When foreign companies explore Nepal, one question comes up early: private vs public company in Nepal.
The choice shapes ownership, compliance, funding, and long-term control.
In practice, Nepal’s economy is driven by private limited companies, not public ones. Most foreign investors choose private structures for flexibility, speed, and confidentiality. Public companies exist, but they are fewer and tightly regulated.
This guide gives foreign companies a clear, authoritative, and practical comparison, grounded in Nepal’s legal framework and real market behaviour.
Nepal allows two principal corporate forms under the Companies Act 2006:
Private Limited Company
Public Limited Company
Both are registered with the Office of Company Registrar, but their obligations and strategic implications differ significantly.
Your choice determines:
Capital structure and funding options
Compliance cost and reporting burden
Control over management and exits
Ability to repatriate profits
A private limited company is Nepal’s most popular corporate form.
Minimum shareholders: 1
Maximum shareholders: 50
Share transfer: Restricted
Public share offering: Not allowed
Private companies dominate sectors such as IT outsourcing, consulting, manufacturing, hospitality, and back-office operations.
A public limited company is designed for large-scale capital mobilization.
Minimum shareholders: 7
No maximum shareholders
Shares freely transferable
Can raise funds from the public
Many public companies list on the Nepal Stock Exchange, known as NEPSE.
| Area | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Public share issue | Not permitted | Permitted |
| Compliance burden | Moderate | High |
| Disclosure requirements | Limited | Extensive |
| Suitability for FDI | Very high | Selective |
This difference explains why most foreign investors choose private companies.
Private companies face fewer filings and approvals.
This reduces setup time and ongoing compliance.
Foreign investors retain tighter control over:
Share transfers
Board composition
Exit timing
Financials and shareholder data are not publicly traded or scrutinized like listed entities.
Audit, reporting, and governance costs are significantly lower.
Public companies are suitable when:
Large capital is required locally
Long-term domestic investors are targeted
The business plans a stock market listing
Common sectors include:
Banking and finance
Hydropower
Insurance
Large manufacturing
Foreign companies must align with multiple laws.
Companies Act 2006
Foreign Investment and Technology Transfer Act 2019
Income Tax Act 2002
Labour Act 2017
These laws collectively govern incorporation, taxation, employment, and profit repatriation.
Most FDI approvals in Nepal are granted to private limited companies.
Advantages include:
Faster approval under FITTA
Easier capital structuring
Simpler exit and liquidation
FDI in public companies is permitted but often requires:
Sector-specific approvals
Higher disclosure standards
Coordination with securities regulators
Annual general meeting
Annual return filing
Tax filings and audit
Quarterly and annual disclosures
Securities compliance
Enhanced audits
Shareholder reporting
This difference directly affects operating cost.
Private companies allow:
Founder-led governance
Custom shareholder agreements
Flexible board structures
Public companies require:
Formal governance frameworks
Independent directors
Public accountability
Foreign parent funding
Private equity
Inter-company loans
IPOs
Rights issues
Public debentures
Foreign companies usually prefer private funding paths.
IT and software development
Shared service centres
Consulting and professional services
Manufacturing subsidiaries
Capital-intensive infrastructure
Financial institutions
Long-term domestic investment plays
Faster incorporation timelines
Predictable compliance cost
Strong ownership control
Easier profit repatriation
Lower reputational exposure
Speed
Flexibility
Confidentiality
No public capital raising
Shareholder cap
Capital access
Market visibility
High compliance
Reduced control
| Business Objective | Best Fit |
|---|---|
| Back-office operations | Private company |
| Market entry testing | Private company |
| Large infrastructure funding | Public company |
| Long-term public fundraising | Public company |
“Public companies are always better.”
Not in Nepal’s regulatory context.
“Private companies lack credibility.”
Many of Nepal’s largest businesses are private.
“Conversion is easy.”
Private-to-public conversion requires major restructuring.
Nepal’s corporate ecosystem rewards pragmatic structure selection.
Private companies are not a compromise. They are a strategic choice.
This is why over 90 percent of foreign-owned companies in Nepal operate as private limited entities, based on OCR registration trends and FITTA approvals.
For foreign companies, private vs public company in Nepal is less about theory and more about execution.
Private limited companies offer:
Faster entry
Lower risk
Higher control
Public companies suit a narrow set of capital-intensive strategies.
For most foreign investors, private limited companies remain the clear winner.