Foreign investors exploring South Asia often ask one critical question first: Private vs public company in Nepal — which structure is right for my investment?
It is a strategic decision.
Your choice affects control, capital raising, compliance, reporting, taxation, and exit planning. It also determines how regulators view your foreign direct investment (FDI).
Nepal is positioning itself as an emerging investment destination. According to the Department of Industry, FDI approvals have grown steadily across manufacturing, IT services, tourism, hydropower, and trade sectors. The legal framework is governed primarily by:
Understanding how private and public companies operate under these laws is essential before deploying capital.
This guide explains everything foreign companies need to know — clearly, practically, and strategically.
Nepal sits between India and China. It has preferential trade access to India. It also benefits from WTO membership and SAARC frameworks.
The government has simplified FDI approvals under FITTA 2019. Minimum FDI thresholds were revised. Certain sectors are fully open. Others are partially restricted.
Common foreign-invested sectors include:
Before structuring your entity, you must determine whether a private limited company or a public limited company best aligns with your capital and growth plan.
Under the Companies Act 2006, companies are categorized primarily into:
Both can receive foreign investment under the Foreign Investment and Technology Transfer Act 2019, subject to sector eligibility.
Let’s break them down.
A private limited company:
This is the most common structure for foreign investors.
It provides:
Most foreign-owned IT companies and service firms choose this structure.
A public limited company:
Public companies are common in:
This structure suits capital-intensive industries seeking local investor participation.
Below is an original investor-focused comparison designed specifically for foreign companies.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Issue | Not allowed | Allowed |
| Listing on NEPSE | No | Yes (optional) |
| Compliance Burden | Moderate | High |
| Governance Complexity | Low to Medium | High |
| Capital Raising | Private placement | Public + institutional |
| Ideal For | Controlled FDI entry | Large-scale infrastructure |
| Investor Control | High | Diluted if public |
| Disclosure Requirements | Limited | Extensive |
Strategic insight:
If your objective is operational control and phased scaling, a private company is usually optimal.
If your objective is large-scale capital mobilization and long-term public participation, a public company is better suited.
Foreign investors must obtain:
Dividend repatriation is permitted under FITTA, subject to tax clearance and central bank approval.
Corporate tax rates under the Income Tax Act 2058 generally stand at:
There is no fundamental tax rate difference between private and public companies.
However:
For foreign investors focused on tax efficiency, structure matters less than sector classification and incentives.
Choose a private limited company if:
This is ideal for:
Most foreign companies start private and later convert to public if scaling requires it.
A public limited company may be better if:
Public structures are common in Nepal’s energy sector, especially in hydropower projects attracting domestic investors.
Here is a simplified roadmap for foreign companies:
Execution quality determines approval speed.
Private Company Capital Raising Options:
Public Company Capital Raising Options:
Public companies can access deeper domestic capital markets.
Private companies retain speed and control.
Private Company Governance:
Public Company Governance:
Foreign investors who prioritize tight control often prefer private structures.
Private Company Risks:
Public Company Risks:
From a strategic advisory standpoint, most first-time FDI entrants choose private incorporation.
Private companies exit via:
Public companies exit via:
Liquidity is higher in public markets but governance obligations are heavier.
Private Company Annual Requirements:
Public Company Additional Requirements:
Compliance cost can be 2–3x higher for public entities.
Nepal’s FDI framework is governed by:
The World Bank’s historical Doing Business indicators highlight improvements in business registration and minority investor protection.
Foreign investors benefit from:
However, execution requires local regulatory navigation expertise.
When evaluating Private vs public company in Nepal, foreign companies should prioritize:
For most foreign entrants, a private limited company is the optimal starting structure.
Public structures are powerful but suitable mainly for capital-heavy, multi-investor projects.
Your structure is not just legal — it defines your governance DNA in Nepal.
Yes. FITTA 2019 allows 100% foreign ownership in most open sectors, subject to approval from the Department of Industry.
Yes. The minimum FDI threshold applies under current regulations and may change. Always verify with the Department of Industry.
Yes. Conversion is allowed under the Companies Act 2006, subject to compliance and shareholder approval.
No. Corporate tax rates are generally the same under the Income Tax Act 2058.
No. A public company may remain unlisted but must comply with additional regulatory obligations.
Choosing between a Private vs public company in Nepal is one of the most important decisions foreign investors will make.
Private companies offer control, flexibility, and efficiency.
Public companies offer scale and capital access.
The right structure depends on your industry, capital needs, and governance strategy.
If you are planning foreign direct investment in Nepal, professional structuring advice can significantly reduce risk and accelerate approval timelines.