The Complete Checklist for Opening a Company in Nepal

Choosing between a private vs public company in Nepal is one of the most important strategic decisions a foreign investor will make. The structure you select directly affects ownership control, regulatory exposure, capital-raising ability, timelines, and long-term exit options.

Nepal welcomes foreign investment, but it also applies strict company law, foreign investment rules, and sectoral controls. This guide cuts through complexity. It gives you a practical, legally grounded checklist to decide whether a private or public company is right for your Nepal entry—without guesswork.

If you are planning market entry, outsourcing, shared services, technology development, or regional expansion, this article is written for you.

Why the Private vs Public Company Decision Matters in Nepal

Foreign companies often underestimate how structural choices shape future flexibility. In Nepal, the difference between private and public companies goes far beyond naming conventions.

Your decision influences:

• Foreign shareholding approvals

• Minimum capital requirements

• Disclosure and audit obligations

• Fundraising and exit pathways

• Governance complexity

Getting this wrong can lock you into years of avoidable compliance friction.

Understanding Company Structures Under Nepal Law

Nepal’s Companies Act recognizes two primary corporate forms relevant to foreign investors:

• Private Limited Company

• Public Limited Company

Both offer limited liability. However, their regulatory expectations differ significantly.

What Is a Private Limited Company in Nepal?

A private limited company is the most common and flexible vehicle for foreign investors entering Nepal.

Key Legal Characteristics

• Minimum shareholders: 1

• Maximum shareholders: 50

• Share transfer: Restricted

• Public fundraising: Not permitted

• Liability: Limited to capital contribution

Why Foreign Companies Prefer Private Companies

Private companies allow tighter control and faster decision-making. They are ideal for:

• Wholly owned subsidiaries

• Joint ventures with selected partners

• Outsourcing and service delivery centers

• Technology and IP-driven businesses

What Is a Public Limited Company in Nepal?

A public limited company is designed for large-scale operations that require capital mobilization from a wider investor base.

Key Legal Characteristics

• Minimum shareholders: 7

• No maximum shareholder limit

• Share transfer: Freely transferable

• Can raise funds from the public

• Mandatory compliance with securities regulations

When Public Companies Make Sense

Public companies are typically suitable for:

• Infrastructure projects

• Hydropower and energy investments

• Banking and financial institutions

• Telecom and large manufacturing

Private vs Public Company in Nepal: Side-by-Side Comparison

Insight: Over 90% of foreign-owned operating companies in Nepal choose the private structure for speed and control.

Capital Requirements for Foreign Investors

Nepal mandates minimum foreign investment thresholds, regardless of whether the company is private or public.

Current Baseline Requirements

• Minimum foreign investment: NPR 20 million

• Capital must be remitted through approved banking channels

• Funds must align with approved business objectives

Public companies often face higher effective capital requirements due to sectoral regulations and compliance expectations.

Step-by-Step Checklist for Opening a Company in Nepal

1. Confirm Sector Eligibility

Not all sectors are open to foreign investment.

Check whether your business falls under:

• Fully open sectors

• Approval-based sectors

• Restricted or prohibited sectors

2. Decide: Private vs Public Company in Nepal

Ask yourself:

• Do I need public fundraising?

• Will ownership exceed 50 shareholders?

• Is this a regulated industry?

For most foreign companies, the answer leads to private limited.

3. Obtain Foreign Investment Approval

Foreign investors must secure approval before incorporation.

This involves:

• Investment proposal submission

• Shareholding structure review

• Capital commitment confirmation

4. Name Reservation and Company Registration

• Reserve company name

• Draft constitutional documents

• Register with the Company Registrar

5. Capital Inflow and Bank Account Setup

• Open a local bank account

• Remit foreign capital

• Document fund utilization purpose

6. Tax and Statutory Registrations

• Permanent Account Number registration

• VAT registration (if applicable)

• Local authority registrations

Governance and Compliance Differences You Must Understand

Private Company Governance

Private companies enjoy operational flexibility.

Typical obligations include:

• Annual general meeting

• Annual audit

• Basic statutory filings

Public Company Governance

Public companies face heavier oversight:

• Mandatory independent directors

• Audit committees

• Public disclosures

• Securities reporting

Risk note: Many foreign investors overestimate their need for public company status and underestimate compliance costs.

Taxation: Does Structure Affect Tax Rates?

Corporate tax rates in Nepal generally apply equally to private and public companies.

However, public companies may face:

• Additional compliance costs

• Higher audit scrutiny

• More complex reporting

Tax incentives are sector-driven, not structure-driven.

Funding and Exit Strategy Considerations

Private Company Exit Options

• Share sale to strategic investors

• Group restructuring

• Conversion to public company later

Public Company Exit Options

• Public share offerings

• Secondary market exits

• Mergers and acquisitions

Strategic insight: Many successful investors start private and convert public only when scale demands it.

Common Mistakes Foreign Investors Make

Avoid these frequent pitfalls:

• Choosing public structure “for credibility”

• Underestimating compliance timelines

• Misjudging sectoral restrictions

• Structuring ownership without exit foresight

• Assuming Nepal rules mirror other jurisdictions

When Should You Consider Converting Private to Public?

Conversion makes sense when:

• Shareholders exceed 50

• Public fundraising becomes essential

• Regulatory requirements mandate public status

Conversion is legally permitted but procedurally intensive.

Why Most Foreign Companies Choose Private vs Public Company in Nepal

For foreign investors, the private vs public company in Nepal decision overwhelmingly favors private companies due to:

• Faster incorporation

• Lower compliance burden

• Strong control mechanisms

• Easier restructuring

Public companies serve specific, regulated, capital-heavy use cases—not general market entry.

Frequently Asked Questions (People Also Ask)

Is private or public company better in Nepal for foreigners?

Private companies are better for most foreign investors due to flexibility, speed, and lower compliance costs.

Can a foreigner own 100% of a Nepal company?

Yes, in approved sectors, foreigners can own 100% of a private company.

What is the minimum capital for a foreign company in Nepal?

The minimum foreign investment is NPR 20 million, subject to sector rules.

Can a private company raise public funds later?

Yes, after conversion into a public company.

How long does company registration take in Nepal?

Private company registration typically takes 3–6 weeks, depending on approvals.

Final Verdict: Choosing the Right Structure

The private vs public company in Nepal decision is not about ambition—it is about alignment. Most foreign companies succeed by starting private, staying compliant, and scaling strategically.

If you want speed, control, and operational clarity, private companies deliver. Public companies should be chosen only when scale and regulation demand them.