For foreign companies exploring South Asia, Nepal is emerging as a compelling destination.
At the heart of every market-entry decision lies one critical choice: private vs public company in Nepal.
This decision affects ownership, fundraising, compliance, taxation, and long-term exit options.
Choosing the wrong structure can slow expansion or block future capital raising.
Choosing the right one can unlock scale, credibility, and investor confidence.
This guide delivers the most authoritative, up-to-date comparison of private vs public company in Nepal, written specifically for foreign investors planning market entry, expansion, or eventual IPO.
Company formation and regulation in Nepal is primarily governed by:
Companies Act, 2006
Securities Act, 2007
Industrial Enterprises Act, 2020
Foreign Investment and Technology Transfer Act (FITTA), 2019
Company registration and oversight is handled by the Office of Company Registrar, while public companies and IPOs fall under the Securities Board of Nepal and listing rules of the Nepal Stock Exchange.
A private company is the most common entry vehicle for foreign investors in Nepal.
Shareholders: 1 to 101
Share transfer: Restricted
Capital raising: Private placements only
Public subscription: Not permitted
Private companies are designed for control, flexibility, and speed.
Foreign investors usually begin with a private company because it allows:
Faster incorporation
Lower compliance burden
Full operational control
Confidential financial reporting
This structure aligns well with greenfield investments, back-office operations, and service centers.
A public company is structured for capital markets and large-scale growth.
Minimum shareholders: 7
No maximum shareholder limit
Shares freely transferable (subject to law)
Eligible to issue shares to the public
Public companies are mandatory for IPOs and stock exchange listings.
Private companies tightly control ownership.
Public companies are built for broad investor participation.
Public companies face stricter governance, disclosure, and audit requirements.
Private companies retain flexibility in board composition and decision-making.
| Area | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share offering | Not allowed | Mandatory for IPO |
| Regulatory oversight | Moderate | High |
| Compliance cost | Lower | Significantly higher |
| Ideal stage | Market entry | Expansion and exit |
Private companies raise capital through:
Promoter funding
Foreign direct investment
Private equity or strategic partners
They cannot advertise or invite public subscriptions.
Public companies can:
Issue IPOs
Raise funds via rights shares
Access institutional and retail investors
This is essential for scaling capital-intensive businesses.
Annual general meeting
Annual financial statements
Corporate filings with the registrar
Public companies must also:
Publish audited financials
Disclose material events
Comply with securities regulations
This increases transparency but adds cost.
There is no difference in corporate tax rates between private and public companies in Nepal.
However:
Public companies face greater scrutiny
Tax positions must withstand investor and regulator review
Transparency becomes non-negotiable.
A private company is ideal if you:
Are entering Nepal for the first time
Need operational flexibility
Want to retain ownership control
Are not raising public capital
Most foreign investors start private and scale later.
A public company is appropriate when:
Large capital is required
Exit through IPO is planned
Brand visibility matters
Governance maturity is achieved
Public status is a growth milestone, not a starting point.
Many successful businesses follow this path:
Incorporate as a private company
Stabilize operations
Attract institutional investors
Convert to public company
Launch IPO and list
This phased approach reduces risk and cost.
Conversion involves:
Shareholder approval
Amendment of constitutional documents
Regulatory filings
Capital restructuring
Foreign investors should plan conversion 12–24 months before an IPO.
Starting public too early
Underestimating compliance costs
Ignoring exit strategy alignment
Failing to structure for future conversion
Strategic planning avoids expensive restructuring later.
For most foreign companies, the optimal strategy is:
Start private
Design governance for future public conversion
Scale operations
Access public markets when ready
This balances speed with long-term opportunity.
Yes. Most foreign investors start with a private company for flexibility and control.
Yes. A private company can convert into a public company before an IPO.
Yes. Only public companies can issue shares to the public.
Yes. Audit, disclosure, and governance costs increase significantly.
Yes. Public companies enjoy higher market trust and visibility.
The private vs public company in Nepal decision is not about right or wrong.
It is about timing, strategy, and growth ambition.
For foreign companies, starting private provides speed and control.
Going public later unlocks scale and exit opportunities.
The most successful investors plan both stages from day one.