If you are evaluating private vs public company in Nepal, you are already asking the right question.
For foreign companies, the legal structure you choose shapes compliance, ownership, capital rules, and long-term scalability.
Nepal welcomes foreign investment, but its corporate framework follows specific statutory rules under the Companies Act.
This guide explains, in plain language, how private and public companies differ, when each makes sense, and how to register step by step.
By the end, you will know exactly which structure aligns with your investment strategy and risk appetite.
Nepal recognises two primary company forms for most foreign investors.
Both are governed by the Companies Act, 2006 and administered by the Office of the Company Registrar (OCR).
A private company is the most common entry vehicle for foreign businesses.
It is designed for closely held ownership and operational control.
Key characteristics
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer restrictions
No public share issuance
Private companies are ideal for subsidiaries, joint ventures, and wholly foreign-owned entities.
A public company is structured for large-scale capital mobilisation.
It is subject to stricter governance and disclosure rules.
Key characteristics
Minimum shareholders: 7
No maximum shareholder limit
Can issue shares to the public
Enhanced regulatory oversight
Public companies suit banks, hydropower projects, and large infrastructure investments.
Private companies limit ownership to maintain control.
Public companies enable broad ownership and potential stock exchange listing.
Foreign investors typically prefer private companies for predictability and speed.
There is no fixed minimum capital under company law.
However, foreign direct investment thresholds apply under FITTA and sectoral rules.
Capital commitments are reviewed during investment approval.
Public companies face stricter board composition, audit, and reporting obligations.
Private companies enjoy simplified compliance and decision-making.
| Factor | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share issue | Not allowed | Allowed |
| Regulatory burden | Moderate | High |
| Typical setup time | 2–4 weeks | 2–3 months |
| Suitable for | Foreign subsidiaries | Large investments |
This comparison alone explains why over 90 percent of foreign investors choose private companies.
Submit a proposed name to the OCR portal.
Names must not conflict with existing entities or restricted terms.
You must prepare:
Memorandum of Association
Articles of Association
These define ownership, objectives, and governance.
Once approved, the OCR issues:
Certificate of Incorporation
Company Registration Number
At this stage, the company legally exists.
Foreign shareholders require approval under the Foreign Investment and Technology Transfer Act, 2019.
Investment approval is issued by the Department of Industry or Investment Board Nepal.
After incorporation, register for:
Permanent Account Number
VAT, if applicable
Social Security Fund
Operational compliance begins here.
A private company is usually the right answer if you:
Are testing the Nepal market
Want full operational control
Plan service or outsourcing operations
Need fast setup with limited disclosure
Most foreign IT, consulting, and outsourcing firms use this route.
A public company becomes relevant if you:
Need large capital mobilisation
Operate in regulated sectors
Plan a future IPO
Require domestic public participation
Hydropower and banking projects often fall here.
Both company types must file:
Annual returns
Audited financial statements
Board resolutions
Public companies face enhanced disclosure and regulatory audits.
Capital inflow and profit repatriation are regulated by the Nepal Rastra Bank.
Proper structuring ensures lawful dividend remittance.
Choosing a public company unnecessarily
Underestimating compliance timelines
Ignoring sector-specific caps
Poorly drafted Articles of Association
Each mistake increases cost and risk.
Corporate income tax applies equally to both structures.
Current standard corporate tax is 25 percent, subject to sector incentives.
Double taxation treaties may reduce withholding taxes.
Always assess tax structuring early.
Yes. Most foreign investors prefer private companies due to simpler compliance, faster setup, and tighter control over ownership.
Yes. Nepalese law allows conversion, subject to shareholder approval and regulatory compliance.
Yes, in most sectors. Certain industries have restrictions or approval thresholds.
Private company registration usually takes two to four weeks, excluding foreign investment approvals.
Yes. Public companies must comply with stricter audits, disclosures, and regulatory supervision.
Nepal’s company law is clear, but execution is technical.
Foreign investors benefit from advisors who understand legal, tax, and regulatory alignment.
The difference between a smooth launch and months of delay is often documentation quality.
Choosing between private vs public company in Nepal is a strategic decision, not just a legal formality.
For most foreign companies, a private company offers speed, control, and compliance efficiency.
Public companies serve a purpose, but only when scale demands it.
The right structure today prevents costly restructuring tomorrow.