Understanding private vs public company in Nepal is one of the first and most critical decisions foreign companies face when entering the Nepali market. The structure you choose affects ownership, capital requirements, compliance burden, fundraising ability, and long-term scalability.
Nepal welcomes foreign investment under a clear legal framework. Yet many overseas founders struggle with choosing the right entity. This guide gives you a practical, step-by-step explanation of private and public companies in Nepal, written specifically for foreign businesses seeking clarity, compliance, and confidence.
Choosing the correct structure is not a formality. It directly impacts:
Speed of market entry
Regulatory approvals and scrutiny
Tax exposure and profit repatriation
Ability to raise capital locally
Ongoing compliance cost and risk
For most foreign investors, the debate comes down to private vs public company in Nepal.
Nepal primarily recognizes two incorporated company forms for commercial operations:
Private Limited Company
Public Limited Company
Both are governed by the Companies Act, 2006 and regulated by the Office of the Company Registrar.
Other structures exist, such as branch offices and liaison offices, but they are not independent legal entities. This article focuses on incorporated companies only.
A private company in Nepal is the most common structure for foreign investors. It is designed for closely held businesses with limited shareholders.
Minimum shareholders: 1
Maximum shareholders: 50
Share transfer restricted
Cannot issue shares to the public
Limited liability protection
Private companies are ideal for subsidiaries, joint ventures, and wholly foreign-owned businesses.
A public company in Nepal is structured for larger enterprises that intend to raise capital from the public or institutional investors.
Minimum shareholders: 7
No maximum shareholder limit
Can issue shares publicly
Higher disclosure and governance standards
Mandatory regulatory oversight
Public companies are common in banking, hydropower, telecom, and infrastructure sectors.
| Criteria | Private Company in Nepal | Public Company in Nepal |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Public share issuance | Not allowed | Allowed |
| Minimum paid-up capital | NPR 100,000 (sector-dependent) | NPR 10 million |
| Compliance burden | Low to moderate | High |
| Ideal for | Foreign subsidiaries | Large-scale ventures |
This table highlights why most foreign investors begin with a private company structure.
Capital requirements are a deciding factor in private vs public company in Nepal.
No fixed minimum for domestic companies
Foreign-invested companies must align with FDI thresholds
Capital linked to approved foreign investment amount
Minimum NPR 10 million paid-up capital
Higher sector-specific thresholds apply
Capital must be deposited before incorporation
For most foreign SMEs, private companies offer capital flexibility.
Foreign ownership is permitted in both private and public companies, subject to sector restrictions.
100% foreign ownership allowed in most sectors
Some industries require Nepali partners
FDI approval required before incorporation
Capital must be remitted through approved banking channels
Understanding ownership rules is essential when evaluating private vs public company in Nepal.
Below is a simplified process foreign companies typically follow.
Confirm that your business activity allows foreign investment.
Submit an FDI application with:
Business plan
Shareholding structure
Capital commitment
Promoter details
Reserve your company name with the Company Registrar.
Prepare constitutional documents including:
Memorandum of Association
Articles of Association
Shareholder resolutions
Register the company with the Office of the Company Registrar.
Complete:
Permanent Account Number registration
VAT registration, if applicable
Social Security Fund enrollment
This step-by-step approach applies to both private and public companies.
Compliance is where the difference between private vs public company in Nepal becomes clear.
Annual return filing
Financial statements submission
Board meetings as required
Lower audit complexity
Mandatory annual audits
Public disclosure obligations
Regulatory reporting
Corporate governance rules
Foreign companies often underestimate public company compliance costs.
Both private and public companies are taxed similarly in Nepal.
Corporate income tax: 25% (sector variations apply)
Dividend tax: 5% withholding
VAT: 13% on taxable supplies
Withholding tax on cross-border payments
Tax treatment does not differ significantly between private and public companies, making compliance rather than tax the key differentiator.
Cannot raise funds from the public
Capital injection via shareholders
Ideal for controlled growth
Public share issuance
Broader investor base
Easier exits via capital markets
Your growth strategy should guide your choice in private vs public company in Nepal.
Many foreign investors face delays due to avoidable errors.
Typical pitfalls include:
Choosing a public company too early
Underestimating compliance obligations
Incorrect sector classification
Poorly drafted constitutional documents
A private company is often the safer entry point.
Want fast market entry
Plan controlled ownership
Are testing the Nepali market
Prefer lower compliance costs
Need large-scale funding
Operate in regulated sectors
Plan IPO or public fundraising
Have long-term institutional investors
This strategic choice defines your Nepal journey.
Nepal’s company framework is governed by:
Companies Act, 2006
Foreign Investment and Technology Transfer Act, 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
According to official investment guidelines, Nepal continues to simplify procedures to attract foreign investors through predictable regulations and digital filings.
Choosing between a private vs public company in Nepal is not about prestige. It is about practicality, compliance, and long-term alignment with your business goals.
For most foreign companies, a private limited company offers speed, flexibility, and control. Public companies make sense only when scale, capital markets, and regulatory readiness justify the added complexity.
Making the right decision at incorporation saves time, money, and risk later.