If you are evaluating private vs public company in Nepal, you are already thinking strategically. The structure you choose will shape your governance, capital strategy, compliance exposure, and long-term exit options.
Nepal is increasingly attractive for foreign direct investment (FDI). The country operates under the Companies Act 2006, the Foreign Investment and Technology Transfer Act 2019 (FITTA), and the Income Tax Act 2002. These laws provide a clear framework for foreign companies forming private or public entities.
In this guide, we break down:
Let’s build this the right way.
Under the Companies Act 2006, Nepal recognizes two primary limited liability structures:
Both offer separate legal personality and limited liability. But their purpose, capital raising ability, and compliance burden differ significantly.
A private limited company:
This is the most common structure for foreign investors entering Nepal.
A public limited company:
Public companies are typically used for large infrastructure, hydropower, banking, or capital-intensive ventures.
Below is a strategic comparison designed for foreign decision-makers.
| Criteria | Private Company | Public Company |
|---|---|---|
| Governing Law | Companies Act 2006 | Companies Act 2006 |
| Min Shareholders | 1 | 7 |
| Max Shareholders | 101 | No limit |
| Public Share Offering | Not allowed | Allowed |
| Director Requirement | 1 | 3 |
| Compliance Burden | Moderate | High |
| Ideal For | FDI entry, subsidiaries, back-office operations | Large capital projects |
| Listing on NEPSE | No | Yes |
| Governance Complexity | Controlled | Formal board structure |
Strategic insight:
For 90% of foreign companies entering Nepal, a private limited company is the optimal starting structure.
Foreign investors must understand the regulatory ecosystem.
Key authorities include:
FITTA 2019 formally permits 100% foreign ownership in most sectors, subject to the Negative List.
Let’s walk through the process clearly.
Most foreign investors choose private limited companies.
Consider public only if:
Submit company name application to the Office of Company Registrar.
Approval typically takes 1–3 working days.
For a private company:
For public companies, additional disclosure and capital structuring documents apply.
File FDI application with the Department of Industry.
Documents include:
Approval timeline: 2–6 weeks depending on sector.
After FDI approval:
Capital must be remitted through formal banking channels and recorded with Nepal Rastra Bank.
NRB verification is essential for:
Register with Inland Revenue Department for:
Typical timeline for a foreign-owned private company:
Total average timeline: 6–8 weeks
Public companies may take longer due to capital structure requirements.
Corporate tax rates are generally consistent:
Dividend distribution tax currently applies upon distribution.
The Income Tax Act 2002 governs:
There is no tax distinction purely based on private vs public status.
A private limited company is ideal if:
For most service-based FDI, this structure minimizes regulatory friction.
A public limited company is strategic if:
However, governance costs rise significantly.
Public entities face stricter transparency obligations.
Under FITTA 2019, certain sectors remain restricted.
Examples may include:
Always verify the current Negative List before structuring.
When analyzing private vs public company in Nepal, consider:
A well-structured private company with strong governance often reduces execution risk.
For 90% of foreign investors entering Nepal:
Start with a private limited company.
Reasons:
You can always convert to public later if capital markets become strategic.
Yes. FITTA 2019 permits 100% foreign ownership in most sectors. Restrictions apply only to activities listed in the Negative List.
There is no strict universal minimum. However, FDI projects typically require a minimum investment threshold under FITTA regulations.
A foreign-owned private company typically takes 6–8 weeks including FDI approval and capital recording.
Yes. A private limited company can convert into a public limited company by amending its constitutional documents and meeting legal requirements.
No. Corporate income tax rates generally apply equally unless sector-specific rates apply.
The debate around private vs public company in Nepal is not theoretical. It directly impacts governance, risk, capital strategy, and compliance exposure.
For most foreign investors:
A private limited company provides optimal flexibility and control.
Public companies are powerful tools for large capital projects but require sophisticated governance readiness.
Nepal’s legal framework under the Companies Act 2006 and FITTA 2019 is increasingly investor-friendly. The opportunity is real. But structure determines success.
If you are entering Nepal for the first time, structure smartly. Build compliance from day one. Align ownership with long-term strategy.