If you are evaluating private vs public company in Nepal, your decision will shape tax exposure, control, capital raising, and long-term scalability. For foreign companies entering Nepal in 2026, this is not a paperwork choice. It is a strategic investment decision.
Nepal’s regulatory framework has evolved under the Companies Act 2006, Foreign Investment and Technology Transfer Act 2019 (FITTA), and the Industrial Enterprises Act 2020. These laws define ownership thresholds, reporting standards, public issuance rules, and foreign capital approvals.
This guide breaks down:
By the end, you will know which structure aligns with your Nepal entry strategy.
Nepal is positioning itself as a competitive South Asian investment destination. The government continues reforms through:
According to data from the Department of Industry, foreign investment commitments have steadily increased in hydropower, IT services, tourism, and manufacturing.
But here is the reality:
Your entry structure determines control, compliance cost, and investor perception.
Choosing between a private and public company affects:
Let’s define both structures clearly.
Under the Companies Act 2006, a private company:
This is the most common structure for foreign investors.
Foreign investors typically register a private limited company after DOI approval under FITTA.
A public company:
Public companies intending to list must comply with rules of the Nepal Securities Board (SEBON) and listing requirements of the Nepal Stock Exchange (NEPSE).
Public companies are generally used for:
Here is a strategic comparison relevant for foreign companies.
| Criteria | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7, unlimited max |
| Share Transfer | Restricted | Freely transferable |
| Public Share Issue | Not allowed | Allowed |
| Regulatory Oversight | OCR + DOI | OCR + DOI + SEBON |
| Compliance Cost | Moderate | High |
| Governance | Flexible | Strict |
| Capital Raising | Private equity / FDI | IPO / Public issue |
| Suitable For | Subsidiaries, SMEs | Large capital projects |
For 80% of foreign investors entering Nepal, a private company offers optimal balance between control and compliance efficiency.
Public company structures are justified only when:
Both company types operate under:
If foreign equity is involved, prior approval from the Department of Industry is mandatory.
Corporate income tax in Nepal generally stands at:
Dividends are subject to withholding tax.
There is no tax difference between private and public companies in basic corporate rate. However:
Public companies incur higher audit and reporting expenses.
This significantly increases compliance cost.
If your growth plan includes foreign private equity, venture capital, or reinvested earnings, a private company works perfectly.
If your strategy includes:
Then a public company may be justified.
Private company recommended.
Lower capital intensity.
Foreign ownership common.
Often public company model.
IPO common post-construction.
Private company preferred initially.
Public conversion possible later.
Private company ideal.
Flexibility in JV structures.
Conversion is strategic when:
Conversion is legally permitted under the Companies Act.
Consider the following criteria:
If you answer “no” to public capital and IPO plans, a private company is optimal.
Always align structure with:
Yes, unless the sector is restricted. FITTA permits 100% foreign ownership in most industries.
No fixed statutory minimum, but sectoral regulations may apply.
Yes. Conversion is permitted under the Companies Act 2006.
Generally no. Corporate tax rates are the same.
IPO activity is common in hydropower and financial sectors.
For most foreign companies entering Nepal in 2026, the answer to private vs public company in Nepal is clear:
Start private. Scale strategically. Convert only if capital markets demand it.
A private structure offers:
Public structure suits only capital-intensive or regulated sectors.