Choosing between a private vs public company in Nepal is one of the first and most critical decisions foreign companies make.
This choice determines how much capital you need, how many shareholders you must appoint, how regulated your business will be, and how easily you can scale later.
Nepal welcomes foreign investment. But its corporate framework is formal and documentation heavy. Understanding the legal distinction upfront saves time, cost, and compliance risk.
This guide breaks down the legal, strategic, and practical differences in clear terms. It is written for foreign founders, CFOs, and expansion leaders planning long-term operations in Nepal.
Nepal’s corporate structure is governed primarily by the Companies Act 2006 and foreign investment rules under FITTA 2019. Every foreign investor must select a legally recognized company form at incorporation.
The two most common options are:
• Private Limited Company
• Public Limited Company
Both are separate legal entities. Both can accept foreign investment. But they serve very different business goals.
A private company in Nepal is the most commonly used structure for foreign investors entering the market.
It is designed for closely held businesses. Ownership is restricted. Compliance is manageable. Control remains concentrated.
A private company must meet these conditions:
Minimum 1 shareholder
Maximum 101 shareholders
Share transfer is restricted
No public invitation to subscribe shares
Can be wholly foreign owned in permitted sectors
This structure is ideal for foreign subsidiaries, joint ventures, and operating companies.
Most foreign companies choose this structure because:
• Faster incorporation
• Lower capital requirements
• Easier governance
• Lower disclosure obligations
It allows foreign founders to focus on operations instead of regulatory burden.
A public company in Nepal is designed for large enterprises that plan to raise capital from the public.
It is highly regulated. Governance standards are strict. Reporting obligations are extensive.
A public company must meet these conditions:
Minimum 7 shareholders
No maximum shareholder limit
Shares freely transferable
Can issue shares to the public
Mandatory higher paid-up capital
Public companies are subject to additional oversight from capital market regulators.
A public company is suitable if you plan to:
• Raise capital from Nepali investors
• List on Nepal Stock Exchange in the future
• Operate at national infrastructure or utility scale
For most foreign entrants, this is not the starting structure.
| Criteria | Private Company in Nepal | Public Company in Nepal |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Foreign ownership | Allowed in permitted sectors | Allowed but regulated |
| Public share issuance | Not allowed | Allowed |
| Paid-up capital | Lower | Significantly higher |
| Compliance burden | Moderate | High |
| Ideal for | Foreign subsidiaries, SMEs | Large scale enterprises |
This comparison alone explains why private companies dominate foreign investment registrations.
Nepal does not mandate a fixed minimum capital for private companies.
However, for foreign investment approval, capital expectations are assessed by regulators based on:
• Sector
• Business model
• Staffing plan
• Revenue projections
In practice, foreign investors often register with NPR 5 million to NPR 50 million.
Public companies must meet significantly higher paid-up capital thresholds.
This makes them impractical for early-stage market entry.
A private company must:
• File annual returns
• Maintain statutory registers
• Submit audited financial statements
• Renew business licenses
Board meetings and shareholder meetings are flexible.
A public company must additionally:
• Appoint independent directors
• Publish financial disclosures
• Follow strict corporate governance codes
• Undergo enhanced audits
For foreign companies, this adds cost and operational complexity.
Many investors assume taxation differs.
It does not.
Both private and public companies are subject to:
• Corporate income tax
• VAT if applicable
• Withholding taxes
• Payroll taxes
The difference lies in reporting intensity, not tax rates.
Foreign investors must obtain FDI approval before registration.
Private companies align better with FDI requirements because:
• Ownership is clear
• Capital injection is traceable
• Governance is simple
Public companies are reviewed more critically due to public interest considerations.
• IT and software services
• Outsourcing and shared services
• Consulting and professional services
• Manufacturing with controlled ownership
• Regional headquarters
• Banking and finance
• Insurance
• Hydropower and energy
• Telecom infrastructure
If your goal is controlled growth, private wins.
Many successful companies in Nepal follow this path:
Register as a private company
Build operations and revenue
Expand shareholder base
Convert to public company later
Nepalese law allows conversion.
This makes private companies a strategic entry vehicle, not a limitation.
• Faster setup
• Lower compliance cost
• Full foreign control
• Easy exit and restructuring
For foreign companies testing the Nepal market, this flexibility is critical.
• Choosing public structure too early
• Overcapitalizing unnecessarily
• Underestimating compliance workload
• Ignoring sector restrictions
The private vs public company decision should be strategic, not symbolic.
Define your business objective
Identify capital needs
Confirm sector eligibility
Evaluate compliance tolerance
Choose private or public structure
Most foreign companies stop at step 3 and choose private.
Yes. In permitted sectors, private companies can be fully foreign owned with FDI approval.
Yes. Conversion is legally allowed once requirements are met.
No. Most foreign investors operate as private companies.
Private companies have significantly lower compliance and governance costs.
No. Profit repatriation depends on tax clearance, not company type.
For most foreign companies, the private vs public company in Nepal decision is clear.
Start private.
Stay compliant.
Scale intentionally.
Public companies serve a purpose, but not at market entry.
The right structure reduces risk, cost, and regulatory friction.