Choosing between a private vs public company in Nepal is one of the first and most important decisions for foreign investors. The structure you select affects your foreign direct investment approval, capital requirements, compliance burden, tax exposure, and exit flexibility. Many non-nationals rush this choice and face avoidable delays later.
This expert guide explains private vs public company in Nepal from a foreign investor’s perspective. You will learn the legal differences, costs, timelines, regulatory expectations, and practical use cases so you can invest with confidence.
Nepal allows foreign investment under a regulated framework. Your company type determines:
Whether foreign shareholding is permitted
Minimum capital thresholds
Ability to raise funds later
Ongoing disclosure and governance duties
Exit and repatriation pathways
Understanding private vs public company in Nepal early helps avoid restructuring costs and regulatory friction.
Foreign investors generally consider four legal entry routes:
Private Limited Company
Public Limited Company
Branch Office
Liaison or Representative Office
This article focuses on the private vs public company in Nepal, as these are the only options allowing equity ownership and long-term operations.
A private limited company is the most common structure for foreign investors entering Nepal.
Minimum shareholders: 1
Maximum shareholders: 50
Foreign ownership: Allowed up to 100 percent (sector-specific)
Share transfer: Restricted
Public share offering: Not allowed
Foreign companies choose private entities because they are faster to register, easier to manage, and cost-efficient during early operations.
A public limited company is designed for large-scale enterprises with long-term capital needs.
Minimum shareholders: 7
No maximum shareholder limit
Minimum paid-up capital: NPR 10 million
Share transfer: Freely transferable
Public share offering: Allowed
Public companies face higher regulatory oversight and are less common for first-time foreign entrants.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Foreign ownership | Permitted | Permitted |
| Minimum capital | Sector-based | NPR 10 million |
| Public fundraising | Not allowed | Allowed |
| Compliance burden | Moderate | High |
| Setup timeline | Faster | Slower |
| Ideal for | SMEs, startups | Large enterprises |
This table highlights why private vs public company in Nepal is not a one-size-fits-all decision.
There is no fixed statutory minimum for private companies. However, foreign investment projects must meet sector-specific thresholds approved during FDI screening.
Public companies must maintain at least NPR 10 million paid-up capital, often higher depending on licensing and industry regulations.
Regardless of structure, foreign investors must secure approval before incorporation.
Submit project proposal
Obtain investment approval
Incorporate the company
Register with tax authorities
Open capital and operational bank accounts
Private companies generally move through this process faster than public entities.
Understanding ongoing obligations is crucial when assessing private vs public company in Nepal.
Annual general meeting
Annual financial statements
Income tax and VAT filings
Limited disclosure
Mandatory board committees
Enhanced audit requirements
Public disclosures
Regulatory reporting
Public companies require stronger governance frameworks and higher administrative budgets.
Foreign investors often prioritize control.
Founder-friendly governance
Restricted share transfers
Easier decision-making
Diluted control
Shareholder activism
Formal board processes
This makes private companies more attractive for foreign SMEs.
Both structures are taxed similarly under Nepalese tax law.
Corporate income tax applies equally
Withholding taxes on dividends
Transfer pricing rules for foreign parents
Tax efficiency depends more on structuring than on choosing private vs public company in Nepal.
Some sectors impose additional rules.
Strategic industries may require higher capital
Certain sectors restrict foreign participation
Regulated industries may mandate public status
Always verify sector-specific rules before deciding.
A public company is suitable if you:
Plan to raise capital from the public
Need a strong local credibility signal
Operate in infrastructure or capital-intensive sectors
For most foreign entrants, these conditions apply later, not at entry.
From advisory experience, over 90 percent of foreign investors begin with private limited companies.
Faster setup
Lower cost
Flexible governance
Easier exit
Private companies provide a controlled environment to test the Nepal market.
A private company can convert into a public company later.
Expansion plans
Capital market access
Strategic partnerships
Conversion requires regulatory approval and compliance upgrades.
Use this checklist when choosing private vs public company in Nepal.
Investment size
Growth timeline
Capital raising needs
Governance appetite
Regulatory tolerance
Most foreign companies start private and scale later.
Choosing public status too early
Underestimating compliance costs
Ignoring sector restrictions
Over-capitalizing unnecessarily
Avoiding these mistakes saves time and capital.
The private vs public company in Nepal decision directly affects cost, control, and compliance. For foreign investors, private limited companies offer speed, flexibility, and lower risk. Public companies suit large, capital-intensive projects with long horizons.
Yes. Foreigners can own up to 100 percent of a private or public company, subject to sector approvals.
In most cases, yes. Private companies are faster to register and easier to manage for foreign investors.
It depends on the sector. Public companies require at least NPR 10 million paid-up capital.
Yes. Conversion is allowed with regulatory approval and compliance upgrades.
Private companies typically register faster than public companies, depending on approvals.