Key Differences Between Private and Public Companies in Nepal

If you are evaluating Private vs public company Nepal, you are making a strategic decision that affects control, compliance, funding, and exit options. For foreign companies, this choice determines how capital enters Nepal, how governance works, and how fast operations can scale. In this guide, you will find a clear, authoritative comparison grounded in Nepali law, market practice, and foreign direct investment realities.

This article is written for founders, CFOs, and legal teams planning a Nepal market entry. It explains not only the legal differences, but also the commercial consequences you will face in practice.

Understanding company structures in Nepal

Nepal’s corporate framework recognises two main for-profit company types relevant to foreign investors: Private Limited Companies and Public Limited Companies. Both are governed primarily by the Companies Act, 2006 and supervised by the Office of the Company Registrar (OCR).

At a high level:

• A private company prioritises control, flexibility, and faster setup.

• A public company prioritises capital raising, transparency, and market credibility.

The right structure depends on your investment size, funding roadmap, and long-term strategy.

What is a private company in Nepal?

A private limited company in Nepal is designed for closely held businesses, subsidiaries, and foreign-owned operating entities.

Key characteristics of a private company

• Share transfer is restricted by law and the Articles of Association.

• Public invitation to subscribe shares is prohibited.

• Ownership is capped, making it suitable for controlled groups.

• Compliance obligations are lighter than for public companies.

Private companies are the most common structure for foreign direct investment in Nepal.

Typical use cases for foreign companies

• Wholly owned Nepal subsidiaries

• Joint ventures with a small number of partners

• Service delivery centres and offshore teams

• Pilot market entry before large capital deployment

What is a public company in Nepal?

A public limited company in Nepal is designed for larger enterprises that intend to raise capital from the public or institutional investors.

Key characteristics of a public company

• Can issue shares to the public, including through an IPO

• Must meet higher disclosure and governance standards

• Shares may be listed on the Nepal Stock Exchange (NEPSE)

• Minimum capital thresholds apply

Public companies are less common for initial foreign entry but relevant for infrastructure, finance, and large-scale ventures.

Private vs public company Nepal: side-by-side comparison

This comparison highlights why most foreign investors start with a private company.

Legal requirements under Nepali law

Both structures are governed by the Companies Act, 2006, with additional regulations from sectoral authorities and, for foreign investors, FITTA 2019 and Nepal Rastra Bank directives.

Common legal requirements

• Memorandum of Association (MOA)

• Articles of Association (AOA)

• Registration with the Office of the Company Registrar

• Tax registration and statutory filings

Additional requirements for public companies

• Prospectus approval

• Securities Board of Nepal (SEBON) compliance

• Ongoing public disclosure obligations

Capital requirements and ownership rules

Private companies

Private companies in Nepal do not have a high statutory minimum capital. Capital is defined based on business needs and FDI approval.

Public companies

Public companies require significantly higher paid-up capital. Sector-specific laws may impose additional thresholds, especially in banking, insurance, and energy.

Foreign ownership is permitted in both structures, subject to sectoral restrictions and approval processes.

Compliance and governance obligations

Private company compliance

• Annual financial statements

• Annual general meeting

• Tax filings and labour compliance

• Limited public disclosure

Public company compliance

• Quarterly and annual reporting

• Independent directors and committees

• Public disclosures and audits

• SEBON and NEPSE reporting

This difference directly impacts cost and management bandwidth.

Advantages of a private company for foreign investors

Why most foreign companies choose private companies in Nepal:

• Full operational control

• Faster incorporation timelines

• Lower compliance and audit costs

• Easier decision-making

• Flexible exit through share transfer or restructuring

These advantages make private companies ideal for first-time entrants.

Advantages of a public company in Nepal

Public companies make sense when:

• Large capital needs exceed private funding

• Public credibility is essential

• Long-term listing on NEPSE is planned

• Broad local ownership is required

However, these benefits come with higher regulatory exposure.

Numbered list: How to choose between private and public company Nepal

1. Define your capital requirement and funding roadmap.

2. Assess whether public fundraising is necessary.

3. Evaluate governance and disclosure capacity.

4. Consider speed of market entry.

5. Align structure with exit strategy.

This framework helps boards make defensible decisions.

Bulleted list: Common mistakes foreign investors make

• Choosing a public company too early

• Underestimating compliance costs

• Ignoring sector-specific restrictions

• Overcapitalising without clear deployment plans

• Misaligning structure with repatriation strategy

Avoiding these mistakes saves time and regulatory friction.

Tax and repatriation considerations

Tax treatment is broadly similar for both structures, but public companies face more scrutiny. Dividend repatriation, capital reduction, and exit proceeds must comply with tax laws and central bank regulations.

Private companies offer more flexibility in restructuring and exit planning.

Private vs public company Nepal in practice

In real transactions, over 90 percent of foreign investors enter Nepal through private limited companies. Public companies are typically used later, once operations stabilise and capital needs expand.

This staged approach reduces risk and preserves flexibility.

Conclusion: Private vs public company Nepal — the strategic verdict

When comparing Private vs public company Nepal, the private company is the default choice for foreign investors. It offers control, speed, and compliance efficiency. Public companies are powerful tools, but only when scale and public capital justify the complexity.

The right decision aligns legal structure with commercial reality.

Call to action

Planning to enter Nepal or restructure your existing entity? Speak with a Nepal market-entry specialist to confirm whether a private or public company best fits your investment strategy.

Frequently Asked Questions

Is a private company better than a public company in Nepal?

For most foreign investors, yes. Private companies offer control, lower compliance, and faster setup. Public companies suit large capital-intensive projects.

Can a foreigner own 100 percent of a private company in Nepal?

Yes, in most permitted sectors, subject to FDI approval and regulatory compliance.

Can a private company convert into a public company later?

Yes. Nepalese law allows conversion, subject to meeting capital, compliance, and approval requirements.

Do public companies pay more tax in Nepal?

Tax rates are generally similar, but public companies face stricter audits and disclosures.

Which structure is easier to exit from?

Private companies usually offer easier exits through share transfer or restructuring.