Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies face when entering the Nepali market. This choice directly affects setup costs, regulatory exposure, compliance burden, fundraising options, and long-term scalability. While Nepal is increasingly open to foreign investment, its company law framework has clear distinctions between private and public entities that investors must understand before committing capital.
This guide is written for foreign founders, CFOs, and expansion leaders who want clarity. We break down company formation in Nepal, explain fee structures and expenses, and compare private and public companies from a cost, compliance, and risk perspective—without legal jargon.
For foreign investors, the decision is rarely academic. It determines:
How much capital you must lock in upfront
Whether you can remain closely held or raise funds publicly
The level of regulatory scrutiny you face
Ongoing compliance and disclosure costs
Most foreign companies start with a private limited company. A public company is usually considered only when large-scale capital raising or listing is planned.
Company formation in Nepal is primarily governed by:
Companies Act, 2006
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
These laws define ownership thresholds, capital requirements, and compliance obligations for both private and public companies.
A private company in Nepal is a closely held entity designed for limited shareholders and controlled ownership.
1 to 50 shareholders
Shares cannot be offered to the public
No requirement to issue a prospectus
Lower disclosure obligations
For foreign companies, this structure offers speed, flexibility, and cost control.
A public company in Nepal is designed for large-scale ownership and capital mobilisation.
Minimum 7 shareholders
Shares may be offered to the public
Mandatory prospectus and enhanced disclosures
Heavily regulated governance structure
Public companies are suitable for banks, hydropower projects, insurance firms, and large infrastructure ventures.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | No limit |
| Public share offering | Not allowed | Allowed |
| Capital requirement | Lower | Significantly higher |
| Compliance intensity | Moderate | High |
| Suitable for foreign SMEs | Yes | Rarely |
Understanding the fee structure and expenses is essential for accurate budgeting. Costs fall into three categories: statutory fees, professional fees, and post-incorporation compliance costs.
Private company registration fees are based on authorised capital.
NPR 1,000 to NPR 9,500 depending on capital slab
Name reservation and registration filing fees
PAN registration at no additional cost
Legal drafting and incorporation support
Document notarisation and translations
Foreign investment approval support (if applicable)
Public companies face substantially higher entry costs.
Higher registration fees based on large capital base
Prospectus review and approval costs
Additional regulator coordination expenses
Legal counsel for prospectus and compliance
Auditor appointment at incorporation
Corporate governance structuring
No fixed minimum capital under company law
Foreign investment thresholds may apply under FITTA
Capital can be structured flexibly
Generally NPR 10 million or higher
Sector-specific minimums often apply
Capital must justify public fundraising intent
Annual return filing
Financial statements preparation
Income tax filings
Basic corporate secretarial work
Mandatory annual audit
Public disclosures and reporting
Annual general meetings with stricter rules
Regulator filings and compliance reviews
Annual cost difference:
A public company can cost 2–4× more annually to maintain than a private company.
From an income tax perspective, both entities are broadly taxed under the same corporate tax framework. However:
Public companies face higher scrutiny
Transfer pricing documentation is more common
Regulatory audits are more frequent
The tax rate itself is not the primary differentiator—compliance exposure is.
It allows full operational control
It reduces upfront and recurring costs
It avoids unnecessary public disclosures
Large capital mobilisation is required
Sector regulations mandate it
Long-term listing is planned
Faster incorporation timeline
Lower formation and compliance costs
Easier governance and decision-making
Cannot raise capital from the public
Share transfers are restricted
Access to public capital markets
Stronger market visibility
High compliance burden
Expensive setup and maintenance
Reduced flexibility
Name reservation
Drafting Memorandum and Articles
Filing with Company Registrar
PAN registration
Industry and investment approvals (if applicable)
Bank account opening
This process typically takes 2–4 weeks if documentation is complete.
Choosing a public company too early
Underestimating compliance costs
Misaligning capital structure with business reality
Ignoring foreign investment approval sequencing
These mistakes can delay operations and increase regulatory risk.
If you are a foreign company entering Nepal for:
Market entry
Back-office operations
Technology or services delivery
A private limited company is almost always the optimal starting point. Public company formation should be a deliberate second-stage decision, not a default choice.
The private vs public company in Nepal decision directly impacts cost, control, and compliance. For most foreign companies, a private company offers the right balance of flexibility, affordability, and regulatory clarity. Public companies are powerful tools—but only when scale and capital strategy demand them.
Choosing the right structure at the start can save years of restructuring and unnecessary expense.
Yes. Most foreign investors prefer private companies due to lower costs, faster setup, and fewer compliance requirements.
While the Companies Act sets general thresholds, most public companies require at least NPR 10 million or more, depending on sector rules.
Yes, subject to foreign investment approval and sector eligibility under Nepal’s investment laws.
The corporate tax rate is generally similar, but public companies face higher audit and disclosure scrutiny.
A private company can usually be incorporated within 2–4 weeks if documents are complete.