Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies must make. It affects ownership, compliance, capital, taxation, and long-term scalability. In the first 100 days of market entry, this choice can determine speed to launch, regulatory risk, and future exits.
This guide is written for foreign founders, CFOs, and expansion leaders. It translates Nepal’s legal framework into practical decisions you can act on today.
Nepal welcomes foreign investment. But it is a law-driven market. The wrong structure can delay approvals, block repatriation, or restrict operations.
Your company type determines:
Whether foreign shareholding is allowed
Minimum capital requirements
Disclosure and audit obligations
Fundraising and exit options
Ongoing compliance costs
Understanding private vs public company in Nepal helps you align structure with strategy.
Nepal primarily recognizes two company forms for commercial operations.
The most common structure for foreign investors.
Used for large capital-intensive ventures and listings.
Both are governed by the Companies Act, 2006, with foreign investment rules under the Foreign Investment and Technology Transfer Act, 2019 (FITTA).
A private company in Nepal is a closely held entity with restricted share transfers and limited shareholders.
Maximum 101 shareholders
Minimum 1 shareholder
Foreign ownership permitted in approved sectors
Shares cannot be offered to the public
Limited liability protection
Private companies are faster to register. They are easier to control. Compliance is lighter.
Most foreign subsidiaries, joint ventures, and wholly owned FDI entities choose this route.
A public company is designed for large-scale capital mobilization.
Minimum 7 shareholders
No maximum shareholder limit
Higher paid-up capital thresholds
Mandatory public disclosures
Eligible for stock exchange listing
Public companies are suitable for:
Infrastructure projects
Banking and financial institutions
Hydropower and energy
Large manufacturing ventures
For most foreign SMEs, this structure is unnecessarily complex.
| Criteria | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | 7 or more |
| Foreign Ownership | Allowed in approved sectors | Allowed with stricter scrutiny |
| Capital Requirement | Lower | Significantly higher |
| Public Share Offer | Not allowed | Allowed |
| Compliance Burden | Moderate | High |
| Ideal For | Subsidiaries, JVs, SMEs | Large projects, IPO plans |
There is no universal minimum capital. Capital depends on:
Sector
Project size
FDI approval conditions
In practice, foreign investors often commit USD 50,000–200,000 equivalent.
Public companies must meet sector-specific minimum paid-up capital. These are substantially higher and often linked to regulatory approvals.
Ownership rules differ sharply in the private vs public company in Nepal comparison.
Share transfers are restricted
Control stays with founders or parent company
Ideal for 100% foreign-owned subsidiaries
Shares are freely transferable
Dilution risk exists
Governance is board-driven
Foreign companies seeking control almost always choose private companies.
Annual return filing
Annual audit
Board meetings as required
Limited disclosures
Quarterly and annual disclosures
Mandatory independent directors
Regulatory oversight
Public reporting obligations
For foreign businesses entering Nepal for the first time, compliance simplicity matters.
Corporate tax rates are not determined by company type.
However, public companies may qualify for incentives in certain sectors.
Standard corporate tax rate applies
Withholding taxes apply uniformly
VAT registration based on turnover
Repatriation rules apply equally
The difference lies in administrative complexity, not headline tax rates.
Foreign investors must secure FDI approval regardless of structure.
Faster processing
Clear ownership mapping
Easier capital verification
Detailed feasibility studies
Higher scrutiny
Longer timelines
For speed and predictability, private companies win.
Define your Nepal activity scope
Confirm sector eligibility for FDI
Assess capital needs
Evaluate control requirements
Plan exit or expansion strategy
This structured approach avoids costly restructuring later.
Choosing public company for credibility alone
Underestimating compliance costs
Ignoring share transfer restrictions
Overcapitalizing without approval alignment
These errors are avoidable with early advisory.
Conversion may be required if you plan to:
Raise capital from the public
List on the stock exchange
Cross shareholder thresholds
Conversion is possible but procedurally heavy.
For most foreign companies, a private limited company is the optimal entry vehicle.
Public companies should be considered only when:
Capital requirements demand it
Sector regulations require it
Public fundraising is core to the model
The private vs public company in Nepal decision is not about prestige. It is about control, speed, and compliance.
For foreign companies, private limited companies offer flexibility, faster entry, and lower risk. Public companies serve a narrower purpose and demand long-term regulatory commitment.
Choosing wisely at the start saves years of restructuring later.