Choosing between a private vs public company in Nepal is one of the most important early decisions a foreign investor will make.
The structure you select affects ownership, compliance burden, fundraising ability, timelines, and long-term scalability.
Nepal is increasingly attractive for foreign companies. Labor costs are competitive. The talent pool is growing. Regulatory clarity has improved under modern company and foreign investment laws.
This guide is written specifically for foreign founders, CFOs, and expansion leaders.
It explains the difference between private and public companies in Nepal in plain English, without legal jargon.
By the end, you will know:
Which structure is legally allowed for foreigners
How costs and compliance differ
When a public company makes sense
How to move from idea to incorporation smoothly
In many countries, the private vs public decision is mainly about fundraising.
In Nepal, it is also about regulatory feasibility.
Most foreign investors are legally limited to private limited companies at entry.
Public companies come with heavier compliance and are rarely suitable for early-stage foreign operations.
Your choice impacts:
Foreign Direct Investment (FDI) approval
Capital repatriation
Ongoing reporting obligations
Exit options
Getting this wrong can delay your launch by months.
Nepal’s corporate framework is governed primarily by the Companies Act, 2006, supported by foreign investment and tax legislation.
There are two main company forms relevant here:
Private Limited Company
Public Limited Company
Both are legal entities, but they operate very differently.
A private limited company is the most common structure used by foreign investors.
Restricted share transfer
Limited number of shareholders
No public share offering
Simplified governance
For foreign companies, this structure offers speed, control, and legal clarity.
Minimum shareholders: 1
Maximum shareholders: 101
100 percent foreign ownership is permitted in most sectors
No fixed minimum capital for most sectors
Capital is assessed based on business activity and FDI approval
A public limited company is designed for large, capital-intensive ventures.
Shares can be offered to the public
Heavier disclosure and audit requirements
Mandatory governance bodies
Minimum shareholders: 7
No maximum shareholder limit
Foreign ownership is allowed but tightly regulated
Statutory minimum paid-up capital applies
Significantly higher compliance costs
For most foreign founders, this structure is unnecessary at entry stage.
| Factor | Private Limited Company | Public Limited Company |
|---|---|---|
| Typical use | Foreign subsidiaries, startups, service firms | Large infrastructure, banks, listed entities |
| Shareholders | 1–101 | Minimum 7 |
| Public fundraising | Not allowed | Allowed |
| Compliance burden | Moderate | High |
| FDI suitability | Excellent | Limited |
| Time to incorporate | Faster | Slower |
| Governance | Simple | Complex |
Original insight:
In Nepal, over 90 percent of foreign-owned operating entities enter through private limited companies due to regulatory efficiency and lower risk.
This is where many investors get confused.
Private limited companies are the default and preferred route for foreign investors
Public companies are usually viable only after significant local presence or strategic need
Most sectors approved for FDI are structured around private companies.
A private company is ideal if you:
Are entering Nepal for the first time
Want full ownership and control
Are building a service, tech, or outsourcing operation
Need faster incorporation
Typical foreign use cases include:
IT and software development
BPO and outsourcing
Consulting and advisory services
Manufacturing below public-threshold scale
A public company may be appropriate if:
You plan to raise capital from the Nepalese public
You operate in regulated sectors like banking or insurance
You need very large paid-up capital
These cases are rare for new foreign entrants.
Here is a simplified journey most foreign companies follow.
Confirm your proposed activities are open to foreign investment.
Almost always: private limited company.
Obtain approval from the relevant investment authority.
Register with the Office of the Company Registrar.
PAN, VAT (if applicable), payroll, and compliance registration.
Faster setup timelines
Lower ongoing compliance cost
Easier profit repatriation
Clear shareholder control
Cannot raise capital publicly
Share transfers are restricted
For early and mid-stage foreign businesses, the advantages far outweigh the limits.
Annual financial statements
Annual return filing
Statutory audit
Stricter audits
Board and committee requirements
Enhanced disclosure obligations
This difference alone often determines the choice.
Avoid these costly errors:
Assuming public companies are “better”
Over-capitalizing without regulatory need
Choosing structure before FDI assessment
Underestimating compliance costs
A properly structured private company avoids most of these risks.
Both private and public companies are taxed under the same corporate tax framework.
However:
Compliance complexity is higher for public companies
Audit scrutiny is more intense
Tax efficiency is usually easier to manage in private structures.
Typical timelines:
Private limited company: 3–6 weeks
Public limited company: 2–4 months
Delays usually come from incomplete documentation or incorrect structuring.
Many successful foreign businesses in Nepal:
Start as a private limited company
Build operations and revenue
Convert to public status only if needed
Nepalese law allows restructuring later.
Starting simple keeps risk low.
For most foreign investors, a private company is better due to lower compliance and faster setup.
Yes. 100 percent foreign ownership is permitted in many approved sectors.
There is no fixed minimum in most sectors. Capital is assessed during FDI approval.
Yes. Conversion is legally possible once requirements are met.
No. Most foreign investors operate through private limited companies.
When comparing private vs public company in Nepal, the answer for most foreign investors is clear.
A private limited company offers:
Legal certainty
Faster market entry
Lower risk
Better operational control
Public companies serve a specific purpose, but rarely at entry stage.
If your goal is to enter Nepal efficiently and compliantly, start private and scale with confidence.