If you are a foreign company evaluating private vs public company in Nepal, the decision goes far beyond registration fees. It directly affects ownership control, compliance exposure, fundraising ability, and long-term exit flexibility.
Many foreign founders assume a public company is only for listed giants. Others believe a private company is always cheaper and easier. Both assumptions are incomplete.
This guide breaks down company formation costs in Nepal, explains the real operational differences between private and public companies, and helps foreign investors choose the structure that aligns with their risk profile and growth plan.
You will also see where most foreign companies overspend or mis-structure their Nepal entry.
Choosing the wrong structure creates hidden risks.
Your company type determines:
Capital requirements and lock-in risk
Compliance and disclosure burden
Ease of foreign ownership and control
Ability to raise capital or onboard shareholders
Cost predictability over the first five years
For most foreign investors, this decision is made before engaging with the Office of the Company Registrar. Fixing it later is costly.
Nepal’s Companies Act, 2006, recognizes two main corporate forms relevant to foreign investors:
Private Limited Company
Public Limited Company
Both are legal entities. Both can accept foreign investment under FITTA 2019. Their economics and obligations differ sharply.
A private company in Nepal is designed for closely held ownership and operational control.
Maximum 101 shareholders
Restriction on share transfer
Cannot issue shares to the public
Minimum paid-up capital often flexible, sector-dependent
This is the most common structure for foreign subsidiaries, joint ventures, and operating companies.
A public company is designed for capital mobilization and wider ownership.
Minimum 7 shareholders
No upper limit on shareholders
Can issue shares to the public
Higher minimum paid-up capital
Mandatory enhanced disclosures
Public companies are not only for stock exchange listings. Many infrastructure and regulated businesses use this structure.
| Cost Component | Private Company | Public Company |
|---|---|---|
| OCR registration fees | Lower | Significantly higher |
| Minimum paid-up capital | Lower or flexible | Statutorily higher |
| Legal documentation | Moderate | Extensive |
| Timeline to register | Faster | Slower |
Insight: Public companies cost more upfront even before operations begin.
Public companies are structurally more expensive to maintain.
They require:
More frequent statutory filings
Enhanced financial disclosures
Mandatory annual audits regardless of size
Board and shareholder governance formalities
Private companies have lighter compliance, especially in early years.
Private companies allow tight control.
Foreign parent companies can:
Retain majority or full ownership
Control board composition
Restrict share transfers
This is ideal for subsidiaries, captive operations, and strategic control plays.
Public companies dilute control faster.
Share transfers are easier
Governance is more regulated
Minority shareholder rights are stronger
This structure suits capital-heavy projects, not control-sensitive operations.
Capital thresholds vary by sector.
Many service and tech businesses operate with modest paid-up capital, reducing idle funds trapped in Nepal.
Public companies face higher mandatory capital floors, even before revenue generation.
This capital is locked in and subject to repatriation controls.
Foreign companies often underestimate this cost.
From a tax rate perspective, both entities are treated similarly under the Income Tax Act, 2002.
However, exposure differs.
Public companies attract closer regulatory scrutiny
Compliance errors carry higher reputational risk
Private companies allow more flexible internal structuring
Both must register with the Inland Revenue Department for PAN and tax filings.
Your growth plan matters more than your starting budget.
Wholly owned foreign subsidiary
Regional delivery or back-office center
Technology, consulting, services, SaaS
Controlled growth without public funding
Infrastructure or energy projects
Banking, insurance, or regulated sectors
Planned IPO or large domestic capital raise
Multi-investor consortium structures
Under FITTA 2019, both structures can accept foreign investment.
However:
Private companies face fewer approval complexities
Public companies often trigger additional scrutiny
Sectoral caps apply regardless of structure
Foreign investors typically gain faster approvals through private entities.
Private Company Risks
Lower disclosure burden
Easier governance control
Faster corrective action if issues arise
Public Company Risks
Public filings expose internal data
Higher penalties for non-compliance
Slower decision cycles
Risk-sensitive foreign founders usually favor private companies.
Private company
Lower registration fees
Lean legal and compliance spend
Capital efficiency
Public company
High incorporation costs
Mandatory audits and reporting
Locked-in capital exposure
Over five years, public companies often cost 2–3× more to maintain.
Before deciding, ask:
Do you need public fundraising in Nepal?
Is control or capital more important?
Can you lock in higher paid-up capital?
Are you prepared for enhanced disclosure?
Is your sector regulated or capital-intensive?
If most answers favor control and efficiency, private wins.
Choosing public company status “just in case”
Over-capitalizing early without revenue
Ignoring long-term compliance costs
Assuming structures are easy to convert later
Structure changes are possible, but expensive.
For most foreign companies, a private company in Nepal offers the best balance of cost control, governance flexibility, and regulatory predictability.
A public company is a strategic tool, not a default choice. It suits capital-heavy, regulated, or investor-driven projects.
Your structure should match your business reality, not hypothetical future plans.
If you align structure early, Nepal becomes a low-risk, high-efficiency market entry.
Yes. Private companies have lower registration fees, lower capital requirements, and lighter compliance obligations, making them significantly cheaper to set up and maintain.
Yes. Subject to sectoral rules under FITTA 2019, foreigners can fully own a private company in Nepal.
No. Public companies can remain unlisted, but they still carry higher compliance and disclosure obligations.
Yes, but conversion involves regulatory approvals, capital restructuring, and additional costs.
Private companies are generally better for foreign subsidiaries due to control, cost efficiency, and compliance simplicity.
When evaluating private vs public company in Nepal, foreign companies should focus on total cost of ownership, not just incorporation fees.
A private company is usually the smartest entry vehicle. A public company should be chosen only with clear capital or regulatory justification.
If you structure it right from day one, Nepal rewards you with stability, talent, and operational leverage.