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.
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.
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.
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.
| Aspect | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7, no maximum |
| Capital Raising | Private funds only | Public + private |
| Regulatory Burden | Moderate | High |
| Disclosure | Limited | Extensive |
| Share Transfer | Restricted | Freely transferable |
| Typical Use Case | Foreign subsidiaries | Banks, insurers, IPO plans |
Insight: Over 90% of foreign investors in Nepal choose private companies due to speed and control advantages.
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.
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.
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.
A public company enables:
Public share issuance
Institutional investment
Future stock exchange listing
A private company is better for:
Parent-funded operations
Controlled JV structures
Gradual scaling
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 companies must:
Appoint independent directors
Conduct statutory audits annually
Publish financial statements
Comply with securities regulations
Compliance costs are significantly higher.
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.
Establishing a foreign subsidiary
Running outsourced operations
Testing the Nepal market
Prioritising speed and control
Planning an IPO
Operating in regulated finance sectors
Raising capital from the public
Building a nationally scaled enterprise
Faster incorporation timelines
Lower regulatory friction
Strong shareholder control
Easier exit and restructuring
This is why private companies dominate foreign investment structures in Nepal.
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.
Foreign companies interact with:
Office of Company Registrar
Department of Industry
Nepal Rastra Bank
Inland Revenue Department
Early alignment avoids costly revisions.
Private Company: 2–4 weeks post-approval
Public Company: 6–10 weeks or longer
Delays usually arise from documentation gaps, not law.
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.
Yes, for most foreign investors. Private companies offer faster setup, lower compliance, and stronger control.
Yes. Both private and public companies allow full foreign ownership, subject to sector approvals.
Yes. Nepalese law permits conversion after meeting statutory conditions.
No fixed minimum under company law, but foreign investment approvals often set practical thresholds.
Private companies are significantly cheaper due to reduced governance and disclosure requirements.
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.
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.