Entering a new market demands clarity. When foreign investors evaluate private vs public company in Nepal, the decision shapes control, taxation, compliance, capital raising, and exit strategy.
Nepal’s regulatory environment has modernized significantly under the Companies Act 2006 and the Foreign Investment and Technology Transfer Act 2019 (FITTA).
But structure still determines control.
And control determines risk.
This guide explains the legal, regulatory, tax, and strategic differences between private and public companies in Nepal — specifically for foreign companies considering foreign trade investment.
Nepal permits 100% foreign ownership in most sectors.
However, the choice between a private limited company and a public limited company affects:
Foreign investors often underestimate structural implications. That can create compliance risk later.
Let’s break it down clearly.
Under the Companies Act 2006, companies in Nepal are primarily categorized as:
Both are governed by the Office of Company Registrar (OCR).
Foreign equity approval is regulated under the Foreign Investment and Technology Transfer Act 2019.
Banking and capital inflows are supervised by Nepal Rastra Bank.
Now, let’s compare them from a foreign investor’s lens.
A private limited company is the most common entry vehicle for foreign investors.
Most foreign subsidiaries in Nepal operate as private limited entities.
A public limited company can raise capital from the public.
Public companies intending to list must comply with the Securities Board of Nepal and stock exchange requirements.
Public companies are typically used by:
| Criteria | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Offering | Not allowed | Allowed |
| Share Transfer | Restricted | Freely transferable |
| Compliance Burden | Moderate | High |
| Disclosure Requirements | Limited | Extensive |
| Regulatory Oversight | OCR + NRB | OCR + NRB + SEBON |
| IPO Eligibility | No | Yes |
| Foreign Control Flexibility | High | Moderate |
| Ideal For | Subsidiaries | Capital-intensive projects |
Strategic Insight:
For 90% of foreign companies entering Nepal, a private limited company provides optimal balance between control and compliance.
Under FITTA 2019:
Foreign capital must enter through formal banking channels.
Inward remittance certificates are mandatory for capital confirmation.
Approval authorities include:
Foreign investors must evaluate:
Private companies allow tighter governance control.
Public companies require broader transparency and board diversity.
For strategic investors, board composition directly impacts operational safety.
Includes everything above plus:
Public compliance costs are significantly higher.
Corporate tax is governed by the Income Tax Act 2002.
Recent reforms simplified dividend repatriation by allowing processing through commercial banks upon compliance documentation.
Choose private limited if:
Most tech companies, service firms, consulting firms, and manufacturing subsidiaries adopt this route.
Choose public company if:
Public structures make sense for scale.
But they require governance maturity.
Foreign companies typically consider:
Each has distinct regulatory consequences.
Subsidiary structures are legally separate entities.
Branches are extensions of foreign parent.
Choosing wrongly can complicate repatriation.
| Risk Area | Private Company | Public Company |
|---|---|---|
| Governance Risk | Low | Medium |
| Disclosure Risk | Low | High |
| Capital Flexibility | Medium | High |
| Regulatory Scrutiny | Moderate | High |
| Exit Complexity | Low | Moderate |
Foreign investors must align structure with capital strategy.
Goal: Offshore development center.
Best structure: Private Limited Company.
Reason: Full control. No IPO need.
Goal: Raise local equity.
Best structure: Public Limited Company.
Reason: Capital mobilization.
Goal: Export-oriented production.
Best structure: Private Limited Company (SEZ eligible).
Structure depends on long-term capital plan.
Structure is not just incorporation.
It is strategic architecture.
Foreign investors interact with:
Understanding institutional roles prevents delays.
Yes. FITTA 2019 allows 100% foreign ownership in most sectors, except those on the negative list.
No. Large investments can operate as private companies unless capital market participation is required.
Private company registration typically takes a few weeks, subject to documentation and FDI approval.
They require tax clearance and audited financials but are streamlined through commercial banks upon compliance.
For most foreign subsidiaries, private limited company offers better control and lower compliance burden.
The decision between private vs public company in Nepal is not administrative.
It is strategic.
For most foreign trade investment, a private limited structure delivers:
Public companies are powerful tools for capital mobilization.
But they demand transparency and institutional readiness.
Before investing, align:
Foreign investors who structure correctly at entry stage avoid restructuring costs later.