Entering Nepal’s fast-evolving market begins with one critical decision: Private vs public company in Nepal.
For foreign companies, this choice shapes ownership control, compliance exposure, capital access, and profit repatriation. It determines how easily you raise funds, manage governance, and exit the market.
Nepal’s regulatory framework has matured significantly in recent years. The Companies Act 2063 (2006), Foreign Investment and Technology Transfer Act (FITTA) 2075 (2019), and updated policies from the Department of Industry (DOI) and Nepal Rastra Bank (NRB) provide a clearer structure for foreign trade investment.
But structure determines strategy. And strategy determines return.
This guide breaks down everything foreign investors need to know — legally, financially, and operationally.
Nepal recognizes two primary corporate forms under the Companies Act:
Both can receive foreign direct investment (FDI) under FITTA 2019, subject to sectoral caps and minimum thresholds.
According to Nepal’s Department of Industry, foreign investment is permitted in most sectors except those on the negative list (such as small retail trade and certain primary industries).
Choosing the correct corporate structure influences:
Let’s examine both.
A private company is the most common entry vehicle for foreign companies.
Legal framework: Companies Act 2063
Minimum shareholders: 1
Maximum shareholders: 101
Public share offering: Not permitted
Director requirement: At least 1 director
Private companies are designed for closely held ownership. Shares cannot be freely transferred to the public.
For strategic investors, control is usually more important than visibility.
A public company may invite the public to subscribe to shares.
Legal framework: Companies Act 2063 + Securities Act
Minimum shareholders: 7
Maximum shareholders: Unlimited
Public share offering: Permitted (IPO)
Board requirements: At least 3 directors
Public companies are subject to oversight by the Securities Board of Nepal (SEBON).
Public companies provide scale, but require transparency.
| Factor | Private Company | Public Company |
|---|---|---|
| Ownership Control | High | Diluted over time |
| Minimum Shareholders | 1 | 7 |
| Capital Raising | Private funding only | IPO and public subscription |
| Compliance Burden | Moderate | High |
| Regulatory Oversight | Company Registrar | SEBON + Registrar |
| Financial Disclosure | Limited | Mandatory public reporting |
| Ideal For | Foreign strategic investors | Large infrastructure ventures |
| Exit Options | Share transfer | Market listing |
Insight: For most foreign trade investment structures, a private limited company offers superior governance flexibility and lower administrative exposure.
Under FITTA 2019, minimum FDI threshold is NPR 20 million per investor (subject to change by policy updates). Investors must obtain approval from:
Funds must be remitted through formal banking channels.
NRB monitors foreign currency inflow and profit repatriation under foreign exchange regulations.
Foreign investors must align:
Documentation precision prevents delays.
Nepal’s corporate income tax (CIT) rate is generally 25% under the Income Tax Act 2058 (2002).
However, sectoral incentives apply:
Dividend repatriation requires:
Nepal maintains double taxation avoidance agreements (DTAA) with several countries including China, India, and South Korea.
Public and private companies are taxed similarly. The difference lies in compliance intensity.
Compliance cost scales rapidly with public structure.
A private limited company is ideal if you:
Most foreign investors entering Nepal’s IT, manufacturing, consulting, or service sectors adopt this structure.
Public companies may unlock:
However, foreign majority control becomes harder post-IPO.
For strategic foreign trade investment, public status is often a second-phase strategy.
Foreign companies sometimes focus only on tax rates. Structure matters more.
Common oversights include:
A private company simplifies most of these risks.
Foreign investors typically follow this phased approach:
Conversion from private to public is legally permissible under the Companies Act.
Foreign investors interact with:
Each plays a distinct role.
Alignment across agencies ensures smooth operations.
| Cost Component | Private Company | Public Company |
|---|---|---|
| Incorporation Cost | Lower | Higher |
| Legal Advisory | Moderate | Significant |
| Audit Complexity | Standard | Enhanced |
| Disclosure Expense | Minimal | Ongoing |
| Governance Cost | Limited | Board committees required |
Public structures can cost 2–3x more in compliance over time.
Private companies offer:
Public companies allow:
However, liquidity comes with loss of concentrated control.
According to World Bank data, Nepal has maintained steady GDP growth averaging above 4% in recent years, excluding pandemic shocks.
Remittance inflows represent over 20% of GDP, strengthening consumption-driven sectors.
The government actively promotes:
Foreign companies positioned correctly can capture first-mover advantages.
Ask yourself:
If most answers are “no,” a private limited company likely maximizes returns.
Yes. FITTA 2019 allows 100% foreign ownership in most sectors, except those on the restricted list.
The general minimum FDI threshold is NPR 20 million per investor, subject to sector regulations.
Yes. The Companies Act allows conversion, subject to regulatory approval and compliance upgrades.
No. Corporate income tax rates are generally the same unless sector incentives apply.
Yes. Profits and dividends can be repatriated after tax clearance and NRB procedural compliance.
Choosing between Private vs public company in Nepal is not merely legal structuring. It is capital architecture.
For most foreign trade investment strategies, the private limited structure delivers:
Public structures unlock scale but increase exposure.
Foreign investors who align structure with long-term return strategy outperform those who simply chase tax incentives.
The right structure does not just protect capital. It multiplies it.