If you are comparing Private vs public company in Nepal, you are already thinking like a serious investor.
Structure drives everything.
Control. Tax exposure. Compliance burden. Capital raising. Exit options.
For foreign companies entering Nepal, choosing the wrong entity can cost time, capital, and regulatory risk. Choosing the right one can accelerate approvals, protect governance control, and streamline dividend repatriation.
This guide breaks down Nepal’s corporate framework clearly and practically based on the Companies Act, 2063 (2006), the Foreign Investment and Technology Transfer Act (FITTA), 2019, the Income Tax Act, 2058 (2002), and directives issued by Nepal Rastra Bank (NRB) and the Office of Company Registrar (OCR).
Let’s get straight into it
Before analyzing private vs public company in Nepal, you must understand the regulatory ecosystem.
Foreign investors must comply with both corporate law and FDI regulations.
This is where structure matters.
At its core, the distinction is about ownership, capital raising, and regulatory intensity.
| Feature | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share offering | Not allowed | Allowed (IPO) |
| Minimum paid-up capital | No statutory minimum (sector-specific may apply) | NPR 10 million (as per Companies Act) |
| Compliance burden | Moderate | High |
| Suitable for FDI | Yes | Yes (with securities compliance) |
| Board requirements | Flexible | Structured with independent directors |
For 90% of foreign investors entering Nepal, a private limited company is the preferred structure.
But that is not always the right answer.
Let’s break it down properly.
Under the Companies Act, a private company:
It is the most common structure used by:
Here’s why:
If your goal is operational presence, branch expansion, or back-office setup, this structure usually fits best.
A public company:
Public companies are typically used for:
Public structure makes sense when capital market access is strategic.
But it comes with regulatory weight.
Whether private or public, the incorporation process involves:
Foreign investors must obtain FDI approval through the Department of Industry (DOI) or the Investment Board Nepal (IBN) depending on project size.
If governance control and IP protection are priorities, private structure provides tighter control.
From a corporate income tax perspective, both structures are taxed similarly.
Under the Income Tax Act, 2058:
There is no inherent tax rate difference between private vs public company in Nepal.
However, public companies face additional compliance costs.
This is where the distinction becomes strategic.
If your Nepal strategy includes future IPO, public structure may be logical from day one.
Otherwise, converting later is possible but involves procedural complexity.
Public companies must:
Private companies must:
Compliance intensity is significantly higher for public companies.
A private company is ideal when:
This is common in technology, outsourcing, consulting, and manufacturing.
Choose public structure if:
Hydropower projects frequently use public company models due to capital requirements.
Here is a practical risk comparison:
| Risk Factor | Private Company | Public Company |
|---|---|---|
| Regulatory risk | Moderate | High |
| Governance control risk | Low | Medium |
| Capital flexibility | Moderate | High |
| Compliance cost | Lower | Higher |
| Disclosure obligations | Limited | Extensive |
For most cross-border investors, minimizing regulatory complexity is a priority.
Private structure wins on that metric.
Foreign investors must comply with:
FITTA allows:
Both private and public companies can receive FDI.
The difference lies in governance and securities regulation.
Regardless of structure, foreign companies must:
Failure to comply can result in penalties under Companies Act and Income Tax Act.
Let’s examine two hypothetical foreign investors.
Goal: Set up Nepal back-office operations.
Need: Cost efficiency and IP protection.
Capital requirement: Moderate.
IPO plan: None.
Best structure?
Private limited company.
Goal: Hydropower project.
Capital requirement: High.
Need: Public subscription for capital.
IPO plan: Yes.
Best structure?
Public company.
Structure must match strategy.
If your objective is:
Start with private limited.
If your objective is:
Consider public company.
A private company restricts share transfer and cannot offer shares publicly. A public company can issue shares to the public and must meet stricter regulatory requirements under securities law.
Yes. Under FITTA 2019, 100% foreign ownership is allowed in most sectors, subject to minimum investment thresholds and approval requirements.
There is no fixed statutory minimum under the Companies Act. However, sector-specific laws and FDI thresholds may impose minimum capital requirements.
Yes. Conversion is allowed under the Companies Act but requires regulatory approval and compliance with public company requirements.
For most foreign operational subsidiaries, a private company is more efficient. Public structure is suitable when capital market access is strategic.
The debate around private vs public company in Nepal is not about which is better.
It is about alignment.
Alignment with capital strategy.
Alignment with governance control.
Alignment with long-term exit plans.
For most foreign companies entering Nepal, private limited offers flexibility, control, and regulatory efficiency.
But infrastructure-scale investments or IPO-driven strategies may justify public structure from inception.
The right structure protects capital, reduces compliance friction, and enables smooth repatriation.