If you are a foreign company planning to enter Nepal, one of your first strategic decisions is choosing between a private vs public company structure. It may seem like a technical legal step. In reality, it shapes your regulatory exposure, capital flexibility, governance model, and long-term growth.
This topic matters because Nepal’s corporate framework is governed by the Companies Act, 2063 (2006) and foreign investment laws that require careful alignment with regulatory authorities such as the Department of Industry (DOI) and Nepal Rastra Bank (NRB). A misstep here can delay approvals for months.
This guide is designed for foreign investors, multinational groups, technology firms, manufacturers, and service companies entering Nepal.
In this post, we’ll explain:
Let’s simplify it.
A private limited company:
Most foreign investors choose this structure.
It offers flexibility, faster decision-making, and fewer disclosure requirements.
A public limited company:
This structure is common for large-scale projects, infrastructure, banking, and companies planning to list on the Nepal Stock Exchange (NEPSE).
Choosing between a private vs public company affects:
In our experience advising cross-border investors, 90% of foreign entrants start as private companies and convert later if expansion requires public funding.
Let’s break this down into clear, actionable steps.
Before filing any document, determine:
Example:
If an Australian tech company is setting up a back-office development center in Kathmandu, a private company is usually sufficient.
If a foreign infrastructure investor plans a hydropower project with public capital raising, a public company may be required.
Foreign investors must obtain approval under Nepal’s Foreign Investment framework.
Authorities involved:
Without FDI approval, capital cannot be legally injected.
Apply through the Office of the Company Registrar (OCR) online portal.
The name must:
Approval typically takes 1–3 working days.
These documents define:
For public companies, drafting must comply strictly with public offering provisions under the Companies Act.
Precision matters here. Errors cause rejection.
Submit:
Upon approval, you receive:
Now your company legally exists.
Register with Inland Revenue Department for:
Tax compliance begins immediately.
Foreign capital must:
Improper routing creates repatriation issues later.
After incorporation:
Public companies face heavier audit and disclosure obligations.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Directors Required | 1 | 3 |
| Public Share Offering | Not allowed | Allowed |
| Regulatory Burden | Moderate | High |
| Best For | Foreign subsidiaries, SMEs | Large projects, IPO plans |
For most foreign companies entering Nepal, the private structure is simpler and cost-effective.
Registering first without approval causes compliance issues.
Future expansion is limited to approved objectives in your Memorandum.
Private companies offer easier share transfer control.
Dividend repatriation requires audited financials and tax clearance.
Switching from private to public later involves regulatory procedures.
We’ve seen projects delayed six months due to documentation errors. Getting it right upfront saves time and money.
A private company limits shareholders and cannot offer shares to the public. A public company can raise capital publicly and has stricter governance requirements. Most foreign subsidiaries choose private companies for flexibility.
Yes. Foreign investors must obtain approval from the Department of Industry or Investment Board Nepal before capital injection and incorporation.
If documents are prepared correctly, incorporation can take 2–4 weeks including FDI approval. Complex projects may take longer.
Yes. Conversion is possible under the Companies Act but requires regulatory approval and structural changes.
Nepal currently does not impose a fixed minimum capital for most private companies. However, FDI minimum investment thresholds may apply depending on sector.
Understanding the legal requirements for company formation in Nepal starts with choosing the right structure private vs public company. This decision influences compliance, governance, funding, and long-term scalability.
For most foreign investors, a private limited company provides operational flexibility and regulatory efficiency. But every project is different.
The right structure is not just about incorporation. It’s about strategic alignment.
If you’re planning to enter Nepal and want a compliant, efficient setup without regulatory surprises:
Book a consultation with our Nepal market entry specialists.
We’ll help you:
Entering Nepal is an opportunity. Let’s make sure you do it right from day one.