Foreign investors exploring Private vs public company in Nepal often ask one core question.
Which structure protects capital, simplifies compliance, and supports long term growth?
Nepal’s economy is evolving fast. Reforms under the Foreign Investment and Technology Transfer Act and the Industrial Enterprises Act have strengthened investor protection. Company registration is governed by the Companies Act and regulated through the Office of the Company Registrar.
But structure determines outcomes.
A private company offers flexibility and control.
A public company enables capital raising and broader ownership.
In this guide, we break down the legal, tax, compliance, and strategic implications. This is written specifically for foreign companies considering market entry, FDI, or joint ventures in Nepal.
Nepal operates under a codified corporate regime. The legal backbone includes:
Public companies may list on the Nepal Stock Exchange (NEPSE).
Foreign direct investment must meet sectoral thresholds set by the Department of Industry under FITTA 2019.
Understanding statutory definitions is critical before incorporation.
Under the Companies Act 2006, a private limited company:
Foreign investors commonly choose this model for:
Minimum capital depends on FDI thresholds under FITTA.
A public limited company:
Public companies are common in:
They are subject to stricter governance and disclosure requirements.
Below is a strategic comparison for foreign investors.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Offering | Not allowed | Allowed |
| Listing on NEPSE | No | Yes |
| Compliance Burden | Moderate | High |
| Governance Structure | Flexible | Structured board requirements |
| Best For | FDI subsidiaries | Capital-intensive ventures |
| Disclosure Level | Limited | Extensive |
If your goal is operational control and risk containment, private structure is usually optimal.
If your goal is capital mobilization and market credibility, public structure may be better.
Foreign investors must secure:
The regulatory path differs slightly for public companies if IPO planning is involved.
Nepal’s minimum FDI threshold is NPR 20 million in most sectors under FITTA 2019.
Private companies meet this easily.
Public companies often require substantially higher paid up capital due to listing norms.
In addition to the above:
The compliance burden is significantly higher.
Under the Income Tax Act, corporate tax rates generally apply equally to private and public companies.
Standard corporate tax rate: 25%
Certain industries such as hydropower enjoy concessions.
Public companies do not automatically receive tax advantages. Incentives depend on industry classification under the Industrial Enterprises Act.
Both structures allow profit repatriation, subject to:
Private companies typically process repatriation faster due to fewer shareholder complexities.
Foreign investors should evaluate four factors:
Private companies allow tighter shareholder agreements and ring fenced governance.
Public companies provide IPO access and institutional capital.
Public entities require transparency that may expose sensitive financial data.
Private companies offer structured share transfer options.
Public companies allow market based exit post listing.
A private company is ideal when:
This model minimizes regulatory exposure.
Public incorporation works best if:
Banks and insurance companies must be public under sectoral laws.
| Stage | Private Company | Public Company |
|---|---|---|
| DOI Approval | 2–4 weeks | 2–4 weeks |
| OCR Registration | 1–2 weeks | 2–3 weeks |
| Capital Injection | 1 week | 1 week |
| IPO Preparation | Not applicable | 6–12 months |
| Total Setup Time | 4–8 weeks | 6–12+ months |
Private company setup costs include:
Public company costs additionally include:
Public setup costs are significantly higher.
Foreign SaaS company enters Nepal.
Chooses private subsidiary.
Retains IP ownership offshore.
Large infrastructure consortium.
Registers public company.
Raises capital through IPO.
The Companies Act mandates:
Public companies face additional securities regulations.
Avoiding these errors protects long term ROI.
Yes. FITTA allows 100% foreign ownership in most sectors except restricted industries.
No. It is required only in specific sectors like banking or insurance.
Private companies have lower compliance and governance requirements.
Yes. Conversion is permitted under the Companies Act 2006 subject to approval.
No. Corporate tax rates are generally identical under the Income Tax Act 2002.
When evaluating Private vs public company in Nepal, most foreign companies begin with a private limited structure.
It offers control.
It reduces compliance burden.
It protects capital.
Public companies are powerful but complex. They are suitable for capital intensive ventures.
If you are entering Nepal for the first time, structure determines everything. It impacts taxation, governance, repatriation, and exit.