Choosing Between a Public or Private Company in Nepal: Legal Guide

When foreign companies plan market entry, the Private vs public company Nepal decision is one of the most strategic choices they will make.
It determines ownership control, compliance burden, capital flexibility, and long-term scalability.

Nepal’s company law allows both Private Limited Companies and Public Limited Companies, but they serve very different business objectives.
Choosing the wrong structure can slow approvals, increase regulatory risk, or block future funding.

This guide offers a clear, regulator-aligned comparison, written specifically for foreign companies seeking certainty, compliance, and growth in Nepal.

Nepal’s Corporate Framework at a Glance

Corporate entities in Nepal are governed primarily by the Companies Act, 2006, administered by the Office of Company Registrar (OCR).
Foreign investment overlays apply under FITTA 2019 and related regulations.

The two most relevant incorporation options are:

• Private Limited Company (Pvt. Ltd.)

• Public Limited Company (Ltd.)

Each structure carries different legal, financial, and strategic implications.

Private vs Public Company Nepal: Core Legal Definitions

What Is a Private Limited Company in Nepal?

A Private Limited Company is a closely held entity designed for controlled ownership and operational flexibility.

Key legal traits include:

• Shareholders capped at 101

• No public invitation to subscribe shares

• Transfer of shares is restricted

• Lower disclosure and reporting thresholds

This structure is most common for foreign subsidiaries, joint ventures, and operating entities.

What Is a Public Limited Company in Nepal?

A Public Limited Company is designed for capital mobilisation and broad ownership.

Key legal traits include:

• Minimum 7 shareholders

• No maximum shareholder limit

• Shares may be offered to the public

• Mandatory regulatory approvals for issuance

Public companies face higher scrutiny and governance requirements.

Comparative Overview: Private vs Public Company Nepal

Insight: Over 90% of foreign investors in Nepal choose private companies due to speed and control advantages.

Ownership & Control Considerations for Foreign Companies

Why Control Matters in Nepal

Foreign investors often prioritise:

• Decision-making authority

• Protection of intellectual property

• Dividend and profit repatriation certainty

A private company allows tighter governance through shareholder agreements and reserved matters.

A public company dilutes control by design.

Shareholding Structure Rules

In Nepal:

• Both structures allow 100% foreign ownership, subject to sector approvals.

• Regulated sectors may impose caps or licensing conditions.

• Beneficial ownership disclosure is mandatory in both cases.

Capital Requirements & Fundraising Strategy

Minimum Capital Thresholds

There is no statutory minimum paid-up capital under the Companies Act alone.
However, foreign investment approvals often impose practical minimums.

• Private companies allow phased capital infusion.

• Public companies require upfront capital planning.

Fundraising Flexibility

A public company enables:

1. Public share issuance

2. Institutional investment

3. Future stock exchange listing

A private company is better for:

• Parent-funded operations

• Controlled JV structures

• Gradual scaling

Compliance, Governance & Reporting Obligations

Private Company Compliance

Private companies benefit from:

• Fewer board formalities

• Simplified annual filings

• No mandatory public audits beyond thresholds

Typical compliance includes:

• Annual returns to OCR

• Tax filings

• Social Security Fund registration

Public Company Compliance

Public companies must:

• Appoint independent directors

• Conduct statutory audits annually

• Publish financial statements

• Comply with securities regulations

Compliance costs are significantly higher.

Taxation Perspective: No Structural Advantage

From a tax rate perspective:

• Corporate income tax rates are identical

• VAT obligations apply equally

• Withholding taxes are structure-neutral

The difference lies in compliance complexity, not tax rates.

Strategic Use Cases: Which Structure Fits Your Business?

Choose a Private Company If You Are:

• Establishing a foreign subsidiary

• Running outsourced operations

• Testing the Nepal market

• Prioritising speed and control

Choose a Public Company If You Are:

• Planning an IPO

• Operating in regulated finance sectors

• Raising capital from the public

• Building a nationally scaled enterprise

Advantages of a Private Company in Nepal

• Faster incorporation timelines

• Lower regulatory friction

• Strong shareholder control

• Easier exit and restructuring

This is why private companies dominate foreign investment structures in Nepal.

Risks of Choosing the Wrong Structure

Common mistakes foreign companies make:

• Incorporating public companies without fundraising intent

• Underestimating compliance costs

• Losing governance control unintentionally

• Delaying operations due to approvals

A structure-first strategy prevents these risks.

Regulatory Authorities Involved

Foreign companies interact with:

• Office of Company Registrar

• Department of Industry

• Nepal Rastra Bank

• Inland Revenue Department

Early alignment avoids costly revisions.

Incorporation Timelines Compared

• Private Company: 2–4 weeks post-approval

• Public Company: 6–10 weeks or longer

Delays usually arise from documentation gaps, not law.

Practical Recommendation for Foreign Investors

For most foreign companies entering Nepal, a Private Limited Company is the optimal starting point.
Public company conversion remains possible later if strategic needs change.

Frequently Asked Questions (People Also Ask)

Is a private company better than a public company in Nepal?

Yes, for most foreign investors. Private companies offer faster setup, lower compliance, and stronger control.

Can a foreigner own 100% of a Nepali company?

Yes. Both private and public companies allow full foreign ownership, subject to sector approvals.

Can a private company convert into a public company later?

Yes. Nepalese law permits conversion after meeting statutory conditions.

Is there a minimum capital requirement?

No fixed minimum under company law, but foreign investment approvals often set practical thresholds.

Which structure is cheaper to maintain?

Private companies are significantly cheaper due to reduced governance and disclosure requirements.

Conclusion: Making the Right Private vs Public Company Nepal Decision

The Private vs public company Nepal choice is not merely legal.
It shapes governance, capital strategy, and long-term scalability.

For foreign companies, private limited companies deliver speed, certainty, and control.
Public companies suit only specific, capital-heavy ambitions.

Choosing wisely at the start saves years of restructuring later.

Call to Action

Planning to incorporate in Nepal?
Speak with a Nepal-based incorporation and compliance advisor before committing to a structure.
A short consultation can prevent long-term regulatory risk and unlock faster market entry.