Choosing the right legal structure is one of the most critical decisions when entering a new market. For foreign investors, the question of private vs public company in Nepal often determines speed to market, regulatory burden, and long-term scalability. Nepal offers a stable company law framework, investor-friendly reforms, and clear rules for foreign ownership. But the differences between private and public companies are significant—and strategic.
This guide provides the most authoritative, up-to-date comparison for foreign companies. It blends legal clarity with practical insight so you can confidently choose the structure that aligns with your investment goals.
All companies in Nepal are governed primarily by the Companies Act 2006 and regulated by the Office of Company Registrar. Foreign investment elements are further governed by the Foreign Investment and Technology Transfer Act.
Nepal recognizes two core corporate forms relevant to foreign companies:
Private Limited Company
Public Limited Company
Understanding how these differ is essential before committing capital.
A private limited company is the most common entry structure for foreign investors. It is designed for closely held ownership, operational flexibility, and faster incorporation.
Minimum shareholders: 1
Maximum shareholders: 50
Share transfer: Restricted
Public fundraising: Not allowed
Foreign ownership: Permitted (subject to sector approval)
Private companies are favoured by startups, professional services firms, IT companies, and foreign subsidiaries.
A public limited company is intended for larger enterprises that require capital from the public or institutional investors.
Minimum shareholders: 7
No maximum shareholder limit
Share transfer: Freely transferable
Public fundraising: Permitted
Mandatory compliance with securities laws
Public companies are often used in banking, hydropower, insurance, and infrastructure projects.
| Feature | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Minimum capital | NPR 100,000 (varies by sector) | NPR 10 million+ |
| Share transfer | Restricted | Freely transferable |
| Public share issue | Not allowed | Allowed |
| Compliance burden | Low to moderate | High |
| Best for | Foreign subsidiaries, SMEs | Large-scale projects |
Insight: Over 80% of foreign investors in Nepal choose private companies due to faster setup and lighter compliance.
A private limited company is ideal if your objective is control, speed, and operational efficiency.
Market entry or pilot operations
Outsourced service centers
IT, consulting, and professional services
100% foreign-owned subsidiaries
Advantages
Faster incorporation
Lower annual compliance costs
Strong shareholder control
Limitations
No public fundraising
Growth relies on internal or foreign capital
A public limited company is strategic when scale and capital access outweigh compliance complexity.
Hydropower and energy projects
Banks and financial institutions
Infrastructure and telecom
IPO-driven expansion strategies
Advantages
Access to public capital
Higher credibility for large projects
Challenges
Extensive disclosures
Regulatory oversight by the Securities Board of Nepal
Longer setup timelines
Annual financial statements
Annual General Meeting (AGM)
Income tax filings
Limited disclosure requirements
Mandatory AGM with public notice
Audited financials
Continuous disclosures
Securities law compliance
Practical insight: Public companies require dedicated compliance teams, while private companies can operate lean.
Foreign investors must obtain approval from the Department of Industry or the Investment Board Nepal depending on project size.
Private companies
Public companies
However, private companies dominate FDI inflows due to flexibility and lower capital thresholds.
Name reservation with OCR
Draft MOA & AOA
FDI approval (if applicable)
Company registration
Tax and VAT registration
Bank account opening
Private companies typically complete this process in 3–6 weeks, while public companies take longer.
Corporate income tax: 25% (standard rate)
Withholding taxes apply on dividends
Sector-specific incentives may apply
Tax treatment is broadly similar for private vs public companies, but compliance volume differs.
If your priority is speed, control, and predictable compliance, a private limited company is usually the right choice. If your project requires public capital or regulatory credibility at scale, a public company may be justified despite higher complexity.
Choosing a public company too early
Underestimating compliance obligations
Ignoring sector-specific FDI restrictions
Structuring shareholding inefficiently
A well-advised structure at the outset saves years of restructuring later.
Yes. Subject to sector approval, foreigners can own 100% of a private limited company.
No. Many large FDI projects operate as private companies unless public fundraising is required.
Private companies have significantly lower compliance and audit costs.
Yes. Conversion is permitted under the Companies Act with regulatory approval.
Private companies suit phased expansion; public companies suit capital-intensive scaling.
The decision between private vs public company in Nepal is strategic, not just legal. For most foreign companies, private limited companies provide the fastest, safest, and most flexible entry into Nepal. Public companies serve a narrower but vital role for large, capital-driven projects.
Choosing correctly at the start protects capital, timelines, and reputation.