Choosing between a private vs public company in Nepal is one of the most important early decisions for foreign companies. The structure you select affects ownership, capital requirements, compliance, fundraising ability, and long-term exit options. Within your first few planning meetings, this choice will either simplify your market entry or create avoidable friction.
This guide is written specifically for foreign investors and international businesses evaluating Nepal. It explains the legal framework, practical trade-offs, and real-world investor considerations—without legal jargon. By the end, you will know which structure fits your strategy and how to move forward confidently.
Nepal has quietly become attractive for regional expansion and offshore delivery. Investors are drawn by:
Competitive labor costs with strong English proficiency
A growing IT and services ecosystem
Strategic access to South Asia
Government supported foreign investment regimes
Under the Companies Act, Nepal allows foreign shareholders to hold equity in both private and public companies, subject to sector rules and approvals. However, most foreign companies start with a private limited company, not a public one.
Company formation in Nepal is primarily regulated by:
Companies Act, 2006
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
All companies are incorporated with the Office of the Company Registrar. Foreign investment routes require approval from the Department of Industry or the Investment Board Nepal, depending on size and sector.
Understanding this framework is critical when comparing a private vs public company in Nepal, because compliance obligations differ materially.
A private company in Nepal is the most common structure for foreign-owned businesses. It is designed for closely held ownership and operational control.
Limited liability for shareholders
Minimum 1 and maximum 101 shareholders
Shares cannot be publicly traded
Flexible governance structure
Suitable for operational businesses
Foreign companies typically use this structure for subsidiaries, offshore teams, service centers, and joint ventures.
A private company is ideal if you plan to:
Retain full ownership control
Operate services or delivery teams
Enter Nepal quickly with limited capital
Avoid public disclosure obligations
For most foreign investors, this structure balances compliance and flexibility.
A public company in Nepal is designed for large-scale capital raising and public participation.
Minimum 7 shareholders
No maximum shareholder limit
Shares may be offered to the public
Higher capital thresholds
Extensive disclosure and governance requirements
Public companies are uncommon for foreign entrants at the early stage.
A public company may be relevant if you plan to:
Raise capital from the Nepalese public
List on the Nepal Stock Exchange
Operate in regulated or infrastructure sectors
Build a large domestic brand
This route is strategic, not tactical. It requires patience, capital, and long-term commitment.
Understanding the structural differences helps avoid costly restructuring later.
Private company: Founders and foreign parents retain control
Public company: Ownership is diluted through public shareholding
Private company: Lower reporting and governance requirements
Public company: Mandatory disclosures, audits, and shareholder meetings
Private company: Funded via shareholders and private arrangements
Public company: Eligible for public fundraising and listing
| Feature | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7 |
| Foreign Ownership | Allowed (sector-based) | Allowed (subject to approvals) |
| Public Share Issue | Not allowed | Allowed |
| Governance Complexity | Moderate | High |
| Compliance Cost | Lower | Significantly higher |
| Ideal For | Subsidiaries, service firms | Large capital projects |
This comparison highlights why most foreign investors choose private companies during market entry.
Opening a company involves multiple approvals and filings. The process is manageable with proper guidance.
Most foreign companies select a private company due to speed and control. Public companies are rare at entry stage.
Approval is required before incorporation. The approving authority depends on:
Investment size
Sector classification
Once approved, the company is registered and receives its incorporation certificate.
This includes PAN registration, bank accounts, and statutory compliance onboarding.
Avoid these frequent errors when choosing a private vs public company in Nepal:
Assuming public companies offer faster credibility
Underestimating compliance costs
Choosing a structure misaligned with revenue plans
Delaying foreign investment approval
These mistakes increase cost and delay operations.
Over 90 percent of foreign-owned companies in Nepal are private limited entities. The reasons are practical:
Faster setup timelines
Easier exit options
Lower annual compliance spend
Greater operational flexibility
Public companies are powerful vehicles, but only at scale.
Both private and public companies are taxed at the corporate level. However, compliance intensity differs.
Key points include:
Corporate income tax applies uniformly
Withholding obligations apply to salaries and vendors
Repatriation requires tax clearance
Private companies are easier to manage during early years.
Public companies must publish audited financials and hold statutory meetings. Private companies have lighter obligations but must still comply with annual filings.
For foreign parents, governance simplicity often drives the choice toward private entities.
Some companies begin privately and later convert.
Consider conversion if:
You need public capital
You plan a Nepal stock exchange listing
Your shareholder base is expanding
Regulators require higher transparency
Conversion is possible but involves regulatory approvals.
There is no universal answer to private vs public company in Nepal. The right structure depends on:
Your investment horizon
Capital requirements
Risk appetite
Regulatory exposure
For most foreign companies, private incorporation is the optimal starting point.
Understanding private vs public company in Nepal allows foreign investors to enter the market with confidence. Private companies dominate because they align with practical business needs. Public companies serve long-term capital strategies.
Choosing correctly at the outset saves time, money, and regulatory stress.