If you are evaluating private vs public company in Nepal, you are already asking the right strategic question. For foreign companies, the legal structure you choose shapes control, compliance, cost, and future scalability. Nepal offers a clearly defined company law framework, but the practical implications differ significantly between private and public companies. This guide explains how to open a company in Nepal, compares both structures, and highlights the essential legal requirements foreign investors must understand before committing capital.
Company formation in Nepal is governed primarily by the Companies Act 2006, administered by the Office of Company Registrar. Foreign investment is further regulated under the Foreign Investment and Technology Transfer Act 2019.
These laws define how companies are formed, owned, governed, and dissolved.
Office of Company Registrar (OCR)
Department of Industry for foreign investment approvals
Inland Revenue Department for tax registration
Nepal Rastra Bank for capital inflow compliance
A private company is the most common structure used by foreign investors entering Nepal.
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer is restricted
Public share issuance is prohibited
Suitable for FDI and wholly owned subsidiaries
Under the Companies Act 2006, private companies offer flexibility and operational control. This makes them ideal for foreign-owned operating entities, back office centers, and technology subsidiaries.
A public company is designed for large-scale capital raising and public participation.
Minimum shareholders: 7
No maximum shareholder limit
Mandatory public disclosure requirements
Can issue shares to the public
Higher compliance and governance burden
Public companies are commonly used by banks, hydropower companies, and infrastructure projects. For most foreign companies entering Nepal operationally, this structure is rarely optimal at the initial stage.
The debate around private vs public company in Nepal is not theoretical. It is strategic. Your decision should align with control, funding plans, and regulatory tolerance.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Foreign ownership | Allowed | Allowed |
| Public fundraising | Not permitted | Permitted |
| Compliance burden | Moderate | High |
| Audit and disclosure | Limited | Extensive |
| Ideal for foreign investors | Yes | Rarely |
This comparison shows why private companies dominate foreign direct investment structures in Nepal.
Whether you choose a private or public company, the registration process follows defined legal stages.
The proposed company name is submitted to the Office of Company Registrar for availability and approval.
You will need:
Memorandum of Association
Articles of Association
Shareholder and director details
Parent company documents for foreign shareholders
Upon submission, the OCR issues a Certificate of Incorporation. The company becomes a legal entity at this stage.
Foreign shareholders must obtain approval under FITTA 2019. Capital must be brought in through formal banking channels.
After incorporation:
Permanent Account Number registration
VAT registration if applicable
Social Security Fund enrollment
Nepal does not impose a fixed minimum capital for private companies. However, for foreign investors, the Department of Industry typically expects a minimum investment threshold per project.
Foreign companies can own up to 100 percent equity in most sectors. Restricted sectors require additional scrutiny or are closed to FDI.
Once registered, compliance becomes an ongoing responsibility.
Annual financial audit
Annual return filing with OCR
Tax filings under the Income Tax Act 2002
Labor compliance under the Labour Act 2017
Failure to comply can result in penalties, suspension, or cancellation of registration.
Foreign investors consistently choose private companies because they offer:
Faster incorporation timelines
Lower disclosure requirements
Full managerial control
Easier exit and restructuring
From an operational perspective, private companies provide clarity and predictability in Nepal’s regulatory environment.
Avoid these pitfalls when deciding between private vs public company in Nepal.
Overestimating the need for public status
Ignoring foreign investment approval timelines
Underestimating compliance obligations
Choosing structure before defining business scope
Early legal structuring prevents long-term regulatory friction.
Private companies are commonly used for:
IT and software development
Shared service centers
Professional services
Outsourced operations
Public companies are typically used for:
Hydropower projects
Banking and finance
Large infrastructure developments
Corporate tax rates depend on industry classification. Standard corporate tax applies to most private companies. Certain sectors enjoy incentives or face higher rates.
Dividend repatriation and profit distribution must follow Nepal Rastra Bank guidelines.
For most foreign companies, yes. Private companies offer control, lower compliance, and faster setup. Public companies suit large-scale fundraising only.
Yes. Full foreign ownership is permitted in most sectors under FITTA 2019.
Typically, 2 to 4 weeks, depending on approvals and document readiness.
No fixed statutory minimum exists, but foreign investment thresholds apply in practice.
Yes. Conversion is legally permitted but requires regulatory approvals and restructuring.
Choosing between private vs public company in Nepal is a foundational decision. For foreign companies, private companies deliver speed, control, and regulatory efficiency. Public companies serve specialized purposes and demand higher compliance tolerance. Align your structure with your business model, funding strategy, and long-term presence in Nepal.