Private Company vs Public Company in Nepal: A Complete Comparison (2026)

Choosing between a Private vs public company Nepal structure is one of the most important decisions a foreign investor will make. The choice affects ownership, capital requirements, regulatory burden, fundraising ability, and long-term exit options.

For foreign companies entering Nepal in 2026, the right structure can reduce risk, speed up approvals, and lower compliance costs. The wrong one can delay operations and increase scrutiny.

This guide provides the most practical, regulator-aligned, and investor-focused comparison available today.

Understanding Company Structures in Nepal

Nepal recognizes two primary corporate forms for investment activities:

• Private Limited Company

• Public Limited Company

Both are governed under Companies Act, 2006 and regulated by the Office of the Company Registrar.

Foreign ownership is additionally governed by Foreign Investment and Technology Transfer Act, 2019 and capital inflow rules issued by Nepal Rastra Bank.

What Is a Private Company in Nepal?

A private company in Nepal is the most common structure for foreign direct investment.

Key characteristics

• 1 to 101 shareholders

• Shares are not publicly transferable

• Cannot invite the public to subscribe shares

• Faster incorporation

• Lower compliance burden

Private companies are typically used for:

• Wholly owned foreign subsidiaries

• Joint ventures with limited partners

• Service, IT, outsourcing, consulting, and trading entities

What Is a Public Company in Nepal?

A public company in Nepal is designed for large-scale capital mobilisation.

Key characteristics

• Minimum 7 shareholders

• No maximum shareholder limit

• Shares may be publicly issued or listed

• Higher paid-up capital requirements

• Heavy regulatory oversight

Public companies are generally used for:

• Infrastructure projects

• Banking and financial institutions

• Hydropower and energy projects

• Companies planning IPOs in Nepal

Private vs Public Company Nepal: Core Legal Differences

Ownership and control

• Private company: Tight control. Ideal for foreign promoters.

• Public company: Dispersed ownership. Governance-heavy.

Capital structure

• Private company: Flexible capital planning.

• Public company: Statutory minimum capital and public disclosures.

Regulatory exposure

• Private company: OCR, IRD, SSF oversight.

• Public company: OCR + SEBON + public reporting rules.

Comparison Table: Private vs Public Company in Nepal (2026)

Insight: Over 90% of foreign-owned companies in Nepal use the private company route due to lower compliance friction.

Private vs Public Company Nepal for Foreign Investors

Why private companies dominate FDI

Foreign investors prioritise:

• Speed of entry

• Control over governance

• Predictable compliance

• Lower fixed costs

Private companies outperform public companies across all four metrics.

When a public company makes sense

A public company may be justified when:

1. The project requires mass capital mobilisation

2. Sector regulations mandate public structure

3. An IPO in Nepal is part of the exit strategy

Regulatory and Compliance Perspective

Private company compliance

• Annual return filing with OCR

• Income tax and VAT compliance

• SSF and labour compliance

• NRB reporting for foreign capital

Public company compliance

• All private company obligations

• SEBON reporting

• Prospectus approvals

• Statutory audits and disclosures

Taxation Considerations

Both structures are taxed similarly under the Income Tax Act.

However:

• Public companies face higher audit and disclosure costs

• Private companies allow cleaner tax planning and dividend repatriation

Dividend repatriation for foreign shareholders must comply with NRB approval processes.

Capital Repatriation and Exit Strategy

Private companies allow:

• Dividend repatriation

• Capital reduction approvals

• Share sale exits

Public companies add:

• Market-linked pricing risk

• SEBON oversight

• Investor protection layers

Typical Use Cases by Industry

Private company is ideal for

• IT and SaaS subsidiaries

• BPO and outsourcing hubs

• Consulting and professional services

• Trading and distribution

Public company is ideal for

• Hydropower projects

• Large infrastructure

• Banks and insurance

• Listed manufacturing entities

Step-by-Step: Choosing the Right Structure

1. Define investment objective

2. Assess sector restrictions

3. Determine capital size

4. Evaluate control preferences

5. Map exit strategy

For most foreign companies, this process leads to a private company decision.

Common Mistakes Foreign Investors Make

• Assuming public company adds credibility

• Overestimating IPO feasibility

• Underestimating compliance costs

• Ignoring NRB capital controls

Expert Recommendation (2026)

For foreign companies entering Nepal today:

• Private company is the default, optimal structure

• Public companies should be used only when required by law or scale

Frequently Asked Questions (People Also Ask)

Is private company better than public company in Nepal for FDI?

Yes. Private companies offer faster setup, lower compliance, and stronger control, making them ideal for foreign investors.

Can a foreigner fully own a private company in Nepal?

Yes. FITTA 2019 allows 100% foreign ownership in permitted sectors.

What is the minimum capital for a public company in Nepal?

It varies by sector but is significantly higher than private companies and often regulator-mandated.

Can a private company convert into a public company later?

Yes. Conversion is permitted with shareholder approval and regulatory filings.

Which company type is easier for profit repatriation?

Private companies are easier due to simpler governance and fewer disclosure layers.

Conclusion

When evaluating Private vs public company Nepal, the answer is clear for most foreign investors.

A private limited company provides speed, control, compliance efficiency, and regulatory clarity. Public companies are suitable only for large, capital-intensive, or regulated ventures.

Choosing the right structure at entry saves years of cost and complexity later.

Call to Action

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