Choosing the right company structure is one of the most critical decisions when entering Nepal. The debate around private vs public company in Nepal goes far beyond ownership size. It affects compliance, capital flexibility, fundraising, timelines, and long-term exit options.
For foreign companies, this choice determines how smoothly you navigate Nepal’s regulatory system. It also influences your cost base and operational risk. This guide breaks down the legal, commercial, and strategic differences in a clear and practical way.
Nepal’s corporate framework is governed primarily by the Companies Act, 2006. Two mainstream structures are available for commercial operations.
A private limited company is the most common entry vehicle for foreign businesses. It is privately held and designed for controlled ownership.
Key characteristics:
Limited to a small group of shareholders
Shares are not publicly tradable
Lower compliance burden
Faster incorporation timeline
A public limited company is structured for capital raising from the public. It is suitable for large-scale projects, banks, hydropower, and infrastructure ventures.
Key characteristics:
Can issue shares to the public
Subject to higher disclosure standards
Heavily regulated by multiple authorities
Higher capital requirements
This section directly addresses the core keyword and highlights legal distinctions that matter most to foreign investors.
Private company
Minimum: 1 shareholder
Maximum: 50 shareholders
Foreign shareholders allowed under FITTA 2019
Public company
Minimum: 7 shareholders
No maximum limit
Foreign ownership permitted but sector-specific caps apply
Capital thresholds vary by sector. However, general legal expectations differ.
| Aspect | Private Company | Public Company |
|---|---|---|
| Statutory minimum | No fixed amount | NPR 10 million |
| Typical FDI threshold | NPR 20 million | Higher by sector |
| Capital flexibility | High | Limited |
| Increase process | Simple | Regulated |
Insight:
Foreign companies testing the market prefer private entities due to capital flexibility.
Private company
Minimum 1 director
No mandatory independent directors
Simple board governance
Public company
Minimum 3 directors
Mandatory independent directors
Audit and risk committees required
Compliance is where many foreign investors underestimate complexity.
Annual general meeting optional
Simplified annual filings
No mandatory public disclosures
Lower audit thresholds
Mandatory AGM
Quarterly and annual reporting
Statutory audits
Regulatory oversight from multiple bodies
Practical takeaway:
Unless public fundraising is essential, private companies reduce compliance friction significantly.
Private companies cannot issue shares to the public. Funding options include:
Shareholder equity
Foreign direct investment
Intercompany loans
Convertible instruments
Public companies can:
Issue IPOs
Raise capital via rights shares
List on Nepal Stock Exchange
Attract institutional investors
This makes public companies suitable for capital-intensive sectors.
Tax rates are broadly similar, but compliance costs differ.
Corporate tax rate generally ranges from 20–30 percent
Dividend distribution tax applies in both structures
Public companies face stricter tax scrutiny
Foreign investors often prefer predictable tax administration, favoring private companies.
Nepal restricts foreign investment in certain sectors.
Commonly restricted areas include:
Small retail trading
Certain media activities
Local courier services
Public companies in regulated sectors face additional approvals.
Private company
Name reservation
Document submission
Registration certificate
PAN and local registrations
Typical timeline: 2–4 weeks
Public company
Regulatory approvals
Capital verification
Prospectus preparation
Registration and compliance
Typical timeline: 2–3 months or longer
Are entering Nepal for the first time
Want operational control
Plan to hire local teams
Need flexibility
Require large capital injection
Plan public fundraising
Operate in infrastructure or finance
Have long-term institutional goals
Overestimating capital needs
Choosing public structure prematurely
Ignoring sector-specific FDI caps
Underestimating compliance costs
Avoiding these mistakes saves time and capital.
| Risk Area | Private Company | Public Company |
|---|---|---|
| Regulatory exposure | Low | High |
| Compliance cost | Low | High |
| Capital raising | Limited | Extensive |
| Operational flexibility | High | Moderate |
| Time to exit | Faster | Slower |
For most foreign businesses, yes. Private companies offer lower compliance, faster setup, and more flexibility. Public companies suit large capital-intensive projects only.
Yes, 100 percent foreign ownership is allowed in most sectors under FITTA 2019, subject to approval.
For foreign investors, the practical minimum is NPR 20 million, depending on sector guidelines.
Yes. Conversion is permitted but requires regulatory approvals and compliance upgrades.
Yes. Only public companies can list on the Nepal Stock Exchange.
The private vs public company in Nepal decision should align with your market entry strategy, capital plan, and risk appetite. For most foreign companies, a private limited company provides the best balance of control, compliance ease, and scalability.
Choosing correctly at the start avoids costly restructuring later.