If you are evaluating Private vs public company in Nepal, you are already thinking strategically. Structure determines control. Structure determines compliance. Structure determines exit.
Nepal’s economy is evolving fast. The country has averaged moderate GDP growth in recent years. Remittance inflows remain strong. Hydropower exports to India are expanding. Digital services are rising. Manufacturing and tourism are rebounding.
For foreign companies, the real question is not whether to invest. It is how to structure your entry.
Should you form a private limited company? Or consider a public limited company?
This guide gives you a complete, practical comparison. It references the Companies Act 2006, Foreign Investment and Technology Transfer Act 2019, Industrial Enterprises Act 2020, and regulatory oversight from the Securities Board of Nepal.
Let’s break this down clearly.
Nepal’s growth drivers include:
Foreign Direct Investment is regulated primarily under FITTA 2019. Approval is generally routed through the Department of Industry or Investment Board Nepal for large projects.
Key legal frameworks include:
Your corporate structure must align with these.
Under the Companies Act 2006, Nepal recognizes two main corporate forms for profit-making entities:
Both can receive foreign investment. But their governance and capital structures differ significantly.
A private company:
It is the most common structure for foreign investors.
For most market-entry strategies, this structure minimizes regulatory friction.
A public company:
Public companies fall under additional supervision by the Securities Board of Nepal.
This structure is typically used for:
| Criteria | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 200 | Unlimited |
| Public Share Offering | Not allowed | Allowed |
| Regulatory Burden | Moderate | High |
| SEBON Oversight | No | Yes |
| IPO Possibility | No | Yes |
| Typical Use Case | FDI entry vehicle | Capital market fundraising |
| Control Structure | Concentrated | Distributed |
If your objective is operational control and risk containment, private structure works best.
If your objective is domestic capital mobilization, public structure may be suitable.
Private companies raise capital through:
No public disclosure of share pricing is required.
Public companies can:
However, compliance costs rise sharply.
In addition to above:
Public governance standards are significantly stricter.
Foreign investors often prioritize:
Private companies allow concentrated control. Public companies dilute control through broader shareholding.
If you are entering Nepal for manufacturing, back-office services, tech outsourcing, or trading, private structure usually aligns better.
Certain sectors may require public structure:
Other sectors permit private companies:
Always check FITTA’s negative list before structuring.
Corporate tax in Nepal is governed by the Income Tax Act 2002.
Standard corporate tax rate: 25%
Certain industries may receive concessions.
Industrial enterprises under the Industrial Enterprises Act 2020 may receive:
Corporate form itself does not change base tax rate. However, public companies often face higher compliance costs.
Foreign investors can repatriate:
Approval is processed via Nepal Rastra Bank through authorized banks.
Private companies allow simpler dividend decisions because ownership is concentrated.
Public companies require board approval and shareholder process transparency.
Choose private structure if:
For most foreign investors, this is the default choice.
Choose public structure if:
Public companies are strategic tools, not entry-level vehicles.
From a risk architecture standpoint:
Private companies provide:
Public companies introduce:
For foreign companies testing Nepal’s market, private structure reduces structural risk.
Time and cost differ significantly.
Most foreign investors choose private limited companies because:
Public companies are typically conversion pathways once scale is achieved.
Corporate structure determines flexibility.
Yes. FITTA 2019 allows 100% foreign ownership in most sectors except restricted industries.
Not always. Smaller projects can be private. Larger projects seeking IPO often convert to public.
Private limited companies are faster and simpler to incorporate.
No. Corporate tax rates are similar. Compliance costs are higher for public companies.
Yes. Conversion is allowed under the Companies Act 2006, subject to regulatory approval.
Choosing between Private vs public company in Nepal is not just legal formality. It is strategic architecture.
Private companies offer control, speed, and lower compliance.
Public companies offer capital access and scale.
For most foreign companies entering Nepal, private structure is the optimal starting point.
If your goal is IPO, infrastructure scale, or large domestic funding, public structure becomes relevant.
The right choice depends on your growth horizon.