If you are evaluating private vs public company in Nepal, you are already thinking like a serious foreign investor. Structure determines control, capital access, tax exposure, compliance burden, and exit flexibility.
Choosing the wrong model can slow approvals, increase regulatory friction, or complicate dividend repatriation. Choosing the right one can accelerate your Nepal market entry and protect long-term value.
This guide explains everything foreign companies need to know before incorporating in Nepal. It draws on the Companies Act 2063 (2006), the Foreign Investment and Technology Transfer Act (FITTA) 2019, and guidance from the Office of Company Registrar (OCR) and Nepal Rastra Bank (NRB).
Let’s break it down clearly.
Foreign companies typically evaluate Nepal for:
Nepal allows foreign direct investment under FITTA 2019 in most sectors. But the corporate vehicle you choose determines:
The most common vehicles are:
Other options exist, such as branch offices or liaison offices, but this article focuses on private vs public company in Nepal for incorporation purposes.
Under the Companies Act 2063 (2006), a private company is a limited liability entity with restrictions on share transfer and a limited number of shareholders.
Private companies are the most common structure for foreign investors.
For example, a foreign IT company setting up a development center in Kathmandu typically chooses a private limited structure.
A public company under the Companies Act:
Public companies are regulated more strictly.
Public companies are supervised by:
They must publish audited financials and comply with public reporting standards.
Here is a practical comparison tailored for foreign companies.
| Factor | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share offering | Not allowed | Allowed |
| Listing on NEPSE | No | Yes |
| Share transfer | Restricted | Freely transferable |
| Disclosure level | Moderate | High |
| Regulatory complexity | Lower | Significantly higher |
| Suitable for | Controlled FDI, subsidiaries | Large capital-intensive projects |
Strategic Insight
For most foreign investors entering Nepal, private companies provide better governance control and lower friction during early-stage market entry.
Nepal does not impose a universal minimum paid-up capital for all sectors. However:
Capital must be injected through formal banking channels and approved by Nepal Rastra Bank (NRB).
Repatriation of dividends is allowed under FITTA 2019, subject to tax clearance and NRB approval.
Private companies require:
Compliance is manageable.
Public companies require:
This adds cost and operational complexity.
Whether private or public, incorporation generally follows these steps:
Foreign investors must obtain approval under FITTA before capital remittance.
A private company is ideal if:
Typical examples:
Private companies reduce unnecessary exposure and compliance costs.
A public company is suitable if:
Hydropower companies in Nepal frequently adopt public structures to raise capital domestically.
Corporate tax in Nepal generally ranges around 25%, depending on sector. Special industries may receive concessions.
Dividend tax applies upon distribution.
Public and private companies are both subject to:
There is no inherent corporate tax advantage between private and public companies.
Foreign investment is governed by:
FITTA guarantees:
However, procedural compliance is essential.
When comparing private vs public company in Nepal, consider:
Public companies face greater scrutiny.
Private companies offer stronger founder-level governance protection.
Below is a simplified strategic framework:
Choose Private If:
Choose Public If:
Credibility depends on compliance and governance, not just structure.
Not necessarily. Many multinational subsidiaries operate as private companies globally.
Repatriation depends on regulatory compliance, not listing status.
For most foreign companies entering Nepal, a private limited company is the recommended starting structure.
It balances:
Public companies are strategic tools, not default structures.
Choosing between a private vs public company in Nepal is not just a legal decision. It is a strategic one.
For foreign investors, the private model offers speed, control, and manageable compliance. Public companies are suitable for capital-intensive sectors requiring broad investor participation.
Before incorporating, align your corporate structure with:
Nepal is increasingly attractive for foreign direct investment. But success depends on making the right structural decision from day one.
If you are planning to incorporate in Nepal and want a tailored structuring roadmap aligned with your industry and risk profile, professional advisory support can significantly reduce friction and accelerate approvals.
A private company restricts share transfer and cannot invite public subscription. A public company can raise funds from the public and list on NEPSE. Public companies face higher compliance requirements.
Yes. Under FITTA 2019, foreign investors may fully own companies in permitted sectors, subject to approval and compliance with capital requirements.
Minimum capital requirements vary by sector. FITTA and sector-specific regulations may prescribe thresholds. Capital must be routed through NRB-approved banking channels.
Yes. Conversion is allowed under the Companies Act, subject to meeting shareholder and regulatory requirements.
For most operational businesses, private companies are more efficient. Public companies are suitable for large-scale capital projects.