Choosing between a private vs public company Nepal is one of the first strategic decisions foreign entrepreneurs face when entering the Nepali market. This choice affects everything: ownership control, regulatory burden, capital raising, compliance cost, and long-term exit options.
Many foreign investors assume a public company is “bigger” or “better.” In Nepal, that assumption can be costly. The legal framework treats private and public companies very differently. For most foreign companies, a private limited company is the default and often the most efficient route.
This guide gives you a clear, authoritative comparison so you can decide with confidence.
In Nepal, company type is not just a formality. It determines how regulators, banks, employees, and investors interact with your business.
Your choice directly impacts:
Speed of incorporation
Capital flexibility
Compliance intensity
Governance expectations
Future fundraising and exit options
Getting this wrong can slow market entry or create unnecessary regulatory exposure.
Company formation and operations in Nepal are primarily governed by:
Companies Act, 2006
Securities Act, 2007
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
Labour Act, 2017
Social Security Act, 2017
These laws define what a private and public company can and cannot do, especially when foreign shareholding is involved.
A private limited company in Nepal is a closely held corporate entity designed for controlled ownership and operational flexibility.
Limits the number of shareholders
Restricts share transfers
Cannot invite the public to subscribe to shares
Suitable for wholly or partly foreign-owned businesses
Minimum shareholders: 1
Maximum shareholders: 50 (excluding employees)
Can be 100% foreign-owned in approved sectors
Foreign subsidiaries
Joint ventures
Professional services firms
IT, outsourcing, and trading companies
A public limited company is designed for large-scale capital mobilisation and public investment.
Can offer shares to the public
Subject to securities regulation
Higher governance and disclosure standards
Often listed or list-ready
Minimum shareholders: 7
No maximum shareholder limit
Foreign ownership permitted only in specific contexts
Banks and financial institutions
Insurance companies
Hydropower and infrastructure projects
Large manufacturing ventures
| Criteria | Private Company Nepal | Public Company Nepal |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Public share offering | Not allowed | Allowed |
| Foreign ownership | Common and flexible | Restricted and regulated |
| Compliance burden | Moderate | High |
| Capital raising | Private funding | IPO and public markets |
| Governance | Simple | Formal and structured |
| Ideal for | Foreign subsidiaries | Large public projects |
This distinction alone explains why most foreign investors choose private companies.
Name reservation with OCR
MOA and AOA preparation
FDI approval (if applicable)
Company registration
Tax, SSF, and labour registration
Average timeline: 3 to 6 weeks
Name reservation
Prospectus preparation
Regulatory approvals
MOA and AOA registration
Public subscription process
Post-issue compliance
Average timeline: 3 to 6 months
No statutory minimum capital (except sector-specific rules)
Capital injected privately
Flexible future capital increases
Higher minimum capital norms
Mandatory disclosure of capital plans
Regulated share issuance
For foreign companies testing the Nepal market, capital flexibility is a major advantage of private entities.
Annual returns to OCR
Tax filings with IRD
SSF and labour compliance
Board meetings as per internal rules
Quarterly and annual disclosures
Independent directors
Audit committee requirements
Securities reporting obligations
Public companies face significantly higher ongoing compliance costs.
From an income tax perspective, private vs public company Nepal taxation is largely similar.
Key points:
Corporate tax generally 25%
Withholding tax applies to dividends and payments
Sector-specific incentives may apply
The real difference lies in audit scrutiny and reporting depth.
Foreign investors must align company type with FITTA approvals.
Most FDI approvals are structured for private companies
Faster approval cycles
Easier profit repatriation planning
Often sector-restricted
Additional regulatory layers
More complex exit mechanisms
A public company structure is justified only when:
Large capital mobilisation is required
Public trust and visibility are critical
Sector regulations demand it
IPO or institutional investment is planned
For most foreign entrepreneurs, this stage comes later, not at market entry.
Are entering Nepal for the first time
Want speed and control
Need regulatory predictability
Plan phased investment
Require large-scale public funding
Operate in regulated infrastructure sectors
Have a long-term listing strategy
Foreign companies often:
Overestimate the benefits of public companies
Underestimate compliance costs
Ignore sector-specific ownership caps
Choose structure before strategy
A structure should support your business model, not complicate it.
Before deciding, ask yourself:
How much capital is needed in year one?
Will ownership change frequently?
Is public fundraising essential?
How complex can governance realistically be?
If unsure, private is usually the safer starting point.
For most foreign investors, yes. Private companies offer faster setup, lower compliance, and greater ownership control, making them ideal for market entry.
Yes. Subject to Companies Act requirements, shareholder approvals, and regulatory filings, a private company can be converted into a public company.
Yes, in sectors approved under FITTA. Many foreign subsidiaries in Nepal are wholly foreign-owned private companies.
No major difference. Corporate tax rates are generally the same, though reporting and audit scrutiny is higher for public companies.
No. Almost all startups, including foreign-backed ones, operate as private companies in Nepal.
For foreign entrepreneurs, the private vs public company Nepal decision almost always starts with a private company, with a public structure reserved for scale, regulation, or capital-market expansion.
Choosing the right structure early reduces risk, saves time, and keeps your Nepal expansion on track.