If you are a foreign company planning to enter South Asia, understanding the difference between a private vs public company in Nepal is not optional. It directly affects your registration costs, compliance burden, ownership flexibility, and long-term scalability.
Nepal welcomes foreign investment, but its corporate framework is formal and rule-driven. Many foreign founders overestimate the benefits of public companies or underestimate the efficiency of private companies. This guide cuts through the confusion.
You will learn how company type impacts cost, compliance, control, and credibility, so you can choose the structure that aligns with your business goals, not assumptions.
Nepal’s corporate regime is governed primarily by the Companies Act 2006 and overseen by the Office of the Company Registrar (OCR).
Under Nepalese law, companies are broadly classified into:
Private Limited Company
Public Limited Company
Both structures are legally distinct, with different cost implications and compliance expectations.
A private company in Nepal is designed for closely held businesses, subsidiaries, joint ventures, and foreign-owned operating entities.
Maximum 101 shareholders
Restriction on public share transfer
Cannot invite public subscriptions
Minimum paid-up capital determined by business activity
Suitable for FDI, wholly owned subsidiaries, and service centers
Most foreign investors choose private companies because they provide:
Lower entry cost
Faster incorporation
Simplified governance
Strong operational control
A public company in Nepal is designed for capital-intensive enterprises and companies planning public fundraising.
Minimum 7 shareholders
No maximum shareholder limit
Can issue shares to the public
Mandatory regulatory oversight
Higher paid-up capital threshold
Public companies are rarely chosen by first-time foreign entrants unless capital markets access is essential.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share issue | Not allowed | Allowed |
| Paid-up capital | Flexible | High minimum |
| Compliance burden | Moderate | Heavy |
| Audit & reporting | Annual | Enhanced + disclosures |
| Ideal for foreign firms | Yes | Only in select cases |
This comparison alone explains why over 90% of foreign-owned entities in Nepal are private companies, according to OCR registration data.
Understanding company registration costs in Nepal requires looking beyond government fees.
Registration fees are linked to authorized capital.
NPR 1 million capital: approx. NPR 1,000
NPR 10 million capital: approx. NPR 15,000
NPR 100 million+ capital: increases progressively
Public companies almost always incur higher registration fees due to higher capital requirements.
Foreign investors typically require:
Legal structuring advice
FDI approval support
Document notarization and translation
Regulatory liaison
Private companies require fewer approvals, lowering professional fees by 30–50% compared to public companies.
There is no universal minimum capital. Capital is assessed based on:
Business sector
Visa requirements
Industry regulator expectations
Many service companies register with USD 20,000–50,000 equivalent capital.
Public companies must meet statutory minimums, often NPR 10 million or higher, depending on sector regulations.
This capital must be fully justified and documented, increasing both cost and scrutiny.
Foreign companies often focus on setup cost, but annual compliance costs are where the real difference lies.
Annual audit
Annual return filing
Tax filings
Statutory registers maintenance
Enhanced audits
Public disclosures
Board committees
Shareholder reporting
Regulatory filings
Public companies typically incur 2–3x higher annual compliance costs than private companies.
Up to 100% foreign ownership (subject to sector rules)
Share transfers require board approval
Tight control over governance
Diluted ownership by design
Public scrutiny
Higher governance complexity
For foreign parent companies, private companies preserve strategic control.
A common misconception is that public companies receive tax benefits. In Nepal:
Corporate tax rates are identical
Incentives are sector-based, not structure-based
Compliance costs do not reduce tax liability
Choosing a public company does not reduce tax exposure.
Certain sectors restrict or prohibit foreign investment, regardless of company type.
Examples include:
Retail trading (limited exceptions)
Small domestic services
Certain media activities
Your FDI eligibility matters more than private vs public classification.
Although uncommon, a public company may be justified if:
You plan to raise capital from Nepalese investors
You operate in infrastructure or hydropower
You need market credibility for regulated industries
You intend to list shares in the future
For most foreign service, tech, consulting, and outsourcing firms, these conditions do not apply.
Name reservation with OCR
Document preparation and notarization
Online application filing
Capital declaration
Company registration certificate issuance
PAN registration and bank account opening
The entire process typically takes 10–15 working days when properly managed.
Foreign investors often stumble due to:
Choosing public company status unnecessarily
Overcapitalizing at incorporation
Ignoring annual compliance obligations
Misunderstanding sectoral FDI rules
Avoiding these errors saves time, money, and regulatory risk.
For foreign companies entering Nepal, a private limited company is almost always the optimal structure.
It offers:
Cost efficiency
Faster market entry
Regulatory simplicity
Long-term scalability
Public companies should be considered only with clear capital market objectives.
Yes. For most foreign investors, private companies offer lower costs, simpler compliance, and stronger control.
Yes, subject to sectoral FDI rules and approvals.
There is no fixed minimum. Capital depends on business activity and visa requirements.
No. Tax rates are the same for private and public companies.
Yes. Conversion is legally permitted but involves regulatory approval and restructuring costs.
Choosing between a private vs public company in Nepal is not about prestige. It is about cost, control, and compliance efficiency.
For foreign companies, a private limited company delivers faster entry, lower risk, and long-term flexibility. Public companies serve a narrow purpose and should be approached strategically.
If you want clarity before committing capital, professional structuring advice is essential.