Entering Nepal is a strategic decision. Choosing between a private vs public company in Nepal is even more critical.
Foreign investors often focus on market size and tax rates first. But your legal structure determines control, capital flexibility, compliance exposure, and exit options. It shapes everything.
This guide breaks down the differences clearly. It connects corporate structure with Nepal’s intellectual property regime, tax system, and foreign investment framework. If you are planning FDI, this is your blueprint.
Before comparing structures, you must understand the legal ecosystem.
Corporate entities in Nepal are primarily governed by:
Nepal follows a structured registration regime. Foreign equity participation requires formal approval under FITTA 2019.
IP protection is centralized. Corporate compliance is document-heavy but predictable.
For foreign companies, structure selection affects:
Let’s now compare the two dominant corporate forms.
A private company is the most common corporate vehicle for both domestic and foreign investors.
Under the Companies Act 2006, a private company:
It is ideal for controlled ownership and closely held operations.
For foreign companies entering Nepal, this is the preferred route.
A public company is structured for broader capital participation.
It can:
Public companies face higher scrutiny and regulatory oversight.
They must comply with additional reporting standards and corporate governance norms.
Below is a practical comparison tailored for foreign investors.
| Criteria | Private Company | Public Company |
|---|---|---|
| Shareholder Limit | Up to 200 | Unlimited |
| Capital Raising | Private funding only | Public share issue allowed |
| Regulatory Oversight | Moderate | High |
| Disclosure Requirements | Limited | Extensive |
| Governance Structure | Flexible | Formalized |
| FDI Suitability | Highly suitable | Less common for new FDI |
| Compliance Cost | Lower | Higher |
| IPO Option | Not available | Available |
Strategic Insight:
Most foreign investors begin as private companies. They convert to public only when scaling capital markets access.
From a risk architecture perspective, private companies offer:
For FDI under FITTA 2019, private companies simplify approval pathways.
Public companies are typically used for:
Public companies must maintain higher transparency.
Foreign companies not seeking public capital rarely need this structure initially.
Corporate tax rate in Nepal generally stands at 25% for most sectors. Certain industries have different rates.
Both private and public companies are taxed similarly.
However:
Foreign investors must plan:
Private companies allow tighter tax planning flexibility.
Choosing the right structure affects IP ownership.
Nepal’s IPR system is governed primarily by the Patent, Design and Trademark Act 1965.
Foreign investors often ask:
Should IP be held locally or offshore?
Private companies are often used as operating entities.
IP holding is sometimes structured through:
Under FITTA 2019, technology transfer agreements require approval from the Department of Industry.
Public companies complicate IP licensing structures due to disclosure obligations.
Public companies provide:
But they demand:
Private companies allow:
For foreign SMEs, private companies are strategically superior in early stages.
A private company can convert into a public company.
The process involves:
Conversion is possible once business scale justifies public participation.
The cost difference is substantial.
When evaluating private vs public company in Nepal, consider:
A misaligned structure creates friction later.
You may consider a public company if:
Otherwise, private structure remains optimal.
Most foreign investors register private companies.
Public companies represent a small portion of newly incorporated FDI entities.
Nepal’s corporate environment is relationship-driven and compliance-oriented. Structure should support operational agility.
| Scenario | Recommended Structure |
|---|---|
| Tech startup with foreign parent | Private |
| Manufacturing FDI | Private |
| Large hydropower project | Public |
| Banking/Insurance | Public |
| Offshore service center | Private |
Choosing between a private vs public company in Nepal is not just legal. It is strategic.
Private companies provide flexibility, control, and lower compliance exposure. They suit most foreign investors entering Nepal.
Public companies offer capital access and scale but demand governance intensity.
For foreign companies exploring Nepal, begin with structure clarity. The right legal foundation protects capital, IP, and long-term scalability.
If you are planning entry into Nepal, consult experts who understand both FDI law and corporate structuring. The difference determines your growth trajectory.
Yes. FITTA 2019 permits 100% foreign ownership in most sectors, subject to approval and minimum investment thresholds.
No. Most FDI projects use private companies. Public structure is required mainly for regulated industries.
Both can hold IP. However, private companies offer simpler licensing and confidentiality management.
Generally no. Corporate tax rates apply equally unless sector-specific incentives exist.
Yes. The Companies Act 2006 allows conversion after meeting regulatory requirements.