If you are a foreign investor, choosing between a private vs public company in Nepal is one of the most important decisions you will make. This choice affects ownership, compliance, capital raising, and long-term growth. Many foreign companies rush into incorporation without fully understanding how Nepal’s company structures work.
This guide explains the private vs public company in Nepal clearly, practically, and step by step. By the end, you will know which structure fits your strategy, budget, and risk appetite.
Nepal’s Companies Act recognizes two primary company types for investors. Each serves a different business purpose.
A private company in Nepal is designed for closely held businesses. It is the most common structure for foreign companies entering Nepal.
Key characteristics
Limited to private shareholding
Shares are not publicly traded
Lower compliance burden
Faster incorporation process
Private companies are popular for subsidiaries, outsourcing centers, and service operations.
A public company in Nepal is designed for large-scale operations that raise capital from the public.
Key characteristics
Shares can be offered to the public
Higher regulatory scrutiny
Mandatory corporate governance structures
Suitable for large infrastructure or financial projects
For most foreign companies, this structure is unnecessary at the entry stage.
The differences between a private vs public company in Nepal go beyond ownership. They affect control, compliance, and cost.
Private company: 1 to 101 shareholders
Public company: Minimum 7 shareholders, no upper limit
Foreign investors prefer private companies because ownership is easier to manage.
Private company: No minimum paid-up capital unless FDI rules apply
Public company: Higher capital expectations and disclosures
Private company: Office of Company Registrar supervision
Public company: Additional oversight from market and securities regulators
Private company: Restricted share transfers
Public company: Freely transferable shares
| Factor | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7 |
| Public Share Issue | Not allowed | Allowed |
| Compliance Cost | Low to moderate | High |
| Governance Complexity | Simple | Complex |
| Ideal For | Foreign subsidiaries | Large enterprises |
This table highlights why private companies dominate foreign investment in Nepal.
Most foreign investors choose a private company structure. The reasons are practical.
Advantages include
Faster registration timelines
Lower legal and accounting costs
Greater control over decision-making
Flexible ownership arrangements
For service-based operations, a public company adds no real value.
This section applies whether you are choosing a private or public company.
Start with your long-term strategy. Ask whether you plan to raise public capital. If not, a private company is usually best.
Foreign investors must secure approval before incorporation. This includes sector eligibility and capital structure review.
Your company name must be unique and approved by the registrar.
You will need:
Memorandum of Association
Articles of Association
These documents define your business scope and governance.
Submit documents to the registrar and obtain the incorporation certificate.
After incorporation:
Obtain tax registration
Open a local bank account
Register for social security if hiring staff
Compliance is where the difference between private vs public company in Nepal becomes most visible.
Both structures must file annual returns and audited accounts. Public companies face stricter deadlines and disclosures.
Public companies must maintain:
Larger boards
Independent directors
Formal committees
Private companies have simpler governance.
Public companies incur significantly higher legal, audit, and reporting costs.
Avoid these errors when choosing between a private vs public company in Nepal.
Assuming public companies are more “credible”
Overestimating capital-raising needs
Ignoring long-term compliance costs
Misunderstanding share transfer restrictions
Most of these mistakes lead to unnecessary complexity.
Although rare, some scenarios justify a public company.
Infrastructure projects
Financial institutions
Large manufacturing ventures
Planned public listings
If your business does not fit these categories, a private company is safer.
The private vs public company in Nepal decision impacts cost, control, and compliance
Private companies suit most foreign investors
Public companies involve heavier regulation
Strategic planning saves time and money
For most foreign companies, yes. Private companies offer lower compliance, faster setup, and more control.
Yes. Conversion is possible after meeting regulatory and capital requirements.
A private company typically takes a few weeks after approvals are secured.
No. Foreigners can own 100 percent equity in permitted sectors.
Minimum investment thresholds depend on sector and prevailing foreign investment rules.
Choosing between a private vs public company in Nepal is a strategic decision, not a formality. For most foreign companies, a private company offers flexibility, control, and cost efficiency. Public companies suit only large, capital-intensive ventures.
Making the right choice at the beginning prevents restructuring headaches later.