Choosing between a private vs public company in Nepal is one of the first and most consequential decisions a foreign investor makes. The choice affects ownership, compliance, capital raising, and exit options. In Nepal, where regulations are clear but process-driven, the right structure reduces risk and speeds market entry. This guide breaks down both options, explains legal requirements, and offers practical advice for opening a company in Nepal with confidence.
Foreign companies enter Nepal for growth, talent, and regional access. Yet the wrong structure can slow operations. The private vs public company in Nepal debate is not academic. It determines how fast you can incorporate, how much capital you need, and how closely regulators will scrutinize your business.
Key outcomes influenced by your choice include:
Time to incorporation
Ongoing compliance burden
Ability to raise capital
Governance complexity
Exit flexibility
Company incorporation and governance are primarily regulated by the Companies Act 2006 and administered by the Office of the Company Registrar. Foreign investment routes are further guided by the Foreign Investment and Technology Transfer Act (FITTA) 2019 and sector-specific policies.
Nepal recognizes two main limited liability company types relevant to foreign investors:
Private Limited Company
Public Limited Company
A private limited company is the most common structure for foreign companies entering Nepal. It is designed for closely held ownership and operational flexibility.
Minimum shareholders: 1
Maximum shareholders: 101
No public share issuance
Lower capital and compliance thresholds
Faster incorporation timelines
Foreign founders value speed and control. A private company offers both. It allows full foreign ownership in most permitted sectors and aligns well with early-stage or service-oriented operations.
A public limited company is intended for larger enterprises planning to raise capital from the public or institutional investors.
Minimum shareholders: 7
No upper limit on shareholders
Can issue shares to the public
Higher paid-up capital requirements
Stricter governance and disclosures
This structure suits banks, insurance firms, hydropower projects, and large manufacturing ventures.
Private companies restrict share transfers. This protects founders. Public companies allow wider ownership but dilute control.
Private companies require modest capital. Public companies must meet higher statutory thresholds and sector rules.
Public companies face audits, disclosures, and reporting aligned with investor protection norms.
| Criteria | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Public share issuance | Not allowed | Allowed |
| Capital requirement | Lower | Significantly higher |
| Compliance burden | Moderate | High |
| Best for | SMEs, service firms | Large projects, IPO plans |
Foreign companies typically follow this sequence:
Name reservation at the Office of the Company Registrar
Preparation of Memorandum and Articles of Association
Company registration approval
Tax registration and PAN/VAT
Foreign investment approval, if applicable
Bank account opening and capital injection
Each step varies in complexity depending on whether you choose a private or public structure.
Despite clear laws, foreign investors often encounter friction points:
Document legalization and notarization
Sector-specific approval delays
Capital repatriation planning
Understanding local labor compliance
These challenges intensify for public companies due to expanded disclosure requirements.
A private structure is ideal if you:
Are testing the Nepal market
Offer professional or outsourcing services
Want 100 percent ownership control
Prefer lean governance
Most foreign SMEs and tech firms start here.
Consider a public company if you:
Need large-scale capital
Operate in regulated sectors
Plan a future IPO in Nepal
Require broad investor participation
Start private, then convert to public later if needed
Align capital structure with repatriation plans
Budget for compliance, not just incorporation
Use local advisors familiar with foreign investment reviews
Authorities focus on substance. They expect:
Genuine business activity
Proper capital inflow
Tax compliance
Local employment adherence
Meeting these expectations builds trust and reduces audits.
This article reflects hands-on experience advising foreign companies on Nepal entry. It aligns with statutory requirements and regulator practices. The guidance is reviewed against the Companies Act 2006 and FITTA 2019, ensuring accuracy and relevance.
The private vs public company in Nepal decision shapes your entire market entry journey. For most foreign companies, a private limited company offers speed, control, and lower risk. Public companies suit capital-intensive ambitions. The right choice balances today’s needs with tomorrow’s growth.