If you are a foreign investor evaluating private vs public company in Nepal, the decision goes far beyond ownership or share transfer rules. It directly determines whether you are even allowed to operate in certain sectors under Nepal’s foreign direct investment framework.
Nepal welcomes foreign capital, but it does so selectively. Some industries are fully open. Others are capped. A third group is entirely restricted. Choosing the wrong company structure can quietly block approvals, delay repatriation, or force costly restructuring later.
This guide breaks down Nepal’s FDI rules in plain English. It is written specifically for foreign companies comparing private and public company structures while navigating restricted business sectors.
Before comparing structures, you need to understand how Nepal regulates foreign entry.
Nepal does not follow a “free entry” investment model. Instead, it operates a negative list approach. This means:
Foreign investors must satisfy both company law and investment law simultaneously.
Foreign investment decisions are primarily guided by:
These laws collectively define:
This is where the private vs public company in Nepal distinction becomes strategically important.
At a high level, Nepal recognizes two main company forms for commercial operations.
A private company in Nepal typically has:
For foreign investors, this is the default FDI vehicle.
A public company:
Public companies are rarely chosen unless mandated by law or required for capital markets access.
Many foreign investors start by asking whether a private or public company is better. That is the wrong first question.
The right question is:
Is my intended business activity open to foreign investment at all?
Only after that can you assess private vs public company in Nepal.
Some sectors:
Ignoring this order leads to approval failures.
Nepal maintains a list of activities where foreign investment is not permitted or strictly limited.
Foreign investment is generally not allowed in:
These sectors are protected to preserve local entrepreneurship.
Some sectors allow foreign investment only if:
Examples include:
In these sectors, structure choice becomes critical.
Here is where private vs public company in Nepal becomes a compliance decision.
A private company:
However, it may face:
A public company may be:
But for most foreign investors, it adds:
| Criteria | Private Company | Public Company |
|---|---|---|
| Typical FDI usage | Very common | Rare |
| Minimum shareholders | 1 | 7 |
| Share transfer | Restricted | Freely transferable |
| Regulatory burden | Moderate | High |
| Suitability for restricted sectors | High | Sector-specific |
| Capital market access | No | Yes |
| Approval complexity | Lower | Higher |
Insight:
For most foreign investors, a private company is strategically safer, unless a sector explicitly requires a public structure.
Some industries frequently cause confusion.
Foreign investment may be permitted, but:
Public companies rarely offer advantages here.
Large-scale energy projects may:
This is one of the few cases where public companies make sense.
IT-enabled services are generally open.
Foreign investors do not deal with a single regulator.
Depending on size and sector, approvals may involve:
Your chosen structure affects:
This is why structure selection must be aligned with sector eligibility.
Here are mistakes we see repeatedly.
Each mistake increases risk and delays.
Exit planning matters from day one.
Private companies:
Public companies:
For foreign investors, exit flexibility strongly favors private companies.
This article is grounded in:
The insights reflect how rules are applied in practice, not just written.
When evaluating private vs public company in Nepal, foreign investors must start with sector eligibility, not structural preference.
Most restricted or regulated sectors:
Public companies are the exception, not the rule.
If you are entering Nepal, the right structure protects your capital, approvals, and exit. The wrong one quietly limits all three.
No. Nepal follows a negative list approach. Certain sectors are fully restricted or conditionally permitted for foreign investors.
In most cases, yes. A private company offers simpler compliance and faster approvals for foreign investors.
Yes, in many open sectors. Restricted sectors may impose caps or require local participation.
No. Public companies often face stricter scrutiny and higher compliance burdens.
Private companies typically offer clearer and more predictable repatriation pathways.