If you are evaluating a private vs public company in Nepal, your structure choice will shape control, capital access, tax exposure, and long-term scalability. For foreign companies, this decision is not administrative. It is strategic.
Nepal’s legal framework is primarily governed by the Companies Act 2006, the Foreign Investment and Technology Transfer Act 2019 (FITTA), and the Income Tax Act 2002. Registration is handled by the Office of the Company Registrar (OCR).
This guide walks you through:
Let’s break it down clearly.
Nepal follows a codified company law regime. The primary statute is the Companies Act 2006. It defines company types, governance, and reporting obligations.
Foreign investment approvals fall under FITTA 2019 and are processed through:
Corporate taxation is governed by the Income Tax Act 2002. The standard corporate tax rate is generally 25%, with sectoral variations.
Understanding this framework ensures compliance from day one.
Under the Companies Act 2006, a private company:
This structure is ideal for closely held businesses, joint ventures, and subsidiaries of foreign companies.
A public company:
Public companies face enhanced governance and regulatory oversight.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Offering | Not allowed | Allowed |
| Minimum Paid-Up Capital | As prescribed (lower threshold) | Higher threshold required |
| Disclosure & Reporting | Moderate | Extensive |
| Governance Requirements | Fewer formalities | Independent directors & stricter norms |
| Ideal For | Subsidiaries, SMEs, FDI entry | Large infrastructure, IPO plans |
Strategic Insight:
Foreign companies entering Nepal almost always begin with a private limited company. Public conversion happens later if capital markets access is required.
Choosing between a private vs public company in Nepal affects:
For foreign investors, risk architecture matters. A private company allows tighter governance and faster decision-making.
Public companies bring credibility but increase compliance complexity.
Here is the structured pathway.
Apply to the OCR online portal.
The name must not conflict with existing entities.
These documents define:
Foreign shareholders must align this with FITTA requirements.
Foreign investors must obtain:
This step is mandatory before capital injection.
Submit:
Once approved, the OCR issues the Certificate of Incorporation.
Register with Inland Revenue Department under the Income Tax Act 2002.
Examples include:
Foreign currency must flow through formal banking channels.
Nepal Rastra Bank monitors repatriation eligibility.
Most foreign companies prefer private companies due to:
This structure also helps avoid premature public scrutiny.
A public company is ideal when:
However, this structure increases compliance obligations significantly.
Public companies face closer scrutiny from regulators and investors.
Corporate tax is generally 25%.
Certain industries receive concessions.
Under the Income Tax Act 2002:
Foreign investors must structure dividend repatriation carefully.
Private companies:
Public companies:
Governance impacts long-term scalability.
| Risk Factor | Private Company | Public Company |
|---|---|---|
| Regulatory Exposure | Lower | Higher |
| Market Visibility | Limited | High |
| Capital Flexibility | Controlled | Broad |
| Administrative Cost | Moderate | High |
| Strategic Control | Strong | Diluted |
For market entry, simplicity often wins.
Avoid these errors:
Structure determines future flexibility.
Most foreign tech, service, and manufacturing investors:
Public conversion is rarely the first step.
Typical timelines:
Public company registration may take longer due to documentation requirements.
Costs vary by structure. Key expenses include:
Public companies incur higher compliance setup costs.
A private company limits shareholders and cannot offer shares to the public. A public company can raise funds publicly and faces stricter compliance requirements.
Yes, subject to sectoral restrictions under FITTA 2019. Many sectors allow full foreign ownership.
Yes. Public companies require higher paid-up capital thresholds than private companies under the Companies Act.
Yes. Conversion is permitted by amending constitutional documents and meeting public company requirements.
For most foreign companies, a private company is more practical during the initial phase.
Deciding on a private vs public company in Nepal is foundational. It determines control, compliance exposure, capital flexibility, and investor confidence.
For most foreign companies entering Nepal, a private limited company provides the right balance between compliance and strategic flexibility. Public structure is usually a growth-stage decision.
If you are planning to register a business in Nepal, align structure with long-term goals not short-term assumptions.