If you are evaluating a private vs public company in Nepal, your first decision will shape everything that follows. Ownership. Capital. Compliance. Exit strategy. Even tax exposure.
For foreign companies entering Nepal, choosing the right legal structure is not a formality. It is a strategic move under the Companies Act 2006, Foreign Investment and Technology Transfer Act 2019 (FITTA), and the Income Tax Act 2002.
This guide simplifies the process. It explains the differences. It highlights regulatory realities. And it helps you register with clarity and confidence.
In Nepal, companies are primarily registered under the Office of the Company Registrar (OCR). The legal form determines:
For foreign investors, it also affects FDI approval pathways through the Department of Industry and repatriation rules under Nepal Rastra Bank.
This is not just about registration. It is about long-term control and scalability.
The Companies Act 2006 recognizes two major company categories relevant to foreign companies:
Let us break them down clearly.
A private company is the most common structure for small and mid-sized enterprises.
Most foreign investors choose this model for controlled market entry.
For market-entry advisory clients, this is often the default structure.
A public company is designed for large-scale capital raising.
Public companies are subject to securities oversight and additional compliance.
They are suitable for:
Here is a clear comparison tailored for foreign decision-makers.
| Criteria | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Public Share Offering | Not allowed | Allowed |
| Capital Raising | Private investment only | Public + institutional |
| Compliance Burden | Moderate | High |
| Disclosure Requirements | Limited | Extensive |
| Suitable for FDI Entry | Yes | Yes (complex) |
| Best For | Subsidiaries, SMEs, controlled operations | Large capital projects |
Strategic Insight:
For 90% of foreign companies entering Nepal for operations, outsourcing, manufacturing, or tech services, a private limited company is structurally more efficient.
Company registration does not happen in isolation. It is influenced by:
Foreign equity requires:
This regulatory layering is where most foreign companies make mistakes.
Here is the simplified process.
Choose between private or public company based on:
File name reservation through the OCR portal.
Submit application to the Department of Industry.
Approval timelines vary by sector.
Submit full incorporation file to Office of the Company Registrar.
Register with the Inland Revenue Office under the Income Tax Act 2002.
Capital must enter Nepal through authorized banking channels regulated by Nepal Rastra Bank.
Nepal does not impose a fixed minimum capital for private companies in most sectors.
However:
Always verify with the sectoral authority.
Public companies are more transparent but less flexible.
Both private and public companies are taxed as corporate entities.
Standard corporate tax rate is generally 25% (sector dependent).
Additional obligations include:
The Income Tax Act 2002 requires minimum record retention of at least five years.
Here is a simplified compliance overview.
Public companies face heavier disclosure obligations.
You should consider a public company if:
Otherwise, private company formation is more practical.
The structure decision is strategic, not administrative.
Instead of asking “which is better,” ask:
For most foreign subsidiaries, private limited structure offers:
A private company cannot offer shares to the public and has a shareholder cap of 101. A public company can raise funds from the public and has no shareholder limit.
Yes. Foreign investors commonly establish private limited subsidiaries under FITTA 2019 with DOI approval.
There is no universal minimum for private companies, but FDI sectors may have thresholds.
Public companies face stricter disclosure, reporting, and governance standards.
Yes. Conversion is allowed under the Companies Act 2006, subject to regulatory compliance.
Choosing between a private vs public company in Nepal is not about size alone. It is about strategy.
Private companies offer control and simplicity.
Public companies offer capital access and scale.
For most foreign entrants, private limited incorporation provides operational efficiency and regulatory clarity.
If you are planning market entry, FDI structuring, or small business registration in Nepal, now is the time to align your legal structure with your long-term vision.
Ready to register your company in Nepal?
Speak with our regulatory and FDI advisory team for a tailored structure analysis and compliance roadmap.