Understanding private vs public company Nepal is one of the first legal decisions a foreign company must make before entering the Nepali market.
This choice affects ownership, capital requirements, compliance burden, fundraising ability, and long-term exit options.
Nepal welcomes foreign investment, but the regulatory framework is detailed. Selecting the wrong structure can delay approvals, increase costs, or limit growth.
This guide explains the legal requirements for private and public companies in Nepal in clear, practical terms—specifically for foreign founders, boards, and CFOs.
A private company in Nepal is a closely held corporate entity governed by the Companies Act, 2006.
A private company must:
Limit the right to transfer shares
Restrict public invitations to subscribe for shares
Operate within a capped shareholder structure
Shareholders: 1 to 101
Directors: Minimum 1
Minimum paid-up capital: NPR 100,000
Public fundraising: Not permitted
FDI eligibility: Yes, subject to sector approval
Private companies are the most common structure for foreign investors establishing wholly owned subsidiaries in Nepal.
A public company is designed for large-scale operations, institutional investment, and public capital markets.
A public company:
May invite the public to subscribe to shares
Has stricter governance and disclosure rules
Can be listed on the Nepal Stock Exchange
Shareholders: Minimum 7, no maximum
Directors: Minimum 3
Minimum paid-up capital: NPR 10,000,000
Public fundraising: Permitted
Regulatory oversight: Higher
Public companies are suitable for infrastructure, banking, hydropower, insurance, and large manufacturing projects.
Private companies offer tight ownership control
Public companies dilute control but enable scale
Private companies require minimal capital.
Public companies demand significant upfront capitalization.
Public companies face higher scrutiny from regulators, auditors, and investors.
| Criteria | Private Company | Public Company |
|---|---|---|
| Governing law | Companies Act, 2006 | Companies Act, 2006 |
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Minimum directors | 1 | 3 |
| Paid-up capital | NPR 100,000 | NPR 10,000,000 |
| Public share issue | Not allowed | Allowed |
| FDI permitted | Yes | Yes |
| Compliance complexity | Moderate | High |
| Ideal for | Foreign subsidiaries, SMEs | Large projects, IPO plans |
Regardless of structure, all companies must meet baseline statutory obligations.
Office of Company Registrar (OCR)
Inland Revenue Department (PAN/VAT)
Social Security Fund (SSF)
Local ward registration
Annual General Meeting (AGM)
Annual return filing with OCR
Audited financial statements
Income tax filings
Failure to comply may result in fines, director liability, or business suspension.
Private companies are preferred for foreign direct investment because:
100% foreign ownership is allowed in most sectors
Governance is simpler
Capital repatriation is more straightforward
Public companies are viable for FDI when:
Large capital is required
Multiple institutional investors are involved
Public listing is planned
Sectoral caps and approval thresholds still apply under the Foreign Investment and Technology Transfer Act, 2019.
Why most foreign companies choose private companies in Nepal:
Faster incorporation timelines
Lower capital commitment
Fewer disclosure requirements
Easier exit and restructuring
Private companies offer flexibility during early market entry.
Public companies are beneficial when:
Long-term capital raising is critical
Public trust and visibility matter
The business operates in regulated industries
However, compliance costs are significantly higher.
Is the investment long-term or exploratory?
Will external capital be raised later?
Is public trust essential for operations?
Market entry: Private company
Infrastructure or finance: Public company
FDI pilot projects: Private company
Most foreign firms start private and convert later if needed.
Over-capitalizing too early
Choosing public structure without funding plans
Ignoring sector-specific FDI limits
Underestimating compliance costs
Strategic legal structuring at incorporation avoids these risks.
Private companies typically incur:
Lower audit fees
Fewer filings
Leaner governance
Public companies must budget for:
Enhanced audits
Board committees
Public disclosures
This difference materially affects operating costs.
For most foreign investors, yes. A private company offers flexibility, lower costs, and faster setup. Public companies suit large, capital-intensive projects.
Yes. Most sectors allow 100% foreign ownership, subject to FDI approval and minimum investment thresholds.
A public company requires at least NPR 10 million paid-up capital at incorporation.
Yes. Conversion is legally permitted after meeting capital, shareholder, and governance requirements.
Private companies are ideal for startups due to low capital needs and simplified compliance.
Choosing private vs public company Nepal is a foundational decision that shapes compliance, control, and growth.
For most foreign companies, a private company provides the right balance of speed, flexibility, and regulatory efficiency.
Public companies remain powerful tools for scale, but only when aligned with funding and governance capacity.