If you are evaluating private vs public company in Nepal, you are already asking the right question.
For foreign companies, the legal structure you choose determines ownership control, capital flexibility, compliance exposure, and future exit strategy. It directly impacts your ability to trade, repatriate profits, raise capital, and scale in Nepal’s evolving foreign trade environment.
Nepal is positioning itself as a strategic gateway between India and China. With updated foreign investment bylaws, growing SEZ incentives, and digital approval systems, the opportunity is real. But structure determines safety.
In this guide, you will learn:
Let’s break it down clearly.
Foreign investors operate under three primary legal frameworks:
Regulatory authorities include:
According to Nepal’s Department of Industry, FDI approvals have steadily increased over the last five years, especially in IT, energy, tourism, and manufacturing sectors.
Choosing between a private or public company determines how these laws apply to you.
Under the Companies Act 2063, companies in Nepal are broadly categorized as:
Here is a strategic comparison for foreign investors.
| Factor | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Offering | Not allowed | Allowed (IPO possible) |
| Director Requirement | Minimum 1 | Minimum 3 |
| Capital Raising | Private funding | Public capital markets |
| Compliance Burden | Moderate | High |
| Governance Requirements | Flexible | Strict |
| Suitable For | SMEs, subsidiaries | Large scale enterprises |
| Disclosure Requirements | Limited | Extensive |
Insight:
For 90% of foreign investors entering Nepal, a private limited structure is more efficient during the initial market entry phase.
A private limited company is the most common structure for foreign companies entering Nepal.
Under FITTA 2019, foreign investors must obtain FDI approval before incorporation. Once approved, the company is registered with the Office of Company Registrar.
For subsidiaries of multinational corporations, this structure provides maximum governance clarity.
A public limited company is designed for large enterprises intending to raise capital from the public.
Public companies are regulated more strictly under the Securities Act 2007 and oversight from the Securities Board of Nepal (SEBON).
If you plan to raise funds domestically through public subscription, a public structure becomes necessary.
However, compliance obligations increase significantly.
For foreign companies, control is everything.
Private Company:
Public Company:
Private companies allow tighter shareholder agreements.
Public companies dilute control when shares are publicly offered.
If IP ownership and capital repatriation clarity matter, private companies offer stronger structural safety.
Under the Income Tax Act 2058, corporate income tax is generally:
Dividend distribution triggers withholding tax obligations.
Both private and public companies are subject to:
The tax rate itself does not differ significantly between private and public companies.
The difference lies in audit scrutiny and reporting transparency.
Nepal is strategically positioned between two major economies.
Under NRB bylaws (updated amendments), profit repatriation requires:
Structure affects documentation flow.
Here is a practical decision framework.
Are you testing the market or building a long-term industrial base?
Will you raise funds publicly?
Do you want tight board control?
Some sectors mandate public structures.
IPO, trade sale, or internal dividend repatriation?
Most foreign SMEs choose private companies first.
Public transition can happen later.
Regardless of structure, ensure:
Failure to comply triggers penalties under the Income Tax Act.
Structure should align with strategy. Not ego.
For most foreign companies entering Nepal:
Start with a private limited company.
Why?
Public companies make sense when scale demands public capital.
Your first priority should be regulatory clarity, not prestige.
Yes, in most sectors under FITTA 2019. Certain industries remain restricted under the negative list.
No. A private limited company is sufficient for most FDI projects.
After FDI approval, registration may take 2–4 weeks depending on documentation.
Generally no. Corporate income tax rates apply equally.
Yes. Conversion is allowed under the Companies Act subject to compliance requirements.
Choosing between private vs public company in Nepal is not just a legal decision. It is a strategic one.
Foreign investors who align structure with capital strategy, governance control, and trade objectives succeed faster.
Nepal offers opportunity.
But structure determines stability.
If you are considering market entry and want clarity on incorporation, FDI approvals, tax structuring, or repatriation planning, consult experienced cross-border advisors before registering.
The right structure today prevents costly restructuring tomorrow.