For foreign companies entering Nepal, one decision shapes everything: private vs public company structure. It may look like a legal checkbox. In reality, it affects FDI approval timelines, capital requirements, reporting obligations, investor credibility, and long-term scalability.
Whether you're an Australian services firm, an Indian manufacturer, or a Chinese technology investor, your incorporation model determines how regulators, banks, and partners view you.
In this post, we’ll explain what private vs public company means under Nepal’s legal framework, outline the step-by-step incorporation process for foreign investors, and share practical insights from real cross-border setups. By the end, you’ll know exactly which structure fits your entry strategy and how to move forward confidently.
Under Nepal’s Companies Act, 2063 (2006), businesses are primarily registered as either:
The distinction is not cosmetic. It defines:
A private company:
Most foreign investors entering Nepal choose this model.
A public company:
If you plan to raise capital locally or scale via public investment, this structure may be relevant.
Choosing incorrectly can result in:
Choosing correctly accelerates:
Structure equals strategy.
Below is a practical framework we use with international clients.
Ask:
If capital is coming from the foreign parent only, a private company is usually sufficient.
If local public fundraising is required, consider a public company.
Foreign investment requires approval under Nepal’s Foreign Investment and Technology Transfer Act (FITTA).
Key authorities:
Both private and public companies can receive FDI approval. However, private companies are simpler to structure during initial entry.
Public companies require:
Private companies offer:
For service companies and foreign subsidiaries, governance simplicity matters.
Certain sectors may require:
For example:
Industry dictates structure.
Foreign investors should plan early for:
Private companies offer cleaner exit structures for group reorganizations.
Public companies may complicate ownership restructuring.
When incorporating in Nepal, foreign companies must address:
Nepal does not impose excessive minimum capital for private companies, but sector-specific rules may apply.
A physical registered office in Nepal is mandatory.
After incorporation:
Corporate tax currently stands at approximately 25% (sector dependent).
If hiring employees:
Let’s compare two hypothetical foreign investors.
| Factor | Australian IT Services Firm | Indian Manufacturing Company |
|---|---|---|
| Capital Source | Parent company | Parent + local financing |
| Growth Model | Internal expansion | Large-scale expansion |
| Public Funding Need | No | Possible |
| Recommended Structure | Private Company | Initially Private, later convert if needed |
Most investors start private and convert later if required.
Flexibility is strategic.
These mistakes cost time and money.
A private company restricts share transfers and cannot offer shares to the public. A public company can raise capital from the public and has stricter governance requirements.
Yes. In most sectors, foreign investors can own 100% equity, subject to FDI approval and sectoral restrictions.
No. Most foreign investors register private companies. Public companies are only required in regulated sectors or for public fundraising.
Incorporation typically takes 7–21 days, depending on documentation and FDI approval complexity.
Yes. Conversion is permitted under the Companies Act, subject to compliance and regulatory approval.
Incorporating in Nepal is not just a registration exercise. The private vs public company decision determines your regulatory pathway, governance model, and long-term flexibility.
Most foreign companies benefit from starting with a private structure and scaling strategically. The right structure reduces friction, accelerates approvals, and protects your investment.
The goal is not complexity. The goal is clarity.
Planning to incorporate in Nepal?
Our team advises foreign investors on:
Book a strategic consultation today and ensure your Nepal entry is structured correctly from day one.