If you are comparing Private vs public company in Nepal, you are already thinking like a serious foreign investor. The structure you choose will shape your tax exposure, compliance burden, capital strategy, and exit options.
Nepal is actively encouraging foreign direct investment (FDI) under the Foreign Investment and Technology Transfer Act 2019 (FITTA 2019). The legal backbone for company formation is the Companies Act 2006.
But choosing between a private limited company and a public limited company is not a paperwork exercise. It is a strategic decision.
In this guide, I will walk you through:
This is written for foreign companies. If you are entering Nepal for manufacturing, IT, outsourcing, hydropower, or trading, this guide is for you.
Nepal is positioning itself as a regional investment gateway between India and China. According to Nepal Rastra Bank reports, FDI approvals have steadily increased over recent years, particularly in energy, tourism, IT, and manufacturing.
The regulatory framework includes:
Foreign investors can own 100% equity in most sectors, except those listed in the negative list under FITTA.
But before filing an FDI application, you must decide your company structure.
This is where many foreign companies hesitate.
The Private vs public company in Nepal decision affects:
Let’s break this down clearly.
A private limited company is the most common structure used by foreign investors.
Most foreign investors use this structure for:
It is flexible, controlled, and easier to manage.
A public limited company is designed for larger ventures.
Public companies are common in:
For most foreign SMEs, this structure is unnecessary unless public capital is required.
| Criteria | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Offering | Not allowed | Allowed |
| Compliance Burden | Moderate | High |
| Listing on Stock Exchange | No | Yes |
| Ideal For | Foreign SMEs, subsidiaries | Large capital projects |
| Speed of Incorporation | Faster | Slower |
| Governance Requirements | Simpler | Board committees required |
Strategic Insight:
If you are a foreign company entering Nepal for operational expansion, 90% of the time a private limited company is the correct structure.
Let’s move to the practical side.
Check whether your sector is open to foreign investment under FITTA 2019.
Some sectors are restricted. Always verify before preparing documents.
FDI approval is obtained from:
Documents typically include:
Approval timeline: 2–6 weeks, depending on complexity.
After FDI approval:
The Companies Act 2006 governs this process.
Capital must be remitted through formal banking channels and recorded with:
This step is critical for future dividend repatriation.
Register with Inland Revenue Department.
Corporate tax rate in Nepal is generally 25%, with lower rates for specific sectors such as manufacturing or SEZ operations.
Depending on your business type, you may require:
Here is a practical checklist:
Always notarize and apostille foreign documents.
Under FITTA 2019, minimum FDI threshold is generally NPR 20 million (subject to updates and sectoral regulations).
However:
Capital must be traceable. Informal transfers will cause problems during profit repatriation.
Foreign companies in Nepal are subject to:
Relevant law: Income Tax Act 2002
Dividend repatriation requires tax clearance and NRB approval.
Let’s look at governance obligations.
For foreign companies seeking operational control, private structure offers stronger centralized governance.
Choose a public limited company if:
Otherwise, private limited is more efficient.
Planning structure correctly from day one saves years of regulatory friction.
If you are:
Choose private limited.
If you are:
Choose public limited.
The decision must align with your long-term capital strategy.
After registration, companies must:
Non-compliance can result in penalties or suspension.
Yes. Under FITTA 2019, most sectors allow 100% foreign ownership, except restricted industries.
Generally NPR 20 million, subject to sector-specific regulations.
Typically 4–8 weeks including FDI approval.
Yes, after tax clearance and approval from Nepal Rastra Bank.
Not always. Only necessary if raising capital from the public or listing shares.
The Private vs public company in Nepal decision determines your compliance exposure, governance burden, and capital flexibility.
For most foreign investors, a private limited company provides:
But the correct choice depends on your investment size, sector, and funding strategy.
If you are considering incorporating a foreign company in Nepal, structure it properly from day one. Regulatory alignment is not optional. It is foundational.