When foreign investors explore South Asia, Nepal often stands out for its strategic location, cost-efficient workforce, and improving regulatory framework. Yet one question arises early: what are the types of companies in Nepal, and which structure is right for you?
In practice, most foreign businesses must choose between private companies and public companies. Each has distinct legal, financial, and compliance implications. Choosing incorrectly can slow market entry, increase regulatory burden, or restrict future growth.
This guide offers the most authoritative comparison of private vs public companies in Nepal, written specifically for foreign companies planning market entry, FDI, or long-term expansion.
Under Nepal’s corporate framework, companies are primarily categorized by ownership, capital structure, and public participation.
At a high level, the types of companies in Nepal include:
Private Limited Company
Public Limited Company
Non-profit Company (Section 166)
Foreign Branch or Liaison Office
This article focuses on the two most commercially relevant forms for foreign investors: private and public companies.
A private company in Nepal is a closely held entity designed for controlled ownership and operational flexibility.
Shareholders: 1 to 101 (excluding employees)
No public share subscription
Restricted transfer of shares
Lower compliance and disclosure requirements
Private companies dominate foreign investment registrations in Nepal due to their simplicity and control.
Wholly foreign-owned subsidiaries
Joint ventures with Nepali partners
Outsourcing, IT, BPO, and consulting firms
Trading, services, and light manufacturing
A public company is designed to raise capital from the general public and operate at scale.
Minimum 7 shareholders
No upper limit on shareholders
Can issue shares to the public
Subject to capital market and securities regulations
Public companies are commonly associated with banks, hydropower projects, insurance companies, and large infrastructure ventures.
Private companies offer concentrated ownership. Founders and foreign parent companies retain decision-making authority.
Public companies dilute control as shares are offered to the public and institutional investors.
Private companies in Nepal have no fixed minimum capital, except where sector-specific FDI thresholds apply.
Public companies must meet higher paid-up capital thresholds, particularly if listed.
Private companies enjoy simplified reporting and governance.
Public companies must comply with extensive disclosure, audit, and shareholder protection rules.
| Feature | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share offering | Not allowed | Allowed |
| Capital requirements | Flexible | High |
| Regulatory scrutiny | Moderate | Extensive |
| Suitable for foreign SMEs | Yes | Rarely |
| IPO eligibility | No | Yes |
Original insight: Over 90 percent of foreign-owned operating entities in Nepal choose the private company structure due to speed and control advantages.
Foreign companies consistently favor private companies for Nepal entry. The reasons are practical and strategic.
Faster incorporation timelines
Lower ongoing compliance costs
Full operational control
Easier profit repatriation planning
Simplified exit strategies
Technology and software development
Outsourcing and shared service centers
Professional services and consulting
Trading and distribution
Although less common, public companies play a critical role in Nepal’s economy.
Require large-scale domestic capital
Operate in regulated sectors like banking or energy
Plan an IPO or institutional fundraising
Need strong public credibility
For most foreign SMEs, these conditions are not immediately relevant.
Both private and public companies in Nepal are governed by:
Companies Act
Foreign Investment and Technology Transfer Act
Income Tax Act
Labor Act and Social Security Act
Public companies face additional oversight from securities and market regulators.
From a corporate tax perspective, both company types are treated similarly.
Standard corporate tax rate applies
Dividend tax withholding applies equally
VAT registration thresholds are identical
The difference lies not in tax rates, but in compliance complexity and audit depth.
Annual audit
Annual general meeting
Basic filings with the Company Registrar
Enhanced audits
Quarterly and annual disclosures
Shareholder reporting obligations
Securities compliance
Selecting the right structure depends on your business model, funding strategy, and risk tolerance.
Are entering Nepal for the first time
Want full ownership control
Plan gradual expansion
Prefer operational simplicity
Need public fundraising
Operate in infrastructure or finance
Have long-term capital market plans
For most foreign companies, yes. Private companies offer faster setup, lower compliance, and stronger control, making them ideal for market entry and FDI operations.
Yes. Subject to sector approval, foreign investors can own 100 percent of a private limited company in Nepal.
There is no universal minimum. Capital depends on the sector and FDI approval requirements.
Yes. Nepalese law allows conversion if regulatory conditions and capital requirements are met.
Only in specific regulated sectors. Most large foreign projects still operate through private companies.
Understanding the types of companies in Nepal is essential for foreign investors planning a successful entry strategy. While both private and public companies are legally robust, the private company remains the most practical and widely used structure for foreign businesses.
Public companies serve a strategic purpose but come with higher regulatory exposure and diluted control. For most foreign companies, starting private and scaling later is the smartest path.
Planning to set up a company in Nepal?
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