If you are a foreign company evaluating private vs public company in Nepal, your choice shapes ownership, compliance, fundraising, and exit options. Nepal has modernized its company laws and investment procedures. Yet many overseas founders still struggle to pick the right structure. This 2026 guide gives you the clearest, most practical explanation. You will learn how private and public companies differ, what regulators expect, and which model best fits your market entry strategy.
Nepal is positioning itself as a South Asian hub for services, IT, tourism, manufacturing, and outsourcing. Foreign direct investment has grown steadily, supported by clearer rules and digital filing systems.
Your entity choice affects:
Shareholding flexibility
Capital requirements
Ongoing disclosures
Investor readiness
Exit and repatriation options
Choosing incorrectly can delay approvals or raise compliance costs.
Nepal primarily recognizes two limited liability company types for commercial activity.
The most common structure for foreign investors entering Nepal.
Used for large-scale ventures or businesses planning public fundraising.
Both are governed by the Companies Act and supervised by the Office of Company Registrar.
A private company in Nepal is designed for closely held businesses. It restricts share transfers and public fundraising.
Minimum shareholders: 1
Maximum shareholders: 101
No public share offering
Limited liability protection
Faster incorporation and lower compliance burden
Foreign-owned subsidiaries
Joint ventures
Outsourcing and captive centers
IT and professional services firms
Most foreign companies choose this model initially.
A public company is structured for capital-intensive or widely owned enterprises.
Minimum shareholders: 7
No maximum shareholder limit
Can issue shares to the public
Higher disclosure and governance standards
Mandatory compliance with securities regulations
Public companies are overseen not only by OCR but also by capital market regulators.
| Feature | Private Company | Public Company |
|---|---|---|
| Shareholders | 1 to 101 | Minimum 7, unlimited max |
| Public share issue | Not allowed | Allowed |
| Compliance burden | Lower | High |
| Ideal for FDI | Yes | Selective |
| Incorporation speed | Faster | Slower |
| Governance complexity | Simple | Complex |
Original insight: Over 85 percent of foreign investors entering Nepal start as private companies, even if they later convert to public status for fundraising.
Nepal does not impose a fixed minimum paid-up capital for private companies. Public companies typically require higher capitalization based on sectoral rules.
Foreign investors must obtain approval under Nepal’s foreign investment regime. Capital inflows are regulated by Nepal Rastra Bank, which oversees foreign exchange compliance.
Here is a simplified numbered process foreign companies follow.
Name reservation with OCR
Preparation of constitutional documents
Foreign investment approval (if applicable)
Company registration filing
PAN and tax registration
Bank account and capital injection
Private companies usually complete this faster than public companies.
Annual return filing
Financial statements submission
Tax filings and audits
All private company obligations
Public disclosures
Board and shareholder reporting
Securities compliance
Public companies face significantly higher professional and audit costs.
Foreign founders often ask who controls the company.
Tight ownership control
Simple board structures
Confidential financials
Independent directors
Transparent disclosures
Shareholder accountability
Control oriented investors usually prefer private companies.
Nepal applies corporate income tax to both private and public companies at similar rates. However, public companies may face additional reporting scrutiny.
Taxes typically include:
Corporate income tax
Withholding taxes
VAT (if applicable)
Professional tax planning is essential from day one.
A public company may make sense if you plan to:
Raise capital from Nepali investors
List on Nepal’s stock exchange
Operate regulated infrastructure or finance businesses
For most foreign SMEs, this is a later-stage option.
Avoid these pitfalls:
Choosing a public company too early
Underestimating compliance costs
Ignoring foreign exchange rules
Poor shareholder agreements
A staged approach reduces risk.
Most foreign companies succeed by:
Starting as a private company
Testing the Nepali market
Scaling operations
Converting to public status if needed
This approach balances flexibility and growth.
Yes. Foreign investors can own up to 100 percent of a private company, subject to sectoral approvals.
Yes. Nepal allows conversion once regulatory and shareholder conditions are met.
Private companies have significantly lower annual compliance and audit costs.
Tax rates are similar. Public companies may access capital markets but face higher compliance.
Private companies typically register faster than public companies, assuming approvals are in place.
For most foreign companies, the private vs public company in Nepal decision is clear. Start with a private company. It offers speed, control, and lower risk. Public companies are powerful tools but best reserved for scale and fundraising stages.