If you are evaluating private vs public company in Nepal, you are already thinking like a serious foreign investor. The legal structure you choose will determine your capital flexibility, governance model, compliance exposure, and exit strategy.
Nepal is actively encouraging foreign direct investment (FDI) under the Foreign Investment and Technology Transfer Act (FITTA 2019). Company formation is governed by the Companies Act. Public market activity is regulated by the Securities Board of Nepal (SEBON) and listing takes place at the Nepal Stock Exchange (NEPSE).
But structure is not just a legal formality. It is a strategic decision.
In this comprehensive guide, we break down:
If you are a foreign company entering Nepal, this is your blueprint.
Under the Companies Act 2006, Nepal recognizes two primary limited liability structures:
Both provide limited liability protection. Both can receive foreign investment (subject to sectoral approval). But their operational flexibility differs significantly.
A private company in Nepal is designed for closely held ownership. It is the most common vehicle for foreign investors.
A foreign investor typically incorporates a private limited company after FDI approval from:
FDI repatriation is allowed under FITTA 2019, subject to central bank approval.
A public company is designed for wider capital participation and potential stock exchange listing.
Public companies may list on NEPSE after regulatory clearance from SEBON.
For foreign investors, this structure is typically relevant for:
Below is a strategic comparison designed specifically for foreign companies.
| Criteria | Private Limited Company | Public Limited Company |
|---|---|---|
| Ownership | 1–101 shareholders | Minimum 7, unlimited |
| Public Share Issue | Not allowed | Allowed |
| Share Transfer | Restricted | Freely transferable (post listing) |
| Compliance Burden | Moderate | High |
| Governance Requirements | Flexible | Strict board committees |
| Capital Raising | Private equity, FDI | IPO, rights issue, public offering |
| Listing | Not permitted | Eligible for NEPSE listing |
| Best For | Subsidiaries, joint ventures | Infrastructure, public participation |
Strategic Insight:
For 90% of foreign investors entering Nepal, a private limited company is the preferred starting point. A public company is usually a growth-stage transition vehicle.
Foreign companies must consider multiple laws:
Approval authorities include:
Failure to align structure with regulatory obligations is one of the biggest FDI risks.
A private company may raise capital through:
This structure allows control retention. It minimizes disclosure obligations.
Public companies can:
However, public offering requires:
For most foreign strategic investors, public listing is a second-phase strategy, not entry-stage.
Compliance is manageable and predictable.
Public companies must:
This increases administrative cost and reputational exposure.
Under the Income Tax Act 2002:
There is no tax difference purely based on private vs public classification.
However:
Tax structuring must align with repatriation rules under NRB regulations.
A private limited company is ideal when:
This is the most common FDI entry model in Nepal.
A public limited company may be preferable if:
For example, hydropower projects often convert to public companies before IPO.
Foreign investors face several challenges regardless of structure.
Multiple authorities may require parallel approvals.
Repatriation requires documentation and central bank clearance.
Some sectors remain restricted or capped for FDI.
Disclosure and governance standards are significantly higher.
Choosing the wrong structure amplifies these challenges.
Use this strategic filter:
If most answers favor control and flexibility → Private Limited Company
If most answers favor public fundraising → Public Limited Company
A foreign SaaS company entering Nepal typically:
Public company structure would add unnecessary complexity.
| Risk Area | Private Company | Public Company |
|---|---|---|
| Regulatory Risk | Moderate | High |
| Governance Risk | Low | Moderate |
| Capital Access Risk | Moderate | Low |
| Disclosure Risk | Low | High |
| Investor Control Risk | Low | Higher dilution risk |
This matrix helps foreign boards evaluate structural exposure.
If your objective is:
Start with a private limited company.
Transition to public company only if capital market access becomes strategic.
Yes. FITTA 2019 permits 100% foreign ownership in most open sectors, subject to approval and minimum investment thresholds.
Yes. A private company may convert by amending its memorandum, increasing shareholders, and meeting public company requirements.
Sector-specific minimum capital may apply. For listed companies, SEBON and NEPSE impose additional thresholds.
No. Corporate tax rates generally apply equally under the Income Tax Act 2002.
Yes, if the company qualifies as a public limited company and receives regulatory approval.
Choosing between a private vs public company in Nepal is not just administrative. It defines your governance exposure, capital flexibility, and regulatory footprint.
For most foreign investors entering Nepal, a private limited company offers:
A public limited company is powerful. But it is a strategic capital-market vehicle, not an entry-level structure.
If you are planning market entry, expansion, or restructuring in Nepal, professional structuring advice is critical. The wrong choice can increase compliance costs and delay repatriation.
The right choice accelerates growth.