If you are a foreign company planning market entry, private vs public company in Nepal is one of the first decisions you must get right. The structure you choose affects ownership control, compliance burden, capital raising, and long-term scalability.
Nepal welcomes foreign investment. But its corporate framework follows strict legal definitions. Many overseas founders assume “public company” means government-owned. In Nepal, that assumption is incorrect. A public company is privately owned but regulated more heavily.
This guide explains the difference clearly. It is written for foreign investors, founders, CFOs, and expansion teams who need accuracy, not theory.
Nepal’s company regime is governed primarily by the Companies Act, 2006 and overseen by the Office of the Company Registrar (OCR).
Under the Act, companies are classified mainly into:
Private limited companies
Public limited companies
Both structures can be foreign-invested if permitted under the Foreign Investment and Technology Transfer Act (FITTA) 2019.
A private company in Nepal is the most common entry structure for foreign businesses. It is designed for controlled ownership and operational flexibility.
Minimum shareholders: 1
Maximum shareholders: 50
Share transfer restrictions apply
No public invitation for shares
Can be 100 percent foreign-owned, sector permitting
Private companies are typically used for:
Subsidiaries
Joint ventures
Service delivery centers
Technology and consulting firms
A public company in Nepal is structured to raise capital from the public or institutional investors.
Minimum shareholders: 7
No maximum shareholder limit
Shares can be publicly offered
Higher paid-up capital requirements
Mandatory regulatory disclosures
Public companies are often used by:
Banks and financial institutions
Hydropower and infrastructure projects
Large manufacturing entities
IPO-oriented ventures
| Feature | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Capital raising | Private only | Public and private |
| Regulatory burden | Moderate | High |
| Disclosure obligations | Limited | Extensive |
| Suitable for foreign entry | Yes | Rare initially |
This distinction matters greatly for foreign founders seeking control and speed.
There is no fixed minimum capital under the Companies Act. However, for foreign investment:
Minimum foreign investment threshold usually starts at NPR 20 million
Sector-specific rules may apply
Public companies require:
Significantly higher paid-up capital
Additional capital adequacy rules for regulated sectors
Approval from sector regulators
For most foreign companies, this is unnecessary at entry stage.
Private companies enjoy streamlined compliance.
Annual returns filing
Basic financial statements
Statutory audit
Board resolutions
Public companies must comply with:
Quarterly and annual disclosures
Shareholder meeting notices
Public reporting standards
Securities regulations if listed
For first-time foreign investors, this often becomes costly and slow.
Private companies offer:
Full shareholder control
Restricted share transfer
Protection against hostile dilution
This is critical for foreign parents protecting IP and governance.
Public companies allow:
Freely transferable shares
Public participation
Dilution through share issuance
This structure suits capital-intensive ventures, not early market entry.
From a tax perspective:
Both private and public companies are taxed under the Income Tax Act, 2002
Corporate tax rates are generally the same
Sector-specific incentives may differ
However, public companies face higher compliance costs in tax reporting and audits.
For foreign companies, the answer is clear in most cases.
You want operational control
You are entering Nepal for the first time
You plan internal funding
You want faster registration
You plan an IPO in Nepal
You need large public capital
You operate in infrastructure or finance
You accept heavy regulation
Many foreign investors arrive with assumptions that do not apply in Nepal.
Public company does not mean government ownership
Private company does not mean small or informal
Foreigners can fully own private companies
Public companies are not required for legitimacy
Understanding these points prevents costly restructuring later.
Most foreign companies follow a phased approach.
Incorporate a private limited company
Operate and validate the market
Scale operations and revenue
Convert to public company only if required
This approach balances speed, control, and compliance.
Foreign investors interact with multiple regulators.
Office of the Company Registrar
Department of Industry
Nepal Rastra Bank
Inland Revenue Department
Private companies face fewer layers of approval.
Faster incorporation timelines
Lower compliance cost
Easier governance
Strong shareholder control
Better suited for foreign subsidiaries
These advantages make private companies the dominant choice.
Selecting the wrong structure can lead to:
Delayed approvals
Excessive compliance costs
Governance complexity
Capital inefficiency
Many foreign companies regret registering as public too early.
| Decision Factor | Best Choice |
|---|---|
| First-time foreign entry | Private company |
| IPO plans | Public company |
| Full ownership control | Private company |
| Heavy infrastructure funding | Public company |
| Speed and flexibility | Private company |
No. A public company is privately owned. It is simply allowed to raise capital from the public.
Yes, if the sector permits foreign investment under FITTA 2019.
Corporate tax rates are similar. Public companies face higher compliance costs.
Yes. Conversion is allowed with regulatory approvals.
A private company is almost always better for startups and foreign entrants.
For foreign companies, private vs public company in Nepal is not a close contest. A private company offers speed, control, and compliance efficiency. Public companies are strategic tools, not entry vehicles.
If your goal is market entry, team building, or service delivery, start private. You can always evolve later.