Private vs Public Company in Nepal: What’s the Difference?

Choosing between a private vs public company in Nepal is one of the most important structural decisions a foreign business will make.
This choice affects ownership, compliance, fundraising, timelines, and long-term exit options.

For foreign companies entering Nepal, the decision is rarely theoretical.
It directly impacts foreign direct investment approval, regulatory exposure, and operational flexibility.

This guide explains the differences clearly, practically, and from an investor’s perspective.

Why the company structure decision matters for foreign companies

Nepal’s corporate framework is governed primarily by the Companies Act, 2006, and foreign investment rules under FITTA 2019.

Your chosen structure determines:

• Whether 100% foreign ownership is permitted

• Minimum capital requirements

• Ongoing compliance burden

• Ability to raise capital locally

• Public disclosure and audit exposure

Most foreign investors underestimate this decision.
That mistake is expensive.

Understanding company types under Nepal law

Nepal recognises two main company forms relevant to foreign investors:

1. Private Limited Company

2. Public Limited Company

Both are registered with the Company Registrar’s Office of Nepal.

However, their legal DNA is very different.

What is a Private Limited Company in Nepal?

A Private Limited Company is the most common structure used by foreign companies entering Nepal.

Core characteristics

• Shareholders: 1 to 101

• Shares are not freely transferable

• Cannot invite public subscriptions

• Lower compliance threshold

• No stock exchange listing

Why foreign investors prefer it

Private companies offer control, speed, and confidentiality.
They are designed for operational businesses, not public fundraising.

What is a Public Limited Company in Nepal?

A Public Limited Company is designed for large-scale capital mobilisation.

Core characteristics

• Minimum shareholders: 7

• No maximum shareholder limit

• Can issue shares to the public

• May list on Nepal Stock Exchange (NEPSE)

• Higher disclosure and regulatory oversight

This structure is rarely used for initial foreign entry.

Private vs Public Company Nepal: side-by-side comparison

Insight:
Over 90% of foreign companies entering Nepal choose private companies for their first entity.

Capital requirements: a practical difference

Private company

• No fixed statutory minimum capital under company law

• FDI minimums apply sector-wise

• Flexible capital phasing allowed

Public company

• Higher minimum paid-up capital

• Capital adequacy scrutiny

• Mandatory capital deployment schedules

For foreign investors testing the Nepal market, flexibility matters.

Compliance and governance burden compared

Private company compliance

• Annual audit

• Annual return filing

• Board meetings as per Articles

• Limited public disclosure

Public company compliance

• Quarterly and annual reporting

• Enhanced audit requirements

• Shareholder meeting mandates

• Regulatory scrutiny from multiple authorities

A public company behaves like a regulated financial instrument.
A private company behaves like a business.

Fundraising and exit considerations

Private company funding options

• Parent company equity

• Shareholder loans

• Strategic investors

• Convertible instruments (subject to approval)

Public company funding options

• Public share issuance

• Debentures

• Rights issues

• Capital market instruments

Reality check:
Foreign companies rarely need public fundraising in Nepal’s early years.

Taxation differences explained simply

There is no difference in corporate income tax rates solely based on private or public status.

However:

• Public companies face higher compliance costs

• Audit exposure increases risk of adjustments

• Disclosure standards raise scrutiny

Tax efficiency depends more on structuring than company type.

Which structure is better for FDI in Nepal?

Choose a private company if:

• You want full operational control

• You are entering Nepal for delivery, outsourcing, or services

• You want faster incorporation

• You prefer lower regulatory exposure

Choose a public company if:

• You plan a large-scale capital project

• You need public capital mobilisation

• You have long-term listing ambitions

• You accept intense compliance obligations

Strategic truth:
Private company first. Public company later, if needed.

Common mistakes foreign companies make

1. Overestimating the need for a public company

2. Underestimating compliance obligations

3. Ignoring future exit flexibility

4. Assuming public structure improves credibility

5. Locking capital unnecessarily

These mistakes delay operations and burn cash.

Private vs Public Company Nepal: decision framework

Ask yourself three questions:

1. Do I need public capital in Nepal now?

2. Can I manage heavy regulatory compliance locally?

3. Is flexibility more valuable than scale at entry?

For most foreign companies, the answers point to a private company.

Frequently Asked Questions (People Also Ask)

Is a private company better than a public company in Nepal?

For foreign investors, yes in most cases. Private companies offer faster setup, lower compliance, and better control.

Can a foreigner own 100% of a Nepal company?

Yes. Up to 100% foreign ownership is allowed in most sectors through a private company.

Can a private company convert into a public company later?

Yes. Conversion is permitted with regulatory approvals and compliance upgrades.

Is a public company mandatory for large investments?

No. Large FDI projects can still operate through private companies unless public fundraising is planned.

Which company type is easier to manage from abroad?

Private companies are significantly easier to manage remotely.

Conclusion

The private vs public company Nepal decision is not about prestige.
It is about strategy, control, and execution.

For foreign companies entering Nepal, a private limited company offers the best balance of flexibility, compliance efficiency, and scalability.

Choosing correctly at entry saves years of restructuring later.

Call to Action

Planning to invest or expand into Nepal?
Get a personalised structure assessment covering FDI approval, tax, and compliance.

👉 Talk to our Nepal market entry specialists today.

Sources & EEAT references

• Companies Act, 2006 (Nepal)

• Foreign Investment and Technology Transfer Act, 2019

• Department of Industry guidelines

• Nepal Rastra Bank foreign investment directives