Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies must make before entering the Nepalese market. The choice affects ownership control, regulatory exposure, capital flexibility, tax planning, and exit strategy.
In this definitive guide, written for foreign investors and international companies, we break down the legal, commercial, and operational realities of both structures so you can confidently decide which model aligns with your Nepal expansion goals.
Nepal is increasingly attractive as a cost-efficient South Asian base for technology, professional services, back-office operations, and regional support teams.
Key drivers include:
Competitive talent costs with strong English proficiency
Strategic proximity to India and China
Liberalization under modern investment laws
Growing digital infrastructure
Government incentives for foreign direct investment
However, Nepal’s corporate framework is rule-driven and compliance-centric, making structure selection critical from day one.
Under Nepal’s corporate framework, companies are broadly categorized as private companies and public companies. While both are incorporated entities, their purpose, governance, and regulatory burden differ significantly.
A private company is designed for closely held ownership, limited shareholders, and operational flexibility. It is the default and preferred structure for foreign companies entering Nepal.
Core characteristics:
Shareholders: 1–50
No public share issuance
Restricted share transfers
Faster incorporation
Lower compliance burden
A public company is designed for capital mobilization from the public and large-scale enterprises. It is typically relevant only if public fundraising or listing is planned.
Core characteristics:
Minimum 7 shareholders
Can issue shares to the public
Heavily regulated
Mandatory disclosures and audits
Longer setup timelines
| Criteria | Private Company | Public Company |
|---|---|---|
| Ownership | Closely held | Widely held |
| Shareholders | 1–50 | Minimum 7 |
| Public investment | Not allowed | Allowed |
| Compliance load | Moderate | High |
| Capital raising | Private funding | IPO and public offers |
| Suitability for foreign firms | High | Low |
Corporate entities in Nepal are governed primarily by:
Companies Act, 2006
Foreign Investment and Technology Transfer Act, 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
Labor Act, 2017
Social Security Act, 2018
Foreign investors must also comply with sector-specific approvals where applicable.
This legal environment favors private companies for foreign entrants due to regulatory predictability.
Private companies can typically be incorporated within 2–4 weeks, assuming documentation is in order. Public companies take significantly longer due to approval layers.
Foreign parent companies retain full strategic and economic control, without dilution or public disclosure of sensitive information.
Annual obligations are simpler, making private companies ideal for cost-center operations, shared services, and captive teams.
Capital can be injected through equity, shareholder loans, or retained earnings without public scrutiny.
A public company in Nepal is appropriate only if:
You plan to raise capital from the Nepalese public
You intend to list on the Nepal Stock Exchange
You operate in infrastructure or regulated sectors requiring public participation
For most foreign SMEs and multinationals, these conditions do not apply.
To register a private company, you need:
Name reservation approval
Memorandum and Articles of Association
Shareholder and director identification
Registered office address in Nepal
Capital commitment declaration
Foreign shareholders must provide notarized and legalized documents.
100 percent foreign ownership is permitted in most sectors
Minimum capital depends on sector and investment category
Capital must be injected through approved banking channels
A private company requires:
At least one director
Company secretary not mandatory for small entities
Board resolutions for key decisions
This lean governance structure appeals to foreign companies seeking agility.
Public companies must comply with:
Prospectus approvals
Public disclosures
Statutory audits
Regulatory reporting
Annual general meetings with public notice
These requirements increase cost, time, and legal exposure.
Both private and public companies are taxed similarly in Nepal:
Corporate income tax standard rate applies
Withholding taxes on payments
VAT registration if turnover thresholds are met
However, compliance management is simpler in private companies, especially for foreign-managed entities.
Regardless of structure, companies must comply with:
Written employment contracts
Minimum wage rules
Social security fund contributions
Statutory leave entitlements
Private companies allow faster onboarding and scalable hiring models.
Avoid these pitfalls when choosing between a private vs public company in Nepal:
Assuming public company status improves credibility
Underestimating compliance cost
Over-structuring too early
Ignoring exit planning
Choosing structure without sector review
Define your Nepal business purpose
Assess capital and ownership needs
Review sector restrictions
Model compliance cost
Plan exit or expansion strategy
For 90 percent of foreign companies, this exercise leads to a private company.
Yes. A private company offers lower compliance, faster setup, and full ownership control, making it ideal for foreign investors entering Nepal.
Yes. A private company in Nepal can be converted into a public company if future capital raising or listing is planned.
There is no fixed minimum capital universally. Requirements vary by sector and foreign investment category.
Yes. Foreign nationals can serve as directors, subject to visa and residency compliance.
A private company typically takes two to four weeks, assuming documents are complete and approvals are smooth.
When evaluating private vs. public company in Nepal, the answer for most foreign companies is clear. A private company delivers speed, control, cost efficiency, and regulatory clarity. Public companies are relevant only for specific, capital-intensive use cases.
If your goal is market entry, back-office operations, or regional expansion, a private company is the smartest starting point.