When foreign investors evaluate private vs public company Nepal, the choice goes far beyond legal formality. It directly affects ownership control, capital raising, compliance burden, exit flexibility, and long-term scalability. Nepal’s corporate framework allows both private and public companies, but each serves a very different strategic purpose.
This guide offers a practical, authoritative comparison for foreign companies planning market entry, FDI structuring, or long-term operations in Nepal. It combines legal analysis, real-world investor considerations, and compliance insights grounded in Nepal’s corporate and investment laws.
Company formation in Nepal is governed primarily by:
Companies Act, 2006
Foreign Investment and Technology Transfer Act, 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
Nepal Rastra Bank directives on capital inflow and repatriation
Both private and public companies are incorporated through the Office of the Company Registrar (OCR). However, regulatory expectations and compliance intensity differ sharply.
A private company in Nepal is the most common vehicle for foreign investors entering the market.
Maximum 101 shareholders
Restriction on public share subscription
Lower minimum capital requirements
Faster incorporation timeline
High confidentiality and control
Over 90% of foreign-invested entities in Nepal are private companies. The reasons are practical rather than legal.
A public company is designed for large-scale capital mobilization and public participation.
Minimum 7 shareholders
No maximum shareholder limit
Ability to raise funds from the public
Mandatory regulatory oversight
Higher disclosure and audit obligations
Public companies are common in banking, insurance, hydropower, and infrastructure sectors.
Private companies offer concentrated ownership and stronger founder control. Public companies dilute ownership to enable capital access.
Private companies rely on internal funding, FDI inflows, or private equity. Public companies can raise funds via IPOs and public offerings.
Public companies must meet stricter governance, audit, and reporting standards.
| Criteria | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7, unlimited |
| Public fundraising | Not allowed | Allowed |
| Minimum capital | No fixed statutory minimum | Higher sector-based thresholds |
| Regulatory oversight | Moderate | High |
| Disclosure | Limited | Extensive |
| Incorporation time | Faster | Longer |
| Suitable for FDI | Excellent | Selective |
| Exit flexibility | High | Moderate |
Faster setup and approvals
Lower compliance costs
Confidential financials
Strong operational control
No public capital access
Growth depends on private funding
Share transfer restrictions
Access to large capital pools
Enhanced credibility
Suitable for infrastructure and finance sectors
Heavy compliance burden
Mandatory audits and disclosures
Slower decision-making
Entering Nepal for the first time
Establishing a service or tech operation
Running a captive or outsourced team
Seeking operational control
Developing capital-intensive infrastructure
Planning IPO or public fundraising
Operating in regulated sectors
Both structures permit foreign ownership under FITTA 2019. However:
Private companies offer smoother capital repatriation
Public companies face additional approvals from regulators
NRB reporting obligations apply to both
Corporate tax applies equally
Withholding tax compliance is identical
Public companies face stricter audit rules
Private companies retain flexibility in structuring
In real deployments, foreign investors often start with a private company, then convert to a public company once:
Revenue stabilizes
Market presence strengthens
Capital expansion is required
This phased approach minimizes risk while preserving growth options.
Choosing a public company too early
Underestimating compliance costs
Misjudging capital thresholds
Ignoring exit flexibility
Yes. FITTA 2019 allows 100% foreign ownership in most permitted sectors, subject to approval.
No. Many large investments operate successfully as private companies unless public funding is required.
Yes. Conversion is legally permitted with regulatory approvals and restructuring.
Private companies have significantly lower compliance and audit expenses.
No. IPOs are optional, but public companies must comply with public governance standards.
Choosing between a private and public company in Nepal is a strategic decision. For most foreign companies, a private company offers flexibility, speed, and control. Public companies make sense only when scale, public capital, or regulatory requirements demand it.
The right structure depends on your sector, funding model, and long-term vision.