Choosing between a private vs public company in Nepal is one of the most important early decisions foreign companies make when entering the Nepali market. The structure you select affects ownership, compliance, funding options, timelines, and long-term scalability. Nepal has modernized its corporate laws, opened priority sectors to foreign investment, and streamlined digital filings. Yet, misunderstandings around private and public companies still cause costly delays. This guide gives you a clear, practical, and authoritative roadmap to register the right entity in Nepal with confidence.
Foreign founders often assume that a public company is “bigger” or “better.” In Nepal, that assumption is rarely true for market entry.
Your company type determines:
Capital thresholds and shareholder limits
Disclosure and audit intensity
Ability to raise funds locally
Speed of registration and cost
Exit flexibility and control
Most foreign investors start private, then convert later if needed.
Nepal’s Companies Act recognizes two primary corporate forms for equity companies.
A private company is the most common structure for foreign investors.
Core characteristics
1 to 101 shareholders
Restriction on share transfer
No public share issuance
Lower compliance burden
Typical use cases
Foreign direct investment subsidiaries
Outsourcing and back-office centers
IT, SaaS, consulting, and services
Regional headquarters
A public company is designed for capital markets and large domestic participation.
Core characteristics
Minimum 7 shareholders
Shares can be offered publicly
Higher paid-up capital
Mandatory public disclosures
Typical use cases
Infrastructure and energy projects
Banks and financial institutions
Telecom and large manufacturing
IPO-driven growth strategies
| Feature | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share offering | Not allowed | Allowed |
| Paid-up capital | Lower | Higher |
| Compliance intensity | Moderate | High |
| Time to incorporate | Faster | Slower |
| Best for foreign entry | Yes | Rarely |
Insight: Over 90 percent of foreign companies entering Nepal choose a private company first.
Foreign companies must align with multiple laws, not just the Companies Act.
Primary legislation
Companies Act, 2006
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
Regulators involved
Office of Company Registrar
Department of Industry
Inland Revenue Department
Nepal Rastra Bank
Ask three questions:
Will you raise capital publicly in Nepal?
Do you need more than 101 shareholders?
Is regulatory speed critical?
If the answer is “no” to all three, choose private.
Conduct name availability search
Reserve the company name online
Names must not conflict or mislead
Memorandum of Association
Articles of Association
Shareholder details
Director appointments
Foreign ownership requires approval before incorporation.
Submit project proposal
Declare capital structure
Define permitted activities
Once approved:
File incorporation documents
Receive company registration certificate
Obtain company number
PAN registration
VAT registration if applicable
Social security enrollment
Nepal does not impose a universal minimum capital. However:
Sector-specific thresholds apply
Foreign investment often starts from USD 50,000 equivalent
Capital must be remitted through banking channels
Public companies face higher requirements:
Minimum paid-up capital set by regulators
Additional capital rules for listed entities
Annual returns to Company Registrar
Financial statements filing
Income tax compliance
Board meetings
All private company obligations
Public disclosures
External audits
Securities regulation compliance
Reality check: Public companies cost significantly more to maintain.
Both private and public companies face:
Corporate income tax
Withholding tax on payments
Dividend distribution tax
There is no tax advantage in choosing public over private for most foreign investors.
A public company only makes sense if:
You plan an IPO in Nepal
You require broad domestic ownership
Regulators mandate public structure
You operate in infrastructure or finance
Otherwise, a private company offers superior flexibility.
Avoid these costly errors:
Choosing public company “for credibility”
Underestimating compliance timelines
Incorrect sector classification
Poor capital planning
Ignoring exit structuring
For foreign companies entering Nepal today:
Start with a private company
Scale operations and revenue
Convert to public later if required
This approach reduces risk, cost, and delays.
Yes, for most foreign investors. Private companies are faster to register, cheaper to operate, and easier to control. Public companies suit capital-market strategies only.
Yes, in sectors open to foreign investment. Prior approval is required, and capital must be legally remitted.
A private company typically takes 2–4 weeks after approvals. Public companies take longer due to additional compliance.
Yes. Nepal allows conversion once capital, shareholder, and compliance requirements are met.
Only in regulated sectors like banking or energy. Most large foreign projects still start as private companies.
Understanding private vs public company in Nepal is not just a legal exercise. It is a strategic decision that shapes your investment success. For most foreign companies, a private company offers speed, control, and flexibility. A public company should be a future option, not a starting point. With the right guidance, Nepal can be a highly efficient and rewarding market entry.