Choosing between a private vs public company in Nepal is one of the most important decisions a foreign investor will make.
The structure you select affects ownership control, compliance, capital raising, taxes, and exit flexibility.
Many foreign companies enter Nepal with strong commercial intent but face delays due to regulatory complexity, unfamiliar laws, and unclear structuring choices. This guide breaks down private and public companies in Nepal in plain language, with practical insights designed for foreign investors.
By the end, you will know which structure fits your expansion strategy and how to avoid common pitfalls.
Nepal has quietly become a strategic market for South Asia expansion. Investors are drawn by:
Competitive labor costs with a young, English-speaking workforce
Preferential access to India and China
Liberalized Foreign Investment and Technology Transfer Act (FITTA) regime
Government incentives for priority sectors like IT, hydropower, and manufacturing
Yet, success depends on choosing the right company structure from day one.
Nepalese company law recognizes two primary corporate structures relevant to foreign investors:
Private Limited Company
Public Limited Company
Both can be foreign-owned, but their governance, disclosure, and capital requirements differ significantly.
A private company in Nepal is the most common entry vehicle for foreign investors.
Minimum shareholders: 1
Maximum shareholders: 50
Restriction on share transfer
No public share issuance
Lower compliance burden
Private companies are governed by the Companies Act, 2006, administered by the Office of the Company Registrar (OCR).
A public company in Nepal is designed for large-scale ventures that plan to raise capital from the public.
Minimum shareholders: 7
No maximum shareholder limit
Mandatory public disclosures
Can issue shares to the public
Subject to securities regulation
Public companies are regulated by the Securities Board of Nepal (SEBON) in addition to OCR oversight.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Public share issuance | Not allowed | Allowed |
| Compliance burden | Low | High |
| Ideal for | Foreign subsidiaries, SMEs | IPO-driven ventures |
| Regulatory oversight | OCR | OCR + SEBON |
This table alone answers why over 90% of foreign investors choose private companies when entering Nepal.
No statutory minimum capital under company law
FDI approval thresholds apply under-investment regulations
Capital must be brought through banking channels
Higher paid-up capital expectations
Mandatory prospectus approval
Ongoing capital adequacy norms
For most foreign firms, capital flexibility makes private companies far more attractive.
One of the biggest advantages in the private vs public company in Nepal debate is control.
Share transfer restrictions protect founders
Fewer board members required
Strategic decisions remain internal
Shareholding dispersion
Strong minority shareholder protections
Board accountability obligations
Foreign companies seeking tight governance and operational control almost always prefer private entities.
Annual financial statements
Annual general meeting
Basic audit requirements
Quarterly and annual disclosures
Independent directors
SEBON reporting
Enhanced audit and governance standards
Compliance costs for public companies can be 3–5x higher than private companies.
Both private and public companies are subject to:
Corporate income tax under the Income Tax Act, 2002
Withholding tax obligations
VAT registration where applicable
However, public companies face additional disclosure and reporting scrutiny from tax authorities.
Regardless of structure, foreign investors must obtain approval from:
Department of Industry or Investment Board Nepal, depending on sector and size
Nepal Rastra Bank for capital inflow compliance
Private companies generally experience faster approval timelines due to simpler documentation.
A private company in Nepal is ideal if you:
Are entering Nepal for the first time
Want full ownership control
Do not plan public fundraising
Prefer faster setup and lower compliance
Most IT, outsourcing, consulting, and trading firms fall into this category.
A public company in Nepal may be suitable if you:
Plan a Nepal IPO
Require large-scale public capital
Operate in infrastructure or hydropower
Need enhanced public credibility
These cases are strategic exceptions, not the norm.
Foreign companies often struggle due to:
Choosing a public company unnecessarily
Underestimating compliance costs
Misunderstanding capital repatriation rules
Failing to plan exit strategies
Avoiding these mistakes begins with choosing the right structure upfront.
Name reservation with OCR
FDI approval from authorities
Company incorporation filing
Bank account and capital injection
Tax and VAT registration
Private companies typically complete this process in 3–5 weeks with proper advisory support.
For foreign investors, the conclusion is clear.
Private companies offer flexibility, control, and speed
Public companies suit only capital-intensive, long-term plays
Your decision should align with your market entry strategy, not assumptions about scale.
Yes, for most foreign investors. Private companies offer lower compliance, faster setup, and stronger control compared to public companies.
Yes. Subject to FDI approval, foreigners can own up to 100% of a private company in permitted sectors.
There is no fixed statutory minimum, but regulators expect significantly higher paid-up capital than private companies.
Private companies typically take 3–5 weeks. Public companies take longer due to regulatory approvals.
Yes. Nepalese law allows conversion, subject to regulatory approvals and compliance upgrades.
Understanding private vs public company in Nepal is essential for foreign investors seeking a smooth market entry.
For most businesses, a private limited company delivers speed, flexibility, and control, while public companies remain a niche option.
Choosing wisely at the start can save years of regulatory friction and unnecessary cost.