Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies must make. It affects ownership control, compliance burden, fundraising options, timelines, and cost.
The good news is this: Nepal has modernized company formation through online systems. Registration is faster, more transparent, and foreign-friendly than ever. If you are an international founder, investor, or expansion leader, understanding the difference between private and public companies in Nepal will help you enter the market with confidence.
This guide is written specifically for foreign companies. It goes beyond definitions and explains what actually works on the ground.
Nepal’s company law framework is governed primarily by the Companies Act 2006. It recognizes two main company types relevant to investors:
Private Limited Company
Public Limited Company
Both can be incorporated through the online company registration system operated by the Office of the Company Registrar (OCR).
The rise of digital filings has reduced paperwork, improved timelines, and made Nepal a practical destination for foreign investment.
At a high level, the difference between a private and public company in Nepal mirrors global practice. However, local thresholds, compliance rules, and investor behavior make the distinction especially important.
A private company in Nepal is designed for closely held ownership. It is the most common structure chosen by foreign investors.
Key characteristics:
Minimum shareholders: 1
Maximum shareholders: 50
Share transfer restrictions apply
No public share offering
Lower compliance and disclosure requirements
Private companies are ideal for:
Foreign subsidiaries
Back-office operations
Tech startups
Consulting, IT, and services firms
Long-term strategic investments
A public company in Nepal is structured for larger enterprises with broader ownership and fundraising ambitions.
Key characteristics:
Minimum shareholders: 7
No maximum shareholder limit
Can issue shares to the public
Higher capital thresholds
Mandatory audits and disclosures
Public companies are typically used by:
Banks and financial institutions
Hydropower and infrastructure projects
Insurance companies
Large manufacturing entities
| Criteria | Private Company in Nepal | Public Company in Nepal |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Foreign ownership | Allowed | Allowed (sector-specific) |
| Public share issuance | Not allowed | Allowed |
| Compliance burden | Moderate | High |
| Annual audit | Required | Mandatory with stricter standards |
| Capital raising | Private funding | Public and institutional funding |
| Ideal for | Foreign SMEs and subsidiaries | Large-scale projects |
Insight for foreign companies:
More than 90 percent of foreign-owned companies in Nepal choose the private company structure due to speed, control, and flexibility.
Nepal’s shift to online business registration has significantly improved the investor experience.
The Office of the Company Registrar allows digital submission of incorporation documents, including:
Name reservation
Memorandum of Association
Articles of Association
Director and shareholder details
Most filings are reviewed electronically, reducing in-person visits.
Name approval – 1 to 3 working days
Document review – 3 to 5 working days
Certificate of incorporation – issued digitally
In practice, a private company in Nepal can be incorporated within 7 to 10 working days if documents are correct.
When comparing private vs public company in Nepal, foreign investors overwhelmingly choose private companies for practical reasons.
Faster incorporation
Lower minimum capital expectations
Simplified governance
Confidential ownership structure
Easier exit and restructuring
For foreign companies entering Nepal as a cost center, captive unit, or regional support hub, private companies provide the cleanest setup.
Compliance is where the private vs public company decision becomes critical.
Private companies must:
Maintain statutory registers
File annual returns
Prepare annual financial statements
Undergo annual audit
However, disclosure remains largely internal.
Public companies face:
Stricter audit standards
Mandatory public disclosures
Regulatory oversight beyond OCR
Shareholder reporting obligations
For foreign companies without capital-market ambitions, public company compliance often adds unnecessary cost.
Another decisive factor in private vs public company in Nepal is how you plan to fund operations.
Parent company funding
Private equity
Strategic investors
Shareholder loans
Public share issuance
Institutional investors
Regulated capital markets
Unless you plan to raise funds locally at scale, private companies offer sufficient flexibility.
Foreign investment in Nepal is governed by the Foreign Investment and Technology Transfer Act (FITTA) 2019.
Some sectors:
Require minimum capital thresholds
Restrict foreign ownership
Mandate public company structures
This is common in:
Banking
Insurance
Large hydropower
Always confirm sector eligibility before deciding between private vs public company in Nepal.
Here is a simple decision framework for foreign companies:
Define your business purpose in Nepal
Assess capital and fundraising needs
Review sector-specific rules
Evaluate compliance capacity
Choose private or public company accordingly
For most service-based and technology-driven businesses, the answer is clear.
Avoid these pitfalls:
Choosing a public company unnecessarily
Underestimating annual compliance obligations
Ignoring sector-specific approvals
Over-capitalizing at entry
Delaying tax and labor registrations
Professional structuring advice can prevent costly corrections later.
Choose a private company if you:
Want speed and simplicity
Need full ownership control
Operate as a subsidiary or back office
Do not need public fundraising
Choose a public company if you:
Plan large-scale infrastructure or finance projects
Need to raise capital locally
Are legally required by sector rules
For foreign companies, the private company remains the default and most efficient option.
Yes. Most sectors allow full foreign ownership in private companies, subject to FITTA 2019 and sector approvals.
Yes. Conversion is legally permitted if capital, shareholder, and compliance requirements are met.
Yes. Company incorporation filings are submitted through the online system of the Office of the Company Registrar.
Public companies typically require significantly higher capital than private companies, depending on the sector.
A private company is generally best for foreign subsidiaries due to flexibility and lower compliance.
The decision between private vs public company in Nepal is not just legal. It is strategic.
For most foreign companies, a private limited company offers the fastest, safest, and most cost-effective entry into Nepal. Combined with online registration, Nepal now provides a smoother investor experience than many expect.
Choosing the right structure at the start protects your investment and accelerates growth.