If you are evaluating Private vs public company in Nepal, you are already asking the right strategic question.
Your entry structure determines governance, capital flexibility, compliance burden, and exit options. It also affects regulatory approvals under Nepal’s foreign investment regime.
For foreign companies exploring Nepal’s fast-growing sectors, understanding this distinction is critical. This guide provides a clear, legally grounded, and commercially practical comparison. It is written for international investors who want certainty, scalability, and compliance from day one.
We will reference:
Let’s break it down in a way that aligns with how global investors actually make decisions.
When entering Nepal, foreign investors must align structure with:
Under FITTA 2019, foreign investors can establish a company in Nepal with approval from the Department of Industry or relevant authority. However, whether that entity should be private or public depends on your long-term objectives.
The Companies Act 2006 defines and regulates:
The Foreign Investment and Technology Transfer Act 2019 governs:
This Act classifies industries and determines:
Foreign investors must comply with all three frameworks simultaneously.
This is the core decision foreign companies must make.
Below is a structured comparison tailored specifically for cross-border investors.
| Criteria | Private Company in Nepal | Public Company in Nepal |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Share transfer | Restricted | Freely transferable |
| Public share offering | Not allowed | Allowed (IPO possible) |
| Regulatory scrutiny | Moderate | High |
| Governance requirements | Flexible | Strict |
| Capital raising ability | Limited to private investors | Can raise from public markets |
| Listing eligibility | No | Yes, via Nepal Stock Exchange |
| Foreign investor suitability | High for controlled entry | High for capital market strategy |
Now let’s analyze each structure in depth.
A private company is the most common structure used by foreign investors.
Registration is completed through the Office of the Company Registrar.
Foreign investors require FDI approval under FITTA before incorporation is finalized.
For most cross-border entries, private companies provide:
This structure is ideal for:
If your strategy focuses on operational control rather than public fundraising, a private company is typically optimal.
A public company is designed for large-scale operations that intend to raise capital from the public.
Public companies are subject to stricter corporate governance norms.
They also require compliance with securities regulations and reporting standards.
A public company makes sense if:
Hydropower, banking, and infrastructure sectors frequently use public company structures in Nepal.
However, regulatory oversight increases significantly.
All private company obligations plus:
The compliance cost difference is material.
Foreign investors should factor this into financial projections.
Capital structure influences scalability.
Capital sources include:
No IPO option.
Capital sources include:
If your five-year plan includes listing, public structure may be necessary.
Under FITTA 2019:
All foreign capital inflow must be:
Whether private or public, FDI compliance remains mandatory.
Corporate tax in Nepal is governed by the Income Tax Act 2002.
General corporate tax rate: approximately 25% (sector dependent).
Certain sectors like hydropower enjoy incentives.
Tax treatment does not significantly differ between private and public companies.
However, public companies may access capital market-driven benefits and broader equity structuring.
Choosing the wrong structure can create:
Many foreign companies overestimate their need for a public structure.
For controlled expansion, private companies usually provide better risk containment.
If your exit involves IPO or large-scale equity participation, public structure is strategic.
Use this simplified evaluation checklist:
Most mid-sized foreign investors start with a private company and convert later if needed.
Private company preferred for operational control.
Public company often used due to project scale and IPO route.
Private company dominant structure.
Public structure frequently mandatory under sector regulation.
Structure is not a formality. It is strategic architecture.
Yes. Under FITTA 2019, foreign investors can own 100% in permitted sectors with approval from the Department of Industry.
Yes. Conversion is allowed under the Companies Act 2006, subject to compliance and shareholder approval.
No. But public companies are eligible to issue shares to the public and list on Nepal Stock Exchange.
Private companies are generally faster and involve fewer regulatory steps.
Corporate tax rates are generally similar. Sector incentives may apply separately.
The debate around Private vs public company in Nepal is not theoretical. It is strategic.
For most foreign companies entering Nepal, a private company provides:
Public companies are powerful tools. But they are best reserved for capital-intensive, market-facing strategies.
If your goal is structured cross-border expansion into Nepal with regulatory certainty and long-term scalability, structure must align with strategy.
Choosing correctly at entry prevents expensive restructuring later.