Foreign investors often begin their Nepal journey by asking one critical question: Private vs public company in Nepal — which structure is right for us?
The answer shapes everything. It affects ownership flexibility, capital raising, compliance costs, governance, reporting, and even exit strategy.
More importantly, it determines how your Foreign Direct Investment (FDI) integrates into Nepal’s economy.
Nepal has positioned itself as a growing South Asian investment destination. Guided by the Foreign Investment and Technology Transfer Act (FITTA 2019) and the Companies Act 2063, the country provides a structured legal environment for foreign companies.
This guide breaks down:
Let’s go deeper.
Nepal’s economy has historically been remittance-driven. However, the government is actively encouraging FDI to diversify growth.
According to Nepal Rastra Bank reports, FDI commitments have steadily increased post-FITTA 2019. The focus sectors include:
The policy backbone includes:
Your company structure determines how you interact with these regulators.
Under the Companies Act 2063 (2006), companies are categorized primarily as:
Both can receive foreign investment under FITTA 2019, but their governance and compliance requirements differ significantly.
A private company in Nepal:
It is the most common vehicle for foreign investors.
Private companies offer:
For technology firms, consulting firms, outsourcing models, and manufacturing setups, private companies are typically ideal.
A public company in Nepal:
Public companies are regulated by the Securities Board of Nepal (SEBON).
If listed, they trade on the Nepal Stock Exchange (NEPSE).
| Criteria | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7, no upper limit |
| Capital Raising | Private investors only | Public share issuance allowed |
| Regulatory Oversight | DOI + NRB | DOI + NRB + SEBON |
| Compliance Burden | Moderate | High |
| Reporting | Annual filing only | Extensive financial disclosures |
| IPO Option | Not allowed | Allowed |
| Governance | Flexible | Structured & regulated |
| Best For | Foreign subsidiaries, controlled operations | Large infrastructure, capital-intensive sectors |
For most foreign entrants, a private limited company offers optimal control and lower friction.
Public companies are suitable when:
Choosing between private vs public company in Nepal does not just impact your internal operations.
It influences national economic outcomes.
Private companies drive operational employment.
Public companies often create broader shareholder participation.
Public companies strengthen:
Under FITTA 2019, foreign companies must ensure compliance with technology transfer agreements.
Private companies usually manage these more efficiently.
Both structures are subject to the Income Tax Act 2058, which governs corporate tax.
Standard corporate tax rates in Nepal typically range around 25% (sector dependent).
The FDI process includes:
Public companies require additional compliance with SEBON.
Under FITTA 2019, foreign investors may repatriate:
However, public companies face greater scrutiny in capital restructuring and dividend distribution.
Private companies offer smoother dividend repatriation when structured correctly.
Here’s where many foreign companies underestimate complexity.
The cost difference can be substantial.
Public companies must maintain:
Private companies may operate with lean governance models.
For foreign parent companies seeking full board control, private limited companies are structurally simpler.
Certain sectors may effectively require public company structures, such as:
Banking is regulated by Nepal Rastra Bank, which imposes specific capital rules.
When evaluating private vs public company in Nepal, consider:
Private companies allow concentrated control.
Public companies provide scale but dilute ownership.
Public listing enables liquidity.
Private companies rely on share transfer or M&A.
Public companies face higher regulatory scrutiny.
| Cost Category | Private Company | Public Company |
|---|---|---|
| Incorporation Fees | Lower | Higher |
| Audit & Reporting | Moderate | High |
| Legal & Governance | Minimal | Extensive |
| Ongoing Regulatory Cost | Moderate | Significant |
For early-stage foreign entrants, public company compliance often outweighs benefits.
Choose public company status if:
Otherwise, private company is typically the strategic entry vehicle.
Structure should reflect business strategy, not just incorporation speed.
When foreign investors choose the correct corporate structure:
Nepal’s government aims to create investment-friendly conditions, but regulatory precision is essential.
Yes, subject to sector restrictions under FITTA 2019. Certain industries are restricted or capped.
No. Most foreign investors use private limited companies unless capital markets are involved.
Public companies require higher minimum capital, often NPR 10 million or more depending on sector.
Corporate tax rates are generally similar. However, compliance costs are higher for public companies.
Yes. Conversion is permitted under the Companies Act 2063, subject to regulatory approval.
For most foreign entrants, the answer to private vs public company in Nepal is clear.
Private companies provide:
Public companies are powerful but suitable for large-scale capital-intensive ventures.
The key is alignment between structure, sector, capital plan, and exit strategy.
If you are considering entering Nepal, structuring your investment correctly from day one will determine long-term success.