Choosing between a private vs public company in Nepal is one of the first and most critical decisions foreign companies make when entering the Nepali market. Yet many investors rush this step, only to face delays, regulatory friction, or costly restructuring later.
Nepal welcomes foreign investment, but its company registration framework follows strict legal rules under national legislation and regulator oversight. Understanding how private and public companies differ, and where most foreign firms make mistakes, can save months of time and significant capital.
This guide is written specifically for foreign companies planning market entry, subsidiaries, or long-term operations in Nepal. It explains the legal distinctions, highlights common errors, and shows how to register correctly the first time.
Foreign founders often assume that company structures work the same everywhere. In Nepal, that assumption leads to problems.
The choice between a private and public company determines:
Who can own shares
How capital can be raised
Ongoing compliance and disclosures
Tax, audit, and governance burden
Exit and restructuring flexibility
Making the wrong choice can block foreign shareholding approval, slow regulatory clearances, or force costly conversion later.
Company registration in Nepal is governed primarily by:
Companies Act, 2006 (Nepal)
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Directives and procedures of the Office of Company Registrar
Foreign companies must align their structure with both corporate law and foreign investment rules from day one.
A private company in Nepal is the most common structure for foreign investors entering the country.
Minimum 1 shareholder, maximum 101 shareholders
Shares cannot be publicly traded
Share transfer is restricted
Lower compliance and disclosure requirements
Faster registration and approval timelines
Private companies offer flexibility, confidentiality, and lower regulatory burden. They are ideal for:
Wholly owned foreign subsidiaries
Joint ventures with local partners
Service centers and outsourcing operations
Early-stage market entry
A public company in Nepal is designed for large-scale enterprises that plan to raise capital from the public.
Minimum 7 shareholders, no maximum
Shares may be offered to the public
Mandatory prospectus and regulatory approvals
Higher minimum capital thresholds
Extensive governance and disclosure requirements
Public companies are typically suitable for:
Large infrastructure projects
Banks and financial institutions
Hydropower and energy projects
Companies planning IPOs in Nepal
For most foreign SMEs, this structure is unnecessarily complex.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share offering | Not allowed | Allowed |
| Compliance burden | Low to moderate | High |
| Registration timeline | Faster | Slower |
| Ideal for foreign investors | Yes | Rarely |
Insight: Over 90 percent of foreign-owned entities in Nepal register as private companies due to ease of compliance and operational flexibility.
Many investors believe public companies appear more “credible.” In Nepal, this choice often backfires due to:
Higher capital requirements
Stricter audits
Public disclosures
Regulatory scrutiny
Unless you need public fundraising, private is usually better.
Foreign investment approval must match the company structure. A mismatch between:
Shareholding pattern
Capital commitment
Company type
can delay or invalidate approvals under FITTA.
While Nepal does not impose a single universal minimum capital, sector-specific expectations apply.
Mistakes include:
Declaring unrealistically low capital
Misaligning capital with proposed activities
Failing to justify investment size
This can trigger regulator queries and resubmissions.
Foreign companies often reuse templates from other jurisdictions.
In Nepal, this leads to:
Rejected filings
Misaligned business objectives
Share transfer restrictions that hurt future exits
Many founders do not think about:
Future investors
Employee share plans
Parent-subsidiary restructuring
Private company provisions must be drafted carefully to allow flexibility later.
Ask these questions:
Will you raise capital from the public in Nepal?
How many shareholders will you have initially?
Do you need operational speed or public visibility?
For most foreign firms, the answer leads to a private company.
The business objective must:
Match intended activities
Align with sector approvals
Be future-proofed
Poor drafting here is a common rejection reason.
Key focus areas:
Share transfer rules
Director powers
Capital structure
Foreign ownership clarity
Documents are filed digitally with the regulator.
Typical timeline:
Private company: 7 to 15 working days
Public company: 30 to 60 working days
After registration, companies must complete:
Tax registration
Social Security Fund enrollment
Bank account opening
Foreign investment reporting
Annual return filing
Basic audit requirements
Limited disclosures
Statutory audits
Public disclosures
Board committees
Prospectus compliance
Foreign SMEs often underestimate these ongoing costs.
Choose a private company if you want:
Speed
Control
Lower compliance
Confidential ownership
Choose a public company only if you need:
Public capital
Large-scale fundraising
IPO readiness
Private companies are the default choice for foreign investors
Public companies carry heavy compliance obligations
Early structure decisions affect future exits
Regulatory alignment is critical
Avoiding early mistakes saves time, cost, and credibility.
For most foreign investors, a private company is better due to lower compliance, faster setup, and greater control.
Yes. Conversion is permitted but requires regulatory approval, capital restructuring, and updated compliance filings.
A private company usually takes 7 to 15 working days. Public companies take significantly longer.
Yes, in most sectors. Some industries require approvals or local participation under sector-specific rules.
Choosing a public company without needing public fundraising is the most common and costly mistake.
Understanding private vs public company in Nepal is essential for successful market entry. The right structure reduces risk, accelerates approvals, and supports long-term growth.
Foreign companies that plan carefully at the registration stage avoid years of compliance friction later.