If you are evaluating private vs public company in Nepal, you are already thinking like a serious investor. Structure determines control. Control determines risk. And risk determines return.
Foreign investment in Nepal is evolving fast. Regulatory reforms, infrastructure growth, and digital sector expansion are changing the landscape. But before capital moves, the first strategic decision is legal structure.
Should you incorporate a private limited company?
Should you consider a public company?
Or is another vehicle more appropriate?
This guide provides a clear, investor-focused breakdown designed specifically for foreign companies exploring Nepal.
Nepal regulates foreign investment primarily under:
The choice between a private and public company affects:
Foreign investors must align structure with long-term strategy.
Under the Companies Act 2006, Nepal recognizes both private and public limited companies. The distinction is more than naming.
Let’s break this down strategically.
| Factor | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Issue | Not allowed | Allowed |
| Regulatory Oversight | Moderate | High |
| Disclosure Requirements | Lower | Extensive |
| Capital Raising | Limited to private investors | Can access capital markets |
| Governance Structure | Flexible | Strict compliance regime |
| Suitable For | FDI, subsidiaries, JV | Large infrastructure or IPO |
Insight:
Over 90% of foreign investors entering Nepal choose a private limited structure. Public companies are typically used for banking, hydropower, and large infrastructure projects.
When analyzing private vs public company in Nepal, foreign investors prioritize control and simplicity.
Private companies are ideal for:
Nepal allows 100% foreign ownership in most sectors under FITTA 2019.
Public companies are not common for initial market entry. But they serve specific strategic goals.
Public companies are regulated more heavily. They must comply with:
This increases cost but improves capital access.
According to Nepal Rastra Bank and Department of Industry data:
The removal of prior central bank approval for dividend repatriation in recent amendments has improved investor confidence.
Foreign investors now focus on:
The Foreign Investment and Technology Transfer Act allows:
Corporate Income Tax (CIT):
Provides tax holidays and incentives for:
Foreign investors must evaluate internal capacity before choosing a public structure.
A private company cannot publicly issue shares. It can raise capital through:
A public company can:
However, listing requires significant compliance preparation.
For foreign investors, tax and repatriation matter most.
Private companies offer smoother dividend control due to limited shareholder complexity.
| Investor Profile | Recommended Structure |
|---|---|
| Tech startup entering Nepal | Private Ltd |
| Chinese manufacturing JV | Private Ltd |
| Hydropower consortium | Public Ltd |
| Bank or financial institution | Public Ltd |
| Outsourcing back-office | Private Ltd |
Structure must align with operational model.
Additional steps include:
Foreign companies often overlook governance architecture.
Key structural considerations:
In a private company, control mechanisms are easier to embed.
Public companies allow IPO-based exit.
Private companies allow share transfer or strategic sale.
Exit planning should be built into the Articles of Association.
When evaluating private vs public company in Nepal, ask:
If not, private limited is usually the optimal entry vehicle.
For most foreign companies, the answer to private vs public company in Nepal is clear.
Start private. Scale later if needed.
A private limited company provides:
Public companies are strategic tools, not entry-level structures.
If you are planning market entry into Nepal, structure should not be an afterthought. It is your foundation.
Yes. Under FITTA 2019, 100% foreign ownership is permitted in most sectors, except restricted industries listed by the government.
Nepal law requires minimum paid-up capital as prescribed under the Companies Act and sector regulators. It is significantly higher than private companies.
Not always. Only certain regulated sectors like banking require a public structure. Infrastructure may require public participation depending on policy.
Private company incorporation typically takes 3–6 weeks, depending on FDI approval and documentation readiness.
Yes, provided tax clearance is obtained and documentation aligns with NRB and FITTA requirements.