- Diluted ownership
- Regulatory oversight
- Slower strategic execution
For most foreign companies, private structures align better.
Sector-Specific Restrictions
Not all sectors are open equally.
Examples include:
- Banking and insurance
- Defense-related activities
- Media and broadcasting
Sector caps and approvals can override the private vs public choice.
When Does a Public Company Make Sense?
A public company may be justified if:
- Large domestic capital is required
- IPO is planned within Nepal
- Regulatory mandate requires it
These cases are exceptions, not the norm.
Practical Recommendation for Foreign Companies
For 90% of foreign investors:
- Private limited company is the optimal structure
- Faster setup
- Lower compliance cost
- Stronger control
Public companies suit only capital-intensive or regulated industries.
Private vs Public Company in Nepal: Final Checklist
Before deciding, confirm:
- Investment size
- Sector restrictions
- Capital raising plans
- Exit horizon
A structured decision avoids costly restructuring later.
Conclusion
The private vs public company in Nepal decision is strategic, not administrative.
For most foreign companies, a private limited company offers speed, control, and compliance efficiency.
Understanding registration steps, capital rules, and tax exposure upfront protects your investment.
With proper planning, Nepal can be a highly effective base for regional operations.
Frequently Asked Questions
Is a private company better than a public company in Nepal?
Yes, for most foreign investors. Private companies are easier to manage and have lower compliance costs.
Can a foreigner own 100% of a Nepali company?
Yes. Full foreign ownership is allowed in many sectors, subject to approval.
What is the minimum capital for foreign investment in Nepal?
Generally NPR 20 million. Some sectors require higher thresholds.
How long does company registration take in Nepal?
Typically 4–8 weeks for foreign investors, including approvals.
Can a private company convert into a public company later?
Yes. Conversion is permitted with regulatory approval.