Choosing the right company structure is the first major decision when entering Nepal.
For foreign companies, the private vs public company in Nepal question shapes ownership control, compliance exposure, funding options, and long-term scalability.
Nepal welcomes foreign investment.
But it operates under a formal legal framework.
Understanding this framework early saves time, cost, and regulatory risk.
This guide explains the differences clearly.
It is written for international founders, CFOs, and expansion leaders.
By the end, you will know which structure fits your market-entry goals.
Nepal has become a strategic destination for international businesses.
Key drivers include:
Competitive labor costs with strong English proficiency
Rapid growth in IT, BPO, fintech, and professional services
Legal pathways for 100 percent foreign ownership
Increasing government focus on foreign direct investment
However, structure matters.
The wrong entity can slow approvals or limit flexibility.
Company structures in Nepal are governed primarily by:
Companies Act, 2006
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
These laws define how private and public companies are formed, managed, and regulated.
Nepal recognizes several legal entities.
For foreign investors, two dominate:
Private Limited Company
Public Limited Company
This article focuses on private vs public company in Nepal, as these are the main vehicles for FDI.
A private limited company is the most common entry structure for foreign businesses.
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer restrictions
No public share issuance
Limited liability protection
Private companies are ideal for controlled operations and phased expansion.
A public limited company is designed for large-scale capital raising.
Minimum shareholders: 7
No maximum shareholder limit
Can issue shares to the public
Higher disclosure and governance standards
Often listed or planning to list
Public companies suit infrastructure, banking, hydropower, and large manufacturing projects.
Private companies provide tighter ownership control.
Public companies dilute control as shareholders increase.
Public companies face significantly higher compliance.
Private companies offer administrative simplicity.
Public companies can raise funds from the public.
Private companies rely on internal or private funding.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Foreign ownership | Up to 100% | Up to 100% |
| Public share issuance | Not allowed | Allowed |
| Regulatory burden | Moderate | High |
| Audit and reporting | Annual audit | Enhanced audit and disclosures |
| Best for | SMEs, service firms, subsidiaries | Large projects, capital markets |
Nepal does not impose a statutory minimum capital for private companies.
However, FDI approvals impose practical thresholds.
For most foreign-owned private companies:
Typical minimum FDI: NPR 20 million
Capital must be remitted via approved banking channels
Investment must align with approved business scope
Public companies often require substantially higher capital.
Board of directors optional for small structures
Flexible internal governance
Faster decision-making
Mandatory board structure
Independent directors required
Formal shareholder meetings
Higher regulatory scrutiny
Annual audit
Annual return filing
Tax filings
Social security compliance
Quarterly and annual reporting
Enhanced audit requirements
Public disclosures
Regulatory oversight
This difference alone pushes most foreign companies toward private entities.
Tax rates are broadly similar.
But compliance intensity differs.
Corporate tax: typically 25 percent
Withholding taxes apply to dividends and services
Transfer pricing rules apply to related-party transactions
Public companies face stricter scrutiny from tax authorities.
Some sectors require approvals regardless of structure.
Examples include:
Financial services
Telecommunications
Energy and hydropower
Aviation
For these sectors, public company structures are often mandatory.
For most international businesses, the answer is clear.
Want full ownership control
Are entering Nepal for operations or services
Plan gradual scaling
Want lower compliance costs
Need public fundraising
Operate in regulated infrastructure sectors
Plan stock exchange listing
Require broad local participation
Foreign investors often misunderstand local realities.
Avoid these pitfalls:
Choosing a public company too early
Underestimating compliance costs
Ignoring sector-specific licensing
Using incorrect shareholding structures
Professional structuring advice matters.
Here is a simplified process overview.
Name reservation with the Company Registrar
Drafting constitutional documents
FDI approval from relevant authority
Capital remittance through approved bank
Company registration
Tax and labor registrations
Public company registration adds multiple additional layers.
In practice, over 90 percent of foreign investors enter Nepal using private limited companies.
Reasons include:
Faster setup
Lower regulatory risk
Flexible exit options
Easier restructuring
Public companies are usually formed later, if needed.
This article reflects:
Nepal’s current corporate legislation
FDI regulatory practice
Real-world structuring for foreign investors
It aligns with guidance under the Companies Act and FITTA.
Always confirm details with professional advisors before execution.
Yes. Most sectors allow 100 percent foreign ownership in private companies, subject to FDI approval and sector rules.
Yes. Private companies can convert into public companies after meeting capital, shareholder, and compliance requirements.
No. Corporate tax rates are generally the same. Public companies face higher compliance and disclosure obligations.
A private company typically takes four to eight weeks. Public companies take longer due to approvals and documentation.
A private company is safer. It offers flexibility, lower costs, and easier exit options.
For foreign companies, the private vs public company in Nepal decision defines risk, cost, and growth flexibility.
In most cases, a private limited company is the smartest starting point.
Public companies make sense only for large, capital-intensive ventures.
The right structure protects your investment.
It also accelerates your market entry.