Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies face when entering the Nepalese market. The structure you select affects ownership, compliance, fundraising, timelines, and exit options. Make the wrong call, and expansion becomes costly and slow. Make the right one, and Nepal can become a scalable South Asian base. This guide breaks down the legal, financial, and operational realities so you can decide with confidence.
Nepal has quietly become attractive for foreign companies seeking cost efficiency, skilled talent, and access to South Asia. Reforms under the Companies Act and foreign investment policies have improved transparency and timelines.
Key pull factors include:
Competitive operating costs
English-speaking professional workforce
Access to India and China
Gradual liberalization of foreign direct investment
Understanding the private vs public company in Nepal framework is essential before committing capital.
Under the Companies Act 2006, companies in Nepal are primarily categorized as Private Limited Companies and Public Limited Companies.
A private company in Nepal is designed for closely held ownership. It is the most common structure for foreign investors.
Core features
1 to 50 shareholders
Share transfer restrictions
No public share issuance
Lower compliance burden
Private companies are ideal for subsidiaries, joint ventures, and wholly owned foreign entities.
A public company allows capital raising from the public and institutional investors.
Core features
Minimum 7 shareholders
Mandatory public disclosures
Can issue shares and debentures
Higher regulatory scrutiny
Public companies suit infrastructure, banking, hydropower, and large-scale manufacturing projects.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Public share issuance | Not allowed | Allowed |
| Compliance cost | Low | High |
| Board structure | Flexible | Regulated |
| Foreign investor suitability | Excellent | Selective |
| Ideal use case | Subsidiary, JV, outsourcing | Large capital projects |
Insight: Over 90 percent of foreign investors entering Nepal start with a private company due to speed and flexibility.
Company registration is handled by the Office of Company Registrar.
Name reservation and approval
Preparation of Memorandum and Articles of Association
Filing incorporation documents
Company registration certificate issuance
PAN and tax registration
For foreign-owned entities, additional approvals apply.
Foreign investors must comply with the Department of Industry and Nepal Rastra Bank regulations.
Foreign investment approval
Capital inflow through banking channels
Industry-specific licensing
Post-investment reporting
Failing to structure correctly can delay operations by months.
In the private vs public company in Nepal decision, ownership control matters.
100 percent foreign ownership allowed in most sectors
Share transfer requires shareholder approval
Simple exit planning
Sector-specific foreign ownership caps
Mandatory disclosures
Share dilution risk
For control-focused foreign companies, private structures dominate.
Nepal’s corporate tax regime applies to both structures, but compliance differs.
Corporate income tax generally applies uniformly
Public companies face higher audit and disclosure obligations
Withholding tax rules apply to dividends and services
Private companies benefit from lower ongoing compliance costs.
Annual general meeting
Annual returns filing
Basic statutory registers
Mandatory independent directors
Public disclosures
External audit requirements
Foreign SMEs rarely need public-company-level governance.
A public company is suitable when:
Large capital requirements exist
Public fundraising is planned
Long-term Nepal presence is strategic
For most foreign service firms, a public structure is unnecessary.
Based on practical market entry experience, the private vs public company in Nepal decision usually favors private incorporation during the first five to seven years.
Public conversion can occur later if capital expansion demands it.
Avoid these pitfalls:
Choosing public status too early
Ignoring sector-specific FDI limits
Underestimating compliance costs
Using generic regional templates
Local legal structuring saves time and capital.
Yes. A private company offers faster setup, lower compliance, and better control for most foreign investors.
Yes. Nepalese law allows conversion once capital and compliance requirements are met.
Private company registration typically takes two to four weeks, excluding foreign investment approvals.
Yes, in most sectors. Some industries have ownership caps or require special approvals.
Tax rates are similar, but public companies face higher compliance and audit costs.
Choosing between a private vs public company in Nepal is a strategic decision, not just a legal one. For foreign companies, private incorporation offers speed, flexibility, and control. Public companies make sense only when scale and public capital are essential.