Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies must make. The choice affects ownership control, compliance exposure, capital raising, timelines, and long-term scalability. This guide demystifies the decision by walking you through Nepal’s regulatory landscape, the role of the Company Registration Office, and the real-world implications for foreign investors. If you are planning market entry, a back-office presence, or long-term expansion, this article gives you a clear, defensible path forward.
All companies in Nepal are incorporated and regulated through the Office of the Company Registrar (OCR). OCR operates under the Companies Act 2006 and is the gatekeeper for legal personality, corporate filings, and public disclosures.
What OCR does
Registers private and public companies
Maintains statutory records
Approves changes in shareholding and directors
Enforces filing and disclosure obligations
For foreign investors, OCR is not just a registry. It is the authority that defines how your Nepal entity is legally perceived.
At a high level, the distinction comes down to ownership structure, capital access, and regulatory intensity.
Private company: Closely held. Restricted share transfers. Limited compliance burden.
Public company: Widely held. Can invite public investment. Higher disclosure and governance standards.
But the real difference lies in how each structure aligns with foreign control, risk management, and growth strategy.
Company incorporation and operations are primarily governed by:
Companies Act 2006
Foreign Investment and Technology Transfer Act (FITTA) 2019
Income Tax Act 2002
Labour Act 2017
These laws collectively shape what foreign shareholders can own, how profits are taxed, and how compliance is enforced.
A private company is designed for controlled ownership and operational simplicity. It cannot invite public subscription for shares and typically limits shareholders.
Minimum shareholders: 1
Maximum shareholders: 101 (excluding employees)
Share transfers are restricted
Cannot issue shares to the public
Foreign investors overwhelmingly prefer private companies because they provide control with lower regulatory exposure.
Strategic advantages
Faster incorporation timelines
Lower compliance costs
Stronger founder and parent-company control
Easier exit or restructuring
Typical use cases
Subsidiary for South Asia operations
Tech development center
Consulting or service delivery entity
Regional holding structure
A public company is structured for capital mobilization and broad ownership. It may offer shares to the public and can list on Nepal’s stock exchange.
Minimum shareholders: 7
No maximum shareholder limit
Shares freely transferable (subject to law)
Higher disclosure and governance requirements
Public companies are typically used by:
Large infrastructure projects
Banking and financial institutions
Hydropower and energy projects
For most foreign operating businesses, the public company model introduces unnecessary complexity.
| Factor | Private Company | Public Company |
|---|---|---|
| Ownership control | High | Diluted |
| Minimum shareholders | 1 | 7 |
| Capital raising | Private only | Public allowed |
| Compliance burden | Moderate | High |
| Audit & disclosure | Limited | Extensive |
| Foreign investor suitability | Excellent | Limited |
| Typical setup time | Faster | Slower |
Insight:
For 90% of foreign companies entering Nepal, private companies are the default strategic choice.
Whether private or public, the registration workflow follows a defined sequence.
Submit proposed company names to OCR
Ensure compliance with naming guidelines
Memorandum of Association
Articles of Association
Shareholder and director details
Online submission to OCR
Regulatory review and approval
Legal existence begins upon issuance
PAN registration
Bank account opening
Local authority registrations
Annual financial statements
Annual return filing
Board and shareholder resolutions
Statutory audit (mandatory)
All private company requirements plus
Enhanced disclosures
Governance committees
Public reporting obligations
This difference has a direct cost implication for foreign businesses.
Nepal taxes companies on source-based income.
Key tax points
Corporate income tax: Generally 25%
Withholding taxes apply on dividends and services
Transfer pricing rules apply to foreign parents
Public companies do not enjoy lower tax rates simply by being public. The tax burden is structurally similar, but compliance is heavier.
Foreign investors often ask whether public companies make profit repatriation easier. In practice:
Private companies can freely repatriate dividends after tax compliance
Public companies face additional procedural scrutiny
The deciding factor is regulatory clearance, not company type.
Control is where the private vs public company in Nepal decision becomes strategic.
Private companies offer
Tight shareholder agreements
Parent-company dominance
Faster decision-making
Public companies require
Independent directors
Formal governance frameworks
Reduced operational agility
For foreign founders, governance friction often outweighs capital benefits.
Choosing a public company “for credibility”
Underestimating disclosure obligations
Over-structuring too early
Ignoring exit flexibility
A private company can always be converted into a public company later. The reverse is far more complex.
A public company may be appropriate if:
You plan to raise capital locally
You operate in regulated sectors
You need broad domestic ownership
If none apply, a private company is usually superior.
For most foreign businesses, the private vs public company in Nepal decision is clear. Private companies deliver control, speed, and regulatory efficiency. Public companies serve a narrow set of capital-intensive use cases. Start private, build operational certainty, and scale intentionally. That approach minimizes risk while preserving optionality.
If your goal is market entry with control, a private company registered through the Office of the Company Registrar is the optimal path.
Yes. Subject to sector approval, foreign investors can own 100% of a private company in Nepal.
No. Investment size alone does not require a public company structure.
A private company generally registers faster than a public company.
Yes. Conversion is legally permitted with regulatory approvals.
No. Tax rates are largely the same. Compliance costs differ.