If you are planning to enter Nepal, Private vs public company Nepal is one of the first strategic decisions you will face. The choice affects ownership control, regulatory burden, funding options, and long term scalability.
Foreign founders often assume public companies offer faster growth. In Nepal, the opposite is usually true. Most startups begin as private companies and only consider public status later.
This guide explains the practical, legal, and commercial differences between private and public companies in Nepal, with a specific focus on foreign companies and cross border founders.
Company structures in Nepal are governed by the Companies Act 2006 and regulated by the Office of the Company Registrar.
Nepal recognizes two primary company forms relevant to startups:
Private Limited Company
Public Limited Company
Both are separate legal entities. Both can accept foreign investment, subject to approval under the Foreign Investment and Technology Transfer Act 2019.
However, their operational realities differ significantly.
A private limited company is the most common structure for startups and foreign subsidiaries in Nepal.
Minimum shareholders: 1
Maximum shareholders: 101
No public share issuance
Shares transferred with restrictions
Lower compliance and disclosure
Private companies align well with early stage operations because they allow:
Tight founder control
Faster incorporation
Predictable compliance
Lower ongoing costs
For most foreign companies entering Nepal, this structure is the default starting point.
A public limited company is designed for large scale operations, capital markets, and public fundraising.
Minimum shareholders: 7
No maximum shareholder limit
Mandatory public disclosures
Can issue shares to the public
Often listed on Nepal Stock Exchange
While attractive on paper, public companies in Nepal involve:
Higher regulatory scrutiny
Mandatory audits and reporting
Slower decision-making
Higher setup and maintenance costs
For most startups, public status is a later stage decision, not an entry strategy.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share issuance | Not allowed | Allowed |
| Regulatory burden | Moderate | High |
| Setup timeline | Faster | Slower |
| Ideal stage | Startup to growth | Large scale, IPO-ready |
| Foreign ownership | Permitted with approval | Permitted with approval |
| Cost of compliance | Lower | Significantly higher |
Insight: Over 90 percent of foreign-owned entities in Nepal start as private companies before scaling.
Private companies allow founders to retain voting and management control. This is critical when operating in a new jurisdiction.
Nepal’s public company regime is conservative. Private companies face fewer reporting layers and inspections.
Private company registration typically completes faster, especially when combined with foreign investment approvals.
A public company becomes relevant when:
Capital requirements exceed private funding options
Broad public ownership is strategic
IPO or large institutional funding is planned
Governance maturity is already established
This usually occurs years after market entry, not at inception.
Under the Foreign Investment and Technology Transfer Act 2019, both private and public companies may accept foreign capital.
However, approval is subject to:
Sector eligibility
Minimum investment thresholds
Central bank compliance under Nepal Rastra Bank
Important: Public status does not bypass FDI approval requirements.
Annual filings with OCR
Tax filings under the Income Tax Act 2002
Labour compliance under the Labour Act 2017
All private company obligations
Mandatory statutory audits
Public disclosures
Board committees and governance rules
This compliance gap is often underestimated by foreign founders.
Higher incorporation fees
Annual audit costs
Legal retainer expenses
Investor communication costs
For startups, these costs frequently outweigh early benefits.
Yes. Nepalese law allows conversion from private to public company.
Shareholder resolution
Amendment of constitutional documents
Regulatory approvals
Capital restructuring
Most startups delay this until revenue and governance maturity justify the shift.
For most foreign companies entering Nepal:
Private company is the optimal entry vehicle
Public company is a future growth option
Starting private does not limit future scalability. It preserves flexibility.
Choose a private company if you want:
Faster setup
Founder control
Lower compliance costs
Choose a public company if you need:
Large public fundraising
Broad shareholder base
Capital market visibility
For startups, yes. Private companies offer flexibility, lower costs, and easier compliance in Nepal.
Yes, subject to sector eligibility and FDI approval under FITTA 2019.
Public companies require higher paid-up capital, which varies by sector and regulator.
Yes. A private company can convert into a public company and then issue shares.
Private companies generally register faster than public companies.
When weighing private vs public company Nepal, startups should prioritize flexibility, control, and speed. For most foreign founders, a private limited company is the smartest first step.
Public companies serve a purpose, but usually later in the business lifecycle.