Private Limited vs. Public Limited Company in Nepal: Key Differences

You’re ready to invest in Nepal. You’ve studied the market, found your local team, and even chosen a business name. But then comes the confusion: should you register as a Private Limited or a Public Limited Company in Nepal?

Most foreign investors struggle here. They’re unsure which structure gives more control, what’s better for scalability, and which involves fewer legal hurdles. Some advisors oversimplify the answer, saying “Private Limited is easier.” That’s not entirely true.

The right choice depends on your capital goals, shareholder expectations, and regulatory tolerance. If you plan to grow organically with a controlled shareholder base, a Private Limited company might fit. But if your goal involves public investment or large-scale operations, the Public Limited model provides credibility and flexibility to raise capital.

This article breaks down both options, explaining their legal foundation, ownership model, compliance requirements, advantages, and risks, so you can make an informed decision before registering your company in Nepal.

Understanding Nepal’s Company Structures

Nepal’s Companies Act 2063 (2006) defines multiple types of entities, but for most business ventures, investors choose between Private Limited and Public Limited companies.

Both are incorporated through the Office of the Company Registrar (OCR), yet differ significantly in capital requirements, number of shareholders, public accountability, and operational scope.

Let’s start by understanding their foundations.

Private Limited Company in Nepal

A Private Limited Company is the most common choice for both local entrepreneurs and foreign investors entering Nepal. It allows up to 101 shareholders, keeps ownership private, and provides legal separation between shareholders and the business.

Key Characteristics:

• Separate legal entity independent of shareholders

• Shareholder liability limited to capital contribution

• Shares are not tradable to the public

• Minimum one and maximum 101 shareholders

• Minimum authorized capital of NPR 100,000

• Registration through the OCR portal within a few weeks

Best Suited For:

• Family-owned or small to medium-sized ventures

• Foreign subsidiaries and FDI-based companies

• Businesses prioritizing operational flexibility and control

Public Limited Company in Nepal

A Public Limited Company is designed for large-scale businesses aiming to raise funds from the public. It can issue shares, invite public investment, and list on the Nepal Stock Exchange after meeting SEBON (Securities Board of Nepal) requirements.

Key Characteristics:

• Must have a minimum of 7 shareholders (no maximum limit)

• Minimum paid-up capital of NPR 10 million

• Mandatory Board of Directors (minimum 3 members)

• Shares are freely transferable

• Required to publish annual reports and conduct annual general meetings (AGMs)

• Subject to SEBON oversight if publicly listed

Best Suited For:

• Large corporations or infrastructure projects

• Financial institutions, insurance, telecom, or utilities

• Companies planning to go public or attract local investors

Comparative Table: Private vs Public Limited Company in Nepal

Legal Framework and Registration Process

Both company types follow similar initial procedures under the Companies Act 2063, though with differing compliance standards.

Step 1: Name Reservation

Submit name availability request through the OCR portal. The name must end with “Private Limited” or “Limited,” depending on your chosen type.

Step 2: Draft Legal Documents

Prepare and notarize the Memorandum of Association (MoA) and Articles of Association (AoA), detailing the company's objectives, shareholding, and capital.

Step 3: Submit the Incorporation Application

Upload digital copies through OCR. Include shareholders’ identification, office lease agreement, and the authorized representative’s details.

Step 4: Receive Certificate of Incorporation

Once approved, OCR issues your certificate confirming legal existence.

Step 5: Register with the Inland Revenue Department

Obtain a Permanent Account Number (PAN) and VAT if applicable.

Step 6: Additional Licensing

Public companies must secure SEBON and other sectoral approvals before raising public capital or listing.

Ownership, Liability, and Management Differences

Ownership and Control

Private companies maintain tighter control since shares are held privately. Public companies, however, dilute control as shares are offered to the public.

Liability

In both structures, shareholder liability is limited to their share contribution. This encourages foreign participation without personal financial risk.

Governance

Public companies must follow strict governance, including independent audits, annual reports, and board accountability. Private companies have more freedom, requiring fewer public disclosures.

Capital Raising and Investor Opportunities

A major distinction lies in how each company raises funds.

Private Limited Company:

• Raises capital through private equity, shareholder loans, or FDI.

• Investment rounds are internal or through negotiated partnerships.

• Suitable for controlled ownership and early-stage growth.

Public Limited Company:

• Can raise funds through Initial Public Offerings (IPOs).

• Eligible for bank financing and bond issuance.

• Ideal for expansion-heavy sectors needing large-scale funding.

For foreign investors, choosing between the two depends on whether your long-term plan involves equity control or public investment growth.

Compliance Burden and Strategic Flexibility

Compliance is often overlooked but critically affects sustainability.

Private Limited Company:

• Fewer regulatory filings

• Flexibility in decision-making

• Easier restructuring or foreign share transfer

Public Limited Company:

• High transparency expectations

• Regular audits, AGMs, and disclosures

• Higher legal and administrative costs

If your strategy emphasizes agility, privacy, and fewer approvals, the Private Limited model wins. But if you plan to expand regionally, raise capital, or gain investor trust, a Public Limited structure may be worth the effort.

Taxation and Financial Reporting

Both company types pay corporate income tax, typically 25%. However, public companies in certain priority sectors (like hydropower or IT) may qualify for incentives or tax rebates under investment laws.

Public companies must publish audited statements annually, while private companies submit them confidentially to the OCR.

10-Step Checklist to Choose the Right Company Type

1. Define your long-term business vision.

2. Identify whether you need public or private investment.

3. Determine acceptable shareholder control levels.

4. Assess your compliance tolerance.

5. Review minimum capital availability.

6. Consider foreign exchange and repatriation needs.

7. Evaluate local market presence and reputation.

8. Analyze tax and reporting requirements.

9. Consult legal and FDI specialists for validation.

10. Register with OCR once your structure is clear.

FAQ — People Also Ask

1. What is the key difference between a Private Limited and a Public Limited company in Nepal?
A Private Limited company is privately owned and cannot sell shares to the public, while a Public Limited company can raise funds from public investors and has no shareholder limit.

2. Which company type is better for foreign investors?
Most foreign investors prefer Private Limited companies due to simpler compliance, fewer disclosure requirements, and full ownership options.

3. What is the minimum capital for Public Limited registration in Nepal?
A Public Limited company must have a minimum paid-up capital of NPR 10 million.

4. Can a Private Limited company later convert to a Public Limited company?
Yes, under the Companies Act, a Private Limited company can convert by fulfilling capital, shareholder, and regulatory conditions.

5. How long does it take to register either company type?
Private companies usually take 7–10 working days, while Public Limited companies may require 4–6 weeks due to SEBON and compliance checks.

Selecting between a Private Limited and a Public Limited Company in Nepal is more than a legal choice, it’s a growth strategy. The right structure determines your control, funding access, and compliance journey for years ahead.

At Digital Consulting Ventures (DCV), we simplify this decision for you. Our experts analyze your business goals, investment structure, and market entry plan to recommend the perfect company setup. We handle every step, from OCR filing and DOI approvals to tax registration and legal compliance.

Ready to start your Nepal journey confidently?
Book a free consultation with DCV today and let our team help you establish your company the right way, compliant, strategic, and future-ready.