When foreign companies explore South Asia, Nepal often surprises them with its growth potential. Understanding private vs public company in Nepal is the first strategic decision you must get right. The choice affects control, compliance, fundraising, taxation, and your long-term exit. In practice, most foreign investors begin with a private limited company. It offers speed, flexibility, and governance clarity in a developing but reform-oriented market.
This guide explains the differences in plain English, grounded in Nepal’s legal framework, and tailored for international founders, CFOs, and expansion leaders.
Nepal’s corporate regime is primarily governed by the Companies Act, 2006, with oversight from the Office of the Company Registrar (OCR) and capital-market supervision by the Securities Board of Nepal (SEBON). Public capital markets operate through the Nepal Stock Exchange (NEPSE).
Foreign investors typically evaluate three structures:
Private Limited Company
Public Limited Company
Branch or Liaison Office (for non-commercial presence)
This article focuses on private vs public company in Nepal, as these are the two equity-based options for commercial operations.
A private limited company in Nepal is a closely held entity with restricted share transfers and a capped number of shareholders. It is the most common vehicle for foreign direct investment (FDI).
Shareholders: 1 to 101
Share transfer: Restricted by Articles of Association
Public invitation: Not allowed
Liability: Limited to share capital
Foreign ownership: Allowed up to 100 percent in permitted sectors under FITTA 2019
Private limited companies form the backbone of Nepal’s economy. They dominate sectors such as IT services, manufacturing, education, tourism, hydropower subcontracting, and professional outsourcing.
Their appeal lies in speed and control.
A public limited company is designed for large-scale capital mobilization from the public.
Shareholders: Minimum 7, no upper limit
Share transfer: Freely transferable
Public invitation: Allowed via IPO
Regulators: OCR, SEBON, NEPSE
Disclosure: High and continuous
Public companies suit banks, insurance companies, hydropower developers, and infrastructure projects with significant capital needs.
| Aspect | Private Limited Company | Public Limited Company |
|---|---|---|
| Ownership | 1–101 shareholders | 7+ shareholders |
| Capital Raising | Private funds only | Public IPO and secondary market |
| Regulatory Burden | Moderate | Very high |
| Disclosure | Annual filings | Quarterly, annual, public disclosures |
| Foreign Investor Control | High | Diluted |
| Setup Time | 2–4 weeks | 4–6 months |
| Best For | FDI, SMEs, back-office hubs | Large infrastructure, finance |
Insight: Over 90 percent of foreign investors entering Nepal choose private limited companies first, even if their long-term goal is to go public.
Private companies can be incorporated quickly, enabling early hiring, contracting, and banking.
Foreign shareholders retain board and management control without public scrutiny.
Fewer audits, disclosures, and regulatory interfaces reduce overhead.
FITTA 2019 explicitly supports foreign investment via private companies.
Shares can be transferred privately or restructured before any public listing.
Public companies are justified when:
Capital requirements exceed private funding capacity
The business relies on public trust, such as banking or insurance
Regulatory mandates require public ownership
Long-term infrastructure financing is needed
For most foreign service companies, public status is unnecessary at entry.
No statutory minimum capital
FDI minimum typically NPR 20 million per investor (sector-dependent)
Capital injected via banking channels and approved by the Department of Industry
Minimum paid-up capital as prescribed by sector regulators
IPO approval from SEBON
Mandatory public share allocation
Minimum one director
Board composition flexible
Internal governance driven by shareholders’ agreement
Minimum three directors
Independent directors required
Board committees mandated
Governance flexibility is a decisive factor in private vs public company in Nepal decisions.
Both company types are taxed under the Income Tax Act, 2002.
Corporate tax: Generally 25 percent
Special sectors: Higher or lower rates apply
Dividends: Subject to withholding tax
There is no inherent tax advantage to being public. Compliance cost, not tax rate, is the differentiator.
Regardless of structure, companies must comply with:
Labour Act, 2017
Social Security Fund Act, 2018
Income Tax Act, 2002
Private companies benefit from simpler HR scaling and fewer public disclosures of employee data.
A common foreign investor journey looks like this:
Incorporate a private limited company
Build operations and local credibility
Scale revenue and workforce
Convert to public company if capital markets are needed
Nepal’s legal framework allows conversion, subject to approvals.
Assuming public companies are more “legitimate”
Underestimating compliance cost of public status
Over-structuring too early
Ignoring sector-specific FDI caps
The private vs public company in Nepal decision should align with business stage, not ambition alone.
Ask yourself:
Do we need public capital in Nepal within five years?
Is regulatory visibility a benefit or a burden?
Do we need full control over operations?
Is Nepal a core revenue market or a strategic delivery hub?
If control and speed matter, private wins.
For most foreign investors, yes. Private companies offer control, faster setup, and lower compliance costs.
Yes, 100 percent foreign ownership is allowed in many sectors under FITTA 2019.
There is no fixed statutory minimum, but FDI thresholds apply based on sector.
Yes. Conversion is legally permitted with regulatory approvals.
No. Corporate tax rates are generally the same for private and public companies.
For foreign companies, the private vs public company in Nepal decision is less about prestige and more about strategy. Private limited companies drive Nepal’s economic growth because they are agile, compliant, and investor-friendly. Public companies serve a purpose, but usually at a later stage.
Choosing correctly at entry can save years of restructuring.