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.
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.
Nepal recognises two main company forms relevant to foreign investors:
Private Limited Company
Public Limited Company
Both are registered with the Company Registrar’s Office of Nepal.
However, their legal DNA is very different.
A Private Limited Company is the most common structure used by foreign companies entering Nepal.
Shareholders: 1 to 101
Shares are not freely transferable
Cannot invite public subscriptions
Lower compliance threshold
No stock exchange listing
Private companies offer control, speed, and confidentiality.
They are designed for operational businesses, not public fundraising.
A Public Limited Company is designed for large-scale capital mobilisation.
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.
| Dimension | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Foreign ownership | Allowed (up to 100%) | Allowed, but regulated |
| Capital threshold | Low | High |
| Public fundraising | Not permitted | Permitted |
| Compliance intensity | Moderate | Very high |
| Audit & disclosure | Limited | Extensive |
| IPO eligibility | No | Yes |
| Ideal for | Market entry, operations | Large-scale investment |
Insight:
Over 90% of foreign companies entering Nepal choose private companies for their first entity.
No fixed statutory minimum capital under company law
FDI minimums apply sector-wise
Flexible capital phasing allowed
Higher minimum paid-up capital
Capital adequacy scrutiny
Mandatory capital deployment schedules
For foreign investors testing the Nepal market, flexibility matters.
Annual audit
Annual return filing
Board meetings as per Articles
Limited public disclosure
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.
Parent company equity
Shareholder loans
Strategic investors
Convertible instruments (subject to approval)
Public share issuance
Debentures
Rights issues
Capital market instruments
Reality check:
Foreign companies rarely need public fundraising in Nepal’s early years.
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.
You want full operational control
You are entering Nepal for delivery, outsourcing, or services
You want faster incorporation
You prefer lower regulatory exposure
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.
Overestimating the need for a public company
Underestimating compliance obligations
Ignoring future exit flexibility
Assuming public structure improves credibility
Locking capital unnecessarily
These mistakes delay operations and burn cash.
Ask yourself three questions:
Do I need public capital in Nepal now?
Can I manage heavy regulatory compliance locally?
Is flexibility more valuable than scale at entry?
For most foreign companies, the answers point to a private company.
For foreign investors, yes in most cases. Private companies offer faster setup, lower compliance, and better control.
Yes. Up to 100% foreign ownership is allowed in most sectors through a private company.
Yes. Conversion is permitted with regulatory approvals and compliance upgrades.
No. Large FDI projects can still operate through private companies unless public fundraising is planned.
Private companies are significantly easier to manage remotely.
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.
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.
Companies Act, 2006 (Nepal)
Foreign Investment and Technology Transfer Act, 2019
Department of Industry guidelines
Nepal Rastra Bank foreign investment directives