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.
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.
A private company in Nepal is the most common structure for foreign direct investment.
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
A public company in Nepal is designed for large-scale capital mobilisation.
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 company: Tight control. Ideal for foreign promoters.
Public company: Dispersed ownership. Governance-heavy.
Private company: Flexible capital planning.
Public company: Statutory minimum capital and public disclosures.
Private company: OCR, IRD, SSF oversight.
Public company: OCR + SEBON + public reporting rules.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Share transfer | Restricted | Freely transferable |
| Public share issue | Not allowed | Allowed |
| Typical FDI use | ✔ Highly suitable | ✖ Rare |
| Compliance cost | Low | High |
| Incorporation time | 2–4 weeks | 2–3 months |
| IPO eligibility | No | Yes |
Insight: Over 90% of foreign-owned companies in Nepal use the private company route due to lower compliance friction.
Foreign investors prioritise:
Speed of entry
Control over governance
Predictable compliance
Lower fixed costs
Private companies outperform public companies across all four metrics.
A public company may be justified when:
The project requires mass capital mobilisation
Sector regulations mandate public structure
An IPO in Nepal is part of the exit strategy
Annual return filing with OCR
Income tax and VAT compliance
SSF and labour compliance
NRB reporting for foreign capital
All private company obligations
SEBON reporting
Prospectus approvals
Statutory audits and disclosures
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.
Private companies allow:
Dividend repatriation
Capital reduction approvals
Share sale exits
Public companies add:
Market-linked pricing risk
SEBON oversight
Investor protection layers
IT and SaaS subsidiaries
BPO and outsourcing hubs
Consulting and professional services
Trading and distribution
Hydropower projects
Large infrastructure
Banks and insurance
Listed manufacturing entities
Define investment objective
Assess sector restrictions
Determine capital size
Evaluate control preferences
Map exit strategy
For most foreign companies, this process leads to a private company decision.
Assuming public company adds credibility
Overestimating IPO feasibility
Underestimating compliance costs
Ignoring NRB capital controls
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
Yes. Private companies offer faster setup, lower compliance, and stronger control, making them ideal for foreign investors.
Yes. FITTA 2019 allows 100% foreign ownership in permitted sectors.
It varies by sector but is significantly higher than private companies and often regulator-mandated.
Yes. Conversion is permitted with shareholder approval and regulatory filings.
Private companies are easier due to simpler governance and fewer disclosure layers.
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.
Planning to invest in Nepal?
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