Choosing between a private vs public company in Nepal is one of the most strategic decisions a foreign investor will make. It affects ownership control, compliance exposure, fundraising options, timelines, and long term exit flexibility.
Nepal has quietly entered a digital transformation phase. Company registration, foreign investment approvals, and statutory filings are now faster, more transparent, and increasingly online. For international founders and multinationals, this creates a clear opportunity if the structure is chosen correctly from day one.
This guide explains the private vs public company in Nepal in plain business language. It is written specifically for foreign companies evaluating market entry, shared services centers, or long term investment strategies.
Nepal’s corporate ecosystem is governed primarily by the Companies Act, 2006, supported by the Foreign Investment and Technology Transfer Act (FITTA) 2019 and administered by the Office of the Company Registrar.
Key digital improvements include:
Online name reservation
Electronic filing of incorporation documents
Digitized PAN and tax registrations
Integrated foreign investment approval workflows
For foreign companies, this digital shift reduces entry friction, but it does not eliminate structural risk if the wrong company type is selected.
A private limited company is the most common entry vehicle for foreign investors.
Under the Companies Act, a private company in Nepal:
Limits the number of shareholders to 101
Restricts the transfer of shares
Prohibits public share invitations
It is designed for controlled ownership and operational flexibility.
Private companies are favored because they:
Allow 100 percent foreign ownership (subject to sector approval)
Require lower minimum compliance
Enable faster decision-making
Reduce public disclosure risk
For most foreign entrants, this structure balances speed, control, and compliance efficiency.
A public limited company is a highly regulated structure designed for capital markets.
A public company in Nepal:
Has a minimum of 7 shareholders
Can invite the public to subscribe to shares
Must comply with capital market and securities regulations
It is often regulated by the Securities Board of Nepal in addition to company law.
Public companies are usually established when:
Raising capital from the general public
Planning a stock exchange listing
Operating large infrastructure or financial projects
For most foreign SMEs and service businesses, this structure is unnecessary at entry stage.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share issue | Not allowed | Allowed |
| Compliance intensity | Moderate | High |
| Disclosure obligations | Limited | Extensive |
| Foreign investor suitability | Very high | Selective |
| Typical setup timeline | 3–6 weeks | 3–6 months |
This comparison highlights why private vs public company in Nepal decisions should be driven by business intent, not perception of scale.
Nepal’s digital systems simplify but do not replace legal rigor.
Online company name reservation
Submission of incorporation documents
Foreign investment approval under FITTA
Company registration certificate issuance
PAN and tax registration
Local bank account opening
Each step requires accurate structuring aligned with whether you choose a private or public company.
Private companies must:
Maintain statutory registers
File annual returns
Submit audited financial statements
Comply with tax and labor laws
Disclosure remains largely confidential.
Public companies must additionally:
Publish financial statements publicly
Follow securities reporting rules
Hold statutory general meetings
Comply with capital market oversight
This creates higher recurring costs and governance exposure.
Private companies allow:
Founder level control
Shareholder agreements
Restricted share transfers
Public companies dilute control due to:
Wider shareholder base
Mandatory disclosures
Regulatory scrutiny
Foreign investors often start with a private company and later convert to public status once scale, valuation, and governance maturity justify it.
Both company types are taxed under Nepal’s Income Tax Act.
Key points:
Corporate tax rates are sector specific
Dividend repatriation is regulated
Transfer pricing applies to related party transactions
Public companies face deeper audit scrutiny and reporting transparency requirements.
Avoid these pitfalls:
Choosing a public company for credibility alone
Underestimating compliance costs
Ignoring sector-specific FDI restrictions
Failing to plan for repatriation and exit
Understanding private vs public company in Nepal early prevents expensive restructuring later.
A public company is appropriate if you:
Plan to raise capital locally
Require public trust through listing
Operate regulated financial or infrastructure businesses
Otherwise, a private company offers superior flexibility.
For most foreign entrants:
Start with a private limited company
Validate operations and market fit
Scale governance gradually
Convert to public only when required
This phased approach aligns with Nepal’s regulatory reality.
Yes. Subject to sector approval under FITTA, foreigners can fully own private companies.
No. Most foreign investments use private companies.
Yes. Conversion is legally permitted once requirements are met.
Private companies have significantly lower compliance and disclosure costs.
Typically, 3–6 weeks for private companies if documents are complete.
Choosing between a private vs public company in Nepal is not about prestige. It is about control, compliance, scalability, and risk management.
For foreign companies entering Nepal’s digital economy, a private limited company remains the smartest, fastest, and most flexible structure. Public companies should be reserved for mature, capital intensive strategies.