If you are evaluating private vs public company in Nepal, you are already thinking like a serious foreign investor. Structure determines control, tax exposure, compliance burden, capital raising flexibility, and trade positioning.
Nepal’s trade policies, foreign investment framework, and corporate laws all interact with your company type. Choosing the wrong structure can delay approvals, complicate repatriation, and increase regulatory risk.
In this comprehensive guide, we break down the legal, tax, and strategic implications of choosing between a private and public company in Nepal—specifically for foreign investors.
Before comparing structures, it’s important to understand the regulatory ecosystem governing foreign businesses in Nepal.
Foreign investment and company formation are primarily governed by:
Trade policy in Nepal is aligned with its membership in the World Trade Organization (WTO) and various bilateral trade agreements, especially with India and China.
Your company type must operate within this framework.
This is where most foreign investors start.
Under the Companies Act 2063, companies are primarily classified as:
Let’s break down the structural differences.
A private company:
Most foreign investors entering Nepal use the private company structure.
Why?
Because it provides control, flexibility, and lower compliance complexity.
A public company:
Public companies are regulated by the Securities Board of Nepal (SEBON) if they issue shares publicly.
They are suitable for large-scale capital-intensive projects.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Offering | Not allowed | Allowed |
| Compliance Burden | Moderate | High |
| Disclosure Requirements | Limited | Extensive |
| Suitable for FDI | Yes (common) | Yes (less common initially) |
| IPO Possibility | No | Yes |
| Governance Complexity | Lower | Higher |
| Capital Raising Flexibility | Limited to private placement | Public markets possible |
Insight for foreign investors:
If you are entering Nepal for operational control, back-office services, manufacturing, IT, or export-oriented services, a private company is usually more efficient.
Nepal’s trade regime focuses on:
Your company structure influences how effectively you leverage these policies.
If you plan to export goods or services:
The Industrial Enterprises Act 2076 provides incentives such as tax rebates for export-oriented industries.
Structure matters if you plan to scale aggressively.
Nepal offers incentives under the SEZ Act, including:
Both private and public companies can operate in SEZs.
However, most foreign investors use private companies initially to test market viability.
Under FITTA 2019, foreign investment approval is required.
Private companies are:
Public companies involve additional regulatory layers.
Foreign investors care about one thing above all:
Can I get my money out safely?
Under Nepal Rastra Bank guidelines:
Both private and public companies qualify.
However:
Public companies face stricter disclosure and audit requirements before dividend declarations.
Private companies offer more controlled dividend timing.
Corporate tax in Nepal is governed by the Income Tax Act 2058.
Standard corporate income tax is typically 25% (sector-specific variations apply).
Key considerations:
Tax rate does not differ purely based on private vs public status.
However, compliance cost does.
Public companies must:
This increases operational overhead.
If control matters to you, consider:
Foreign strategic investors often start private and convert to public later.
Choose a private company if:
This structure is ideal for:
A public company may be better if:
Examples include hydropower, large manufacturing, and financial institutions.
Trade policy in Nepal is evolving.
Risks include:
Mitigation strategies:
Structure choice affects risk exposure.
Many successful foreign investors use a phased model:
Phase 1: Incorporate as private company
Phase 2: Stabilize operations
Phase 3: Expand capital base
Phase 4: Convert to public company (if needed)
This reduces early compliance burden.
It also preserves flexibility.
Ask yourself:
In most FDI cases, private company wins early-stage efficiency.
Yes, subject to sectoral restrictions under FITTA 2019. Many sectors allow 100% foreign ownership with DOI approval.
No. Most FDI projects are structured as private limited companies.
Both qualify for export incentives. Private companies are simpler initially.
Yes. The Companies Act allows conversion subject to compliance requirements.
Corporate tax rates are generally the same. Compliance and disclosure costs differ.
When analyzing private vs public company in Nepal, the answer depends on your scale, capital needs, and governance strategy.
For most foreign investors:
Public structures are powerful but come with complexity.
Nepal’s trade policies favor foreign investment.
But success depends on structuring correctly from day one.