Foreign investors researching private vs public company in Nepal often focus only on structure. That is a mistake.
The real decision is strategic.
Your choice affects foreign direct investment (FDI) approval, regulatory burden, capital raising options, governance control, tax exposure, and long-term exit planning.
Nepal has introduced several policy reforms to attract foreign capital. These include amendments under the Foreign Investment and Technology Transfer Act 2019 (FITTA), improvements in the Companies Act 2006, and digital filing through the Office of Company Registrar (OCR).
This guide breaks down the differences clearly. It is written specifically for foreign companies evaluating Nepal as a market entry destination.
If you are considering manufacturing, IT outsourcing, infrastructure, trade, or professional services, this article will help you decide which structure aligns with your strategy.
Nepal has been gradually modernizing its investment regime to improve ease of doing business.
Key reforms include:
The Government of Nepal has prioritized foreign capital inflows in infrastructure, energy, digital services, and export-oriented manufacturing.
But structure matters.
The choice between a private limited company and a public limited company significantly changes your compliance and governance obligations.
Understanding the statutory definitions is the starting point.
Defined under the Companies Act 2006, a private company:
A public company:
For most foreign companies entering Nepal, the private limited company is the preferred vehicle.
But that is not always the correct answer.
Let’s compare them in depth.
| Factor | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Minimum Directors | 1 | 3 |
| Public Share Offering | Not allowed | Allowed |
| NEPSE Listing | No | Yes |
| Governance Burden | Moderate | High |
| Best For | FDI entry, subsidiaries, JV | Large-scale capital raising |
If your goal is:
→ A private limited company is usually optimal.
If your goal is:
→ A public limited company may be strategic.
Under FITTA 2019:
Most FDI projects are incorporated as private limited companies.
Why?
Because:
Unless your business requires broad public participation, the private structure reduces regulatory friction.
Compliance cost and administrative time increase significantly with a public entity.
Foreign subsidiaries rarely benefit from that additional complexity unless capital markets are part of the strategy.
There are limited but powerful scenarios where a public company is justified:
Nepal’s hydropower sector often uses public limited company structures to mobilize domestic investment.
For service-sector FDI, however, private companies dominate.
Corporate income tax in Nepal generally applies equally to private and public companies.
Standard corporate tax rate:
Certain sectors such as hydropower and manufacturing may qualify for reduced or phased rates under the Industrial Enterprises Act.
Dividend tax applies at source.
The structure itself does not automatically change the base corporate tax rate. But compliance and reporting obligations differ.
Foreign investors who want to maintain operational and financial control almost always prefer private limited companies.
Nepal’s Companies Act provides:
Additionally, FITTA ensures:
From a legal certainty perspective, both private and public companies offer similar base protection.
The difference lies in operational burden and capital strategy.
Certain sectors influence structure decisions:
Often structured as public companies to attract retail investors.
Usually private limited companies with 100% foreign ownership.
Depends on scale. Large export-driven plants may consider public participation.
Require regulatory approvals and often operate as public entities.
Foreign companies should align structure with sector regulations.
Incorporation involves:
Private company registration is generally faster.
Public companies require additional documentation.
These mistakes delay projects and increase costs.
Ask yourself:
If the answer is no to most of these, a private limited company is usually the smarter entry structure.
Exit strategy matters.
Private Company Exit Options:
Public Company Exit Options:
Many foreign investors start as private and convert later if necessary.
That flexibility is valuable.
Based on incorporation trends at the OCR, the majority of FDI entries are private limited entities.
Reasons include:
Unless capital markets are part of your growth model, private structure offers efficiency.
Yes. FITTA 2019 allows 100% foreign ownership in most sectors, subject to minimum investment thresholds and sectoral restrictions.
Not always. Only sectors requiring public capital or regulatory mandate require public structure.
Yes. The Companies Act allows conversion, subject to compliance and regulatory approval.
No. Corporate income tax rates are generally the same, unless sector-specific incentives apply.
No. A company can be public without listing, but listing adds regulatory obligations.
The debate around private vs public company in Nepal is not about which is better. It is about which aligns with your strategic goals.
For most foreign companies entering Nepal:
Nepal’s FDI reforms under FITTA 2019 and the Industrial Enterprises Act 2020 have improved clarity and investor protection.
But structure remains a critical early decision.
If you are planning market entry into Nepal, structuring correctly from day one reduces risk, speeds approval, and protects long-term returns.
For foreign companies serious about Nepal, expert structuring advice is not optional. It is strategic risk management.