Choosing between a private vs public company in Nepal is one of the first and most strategic decisions foreign companies must make when entering the Nepalese market. This choice affects ownership control, regulatory exposure, capital requirements, timelines, and long-term exit options.
Nepal continues to attract foreign investors due to competitive operating costs, skilled talent, and a steadily improving regulatory environment. Yet, misunderstanding company structures can delay approvals, increase compliance risk, and limit scalability. This guide gives you a clear, practical, and legally grounded comparison so you can choose the right structure from day one.
Nepal has transitioned from a frontier market into a structured emerging destination for foreign direct investment. Reforms in company law, labor regulation, and foreign investment policy have improved clarity and predictability.
Key reasons foreign companies choose Nepal include:
Access to educated, English-speaking professionals
Lower operational and staffing costs
Strategic location between India and China
Clear frameworks for foreign shareholding and profit repatriation
Understanding the private vs public company in Nepal distinction ensures these advantages are not offset by regulatory friction.
Foreign investors operate under a defined legal ecosystem. The most relevant instruments include:
Companies Act 2006
Foreign Investment and Technology Transfer Act (FITTA) 2019
Industrial Enterprises Act 2020
Income Tax Act 2002
Labor Act 2017
Company registration and oversight are handled by the Office of Company Registrar, which enforces corporate governance, filings, and statutory disclosures.
A private company in Nepal is the most commonly used structure for foreign-owned businesses. It is designed for closely held ownership and operational control.
Minimum shareholders: 1
Maximum shareholders: 101
No public share issuance
Shares are not freely transferable
Limited liability protection
Private companies are ideal for subsidiaries, joint ventures, and wholly foreign-owned entities.
Market entry and pilot operations
Back-office and shared services
Technology, consulting, and outsourcing
Long term control with limited investors
A public company in Nepal is structured for large-scale capital mobilization and public ownership.
Minimum shareholders: 7
No upper limit on shareholders
Can issue shares to the public
Mandatory regulatory disclosures
Higher capital and governance requirements
Public companies are less common for foreign market entry and are typically used for banks, hydropower, insurance, or infrastructure projects.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Share transfer | Restricted | Freely transferable |
| Public fundraising | Not allowed | Allowed |
| Compliance burden | Moderate | High |
| Suitable for FDI | Yes | Yes, but complex |
| Typical setup time | Faster | Slower |
| Ongoing disclosures | Limited | Extensive |
Original insight:
Over 85 percent of foreign owned companies registered in Nepal choose the private company structure due to control and compliance efficiency.
Nepal does not impose a universal minimum paid-up capital for all sectors. However, foreign investment thresholds may apply based on industry classification.
Important points:
100 percent foreign ownership is permitted in most service sectors
Restricted sectors require approvals or are prohibited
Capital must be remitted through formal banking channels
Shareholding ratios must be declared at incorporation
Private companies allow tighter ownership structuring, which is why they dominate foreign investment inflows.
Annual financial statements
Annual general meeting
Tax filings and audits
Basic corporate disclosures
Mandatory board committees
Public disclosures and prospectus rules
Regulatory filings with capital market authorities
Enhanced audit and reporting standards
For foreign investors, compliance complexity is a decisive factor in the private vs public company in Nepal decision.
Both private and public companies are subject to corporate income tax. However, operational impact differs.
Key considerations:
Corporate tax applies uniformly
Dividend distribution tax applies on profit repatriation
Withholding tax obligations vary by transaction
Public companies face additional disclosure scrutiny
Private companies offer simpler tax administration, especially during early-stage operations.
Define business activity and sector eligibility
Choose between private vs public company in Nepal
Prepare constitutional documents
Obtain foreign investment approval
Register with the Office of Company Registrar
Complete tax and statutory registrations
Open bank accounts and remit capital
Private companies typically complete this process faster.
Choosing a public company unnecessarily
Underestimating compliance obligations
Misclassifying business activities
Failing to plan profit repatriation
Delaying regulatory approvals
Avoiding these errors protects both timeline and capital.
Want operational control
Plan to start lean
Need faster setup
Prefer predictable compliance
Need public fundraising
Operate in regulated infrastructure sectors
Plan large-scale domestic expansion
For most foreign companies, the private company wins decisively.
Yes. Most foreign investors choose private companies due to simpler compliance, faster setup, and full ownership control.
In many sectors, yes. Ownership depends on industry classification and foreign investment approval.
A private company typically takes four to six weeks, excluding investment approvals.
Yes. Conversion is legally allowed but requires regulatory approvals and restructuring.
Yes. Dividends and approved returns can be repatriated under Nepal’s foreign exchange regulations.
Nepal’s legal framework is clear but procedural. Foreign companies benefit from advisors who understand regulatory sequencing, sector approvals, and compliance calendars.
Professional structuring reduces risk and accelerates market entry.