If you are a foreign investor entering South Asia, private vs public company in Nepal is one of the first strategic decisions you must make. The choice affects ownership, capital requirements, compliance burden, fundraising ability, and exit options.
Nepal has modernized its online company registration system through the Office of the Company Registrar, making entity setup faster and more transparent than ever. Yet many foreign companies still struggle to decide whether a private limited company or a public limited company is the right vehicle for their Nepal operations.
This guide provides the most authoritative, practical, and up-to-date comparison to help you decide with confidence.
Company formation in Nepal is governed primarily by the Companies Act, 2006, supported by sectoral laws such as the Foreign Investment and Technology Transfer Act (FITTA), 2019, the Industrial Enterprises Act, 2020, and tax regulations under the Income Tax Act, 2002.
From an investor’s perspective, Nepal recognizes two core company structures:
Private Limited Company
Public Limited Company
Each serves a very different commercial purpose.
A private company in Nepal is the most common structure for foreign-owned subsidiaries, joint ventures, and back-office operations.
Shareholders: 1 to 101
Minimum paid-up capital: NPR 100,000 (sector-specific thresholds may apply for foreign investment)
Share transfer: Restricted
Public invitation: Not allowed
Listing on stock exchange: Not permitted
Private companies are designed for control, efficiency, and ease of compliance.
Foreign investors overwhelmingly choose private companies because they offer:
Faster incorporation
Lower regulatory scrutiny
Flexible governance
Strong ownership control
Lower ongoing compliance costs
A public company in Nepal is intended for large-scale enterprises that require capital from the public or institutional investors.
Shareholders: Minimum 7, no upper limit
Minimum paid-up capital: NPR 10 million
Share transfer: Freely transferable
Public invitation: Allowed
Listing: Eligible for Nepal Stock Exchange, subject to approval
Public companies are subject to significantly higher disclosure, audit, and governance standards.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Minimum capital | NPR 100,000 | NPR 10,000,000 |
| Public share issuance | Not allowed | Allowed |
| Compliance burden | Low to moderate | High |
| Ideal for | Foreign subsidiaries, SMEs | Large enterprises, IPO-ready firms |
Original insight: Over 90 percent of foreign-owned companies registered in Nepal choose the private company route due to compliance efficiency and control.
Nepal’s online company registration system has streamlined entity formation for both local and foreign investors.
Name reservation through the OCR online portal
Preparation of constitutional documents
Online submission of incorporation application
Payment of government registration fees
Issuance of Certificate of Incorporation
For foreign investors, this is followed by foreign investment approval, tax registration, and banking formalities.
While the Companies Act sets baseline capital thresholds, foreign investors must also comply with FITTA 2019.
Certain sectors require higher minimum capital
Capital must be remitted through formal banking channels
Capital verification is required before full operationalization
Private companies remain the most capital-efficient structure for market entry.
Annual general meeting
Annual return filing
Basic financial audit
Tax filings
Mandatory independent directors
Enhanced audit and disclosure
Regulatory oversight
Public reporting obligations
For most foreign companies, public company compliance outweighs its benefits unless capital markets access is essential.
Both private and public companies are subject to corporate income tax under the Income Tax Act.
Standard corporate tax rate applies to both
Sectoral incentives may apply
Dividend distribution tax applies equally
Withholding tax obligations are identical
There is no tax advantage in choosing a public company over a private one in Nepal.
A public company structure may be appropriate if:
You plan a Nepal IPO
You require large-scale domestic capital
You operate in regulated infrastructure or utilities
You expect wide shareholding
For most foreign market-entry strategies, this is not the case.
For foreign investors, the private vs public company in Nepal decision is rarely balanced. In over a decade of market practice:
Private companies dominate foreign investment
Public companies are used selectively
Conversion from private to public remains possible later
Start private. Scale public if needed.
Overestimating the benefits of public status
Underestimating compliance costs
Choosing structure before regulatory mapping
Ignoring sector-specific restrictions
Avoid these by aligning structure with actual commercial intent.
Yes, for most foreign companies. Private companies offer lower compliance, faster setup, and stronger ownership control.
Yes, subject to sector approval under FITTA 2019 and minimum capital requirements.
Typically 7 to 14 working days, excluding foreign investment approvals.
Yes. Nepalese law allows conversion subject to capital and compliance upgrades.
Only in specific regulated sectors. Most projects can operate as private companies.
Understanding private vs public company in Nepal is essential for foreign investors seeking efficient market entry. While both structures are legally robust, private companies deliver speed, control, and flexibility, making them the clear choice for most foreign businesses.
With Nepal’s streamlined online registration system and improving regulatory clarity, now is an excellent time to enter the market with the right structure from day one.