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.
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.
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.
A private limited company is the most common and flexible vehicle for foreign investors entering Nepal.
Minimum shareholders: 1
Maximum shareholders: 50
Share transfer: Restricted
Public fundraising: Not permitted
Liability: Limited to capital contribution
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
A public limited company is designed for large-scale operations that require capital mobilization from a wider investor base.
Minimum shareholders: 7
No maximum shareholder limit
Share transfer: Freely transferable
Can raise funds from the public
Mandatory compliance with securities regulations
Public companies are typically suitable for:
Infrastructure projects
Hydropower and energy investments
Banking and financial institutions
Telecom and large manufacturing
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Capital raising | Private only | Public & private |
| Regulatory scrutiny | Moderate | High |
| Disclosure requirements | Limited | Extensive |
| Governance complexity | Simple | Complex |
| Setup timeline | Faster | Slower |
| Ideal for foreign SMEs | Yes | Rarely |
Insight: Over 90% of foreign-owned operating companies in Nepal choose the private structure for speed and control.
Nepal mandates minimum foreign investment thresholds, regardless of whether the company is private or public.
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.
Not all sectors are open to foreign investment.
Check whether your business falls under:
Fully open sectors
Approval-based sectors
Restricted or prohibited sectors
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.
Foreign investors must secure approval before incorporation.
This involves:
Investment proposal submission
Shareholding structure review
Capital commitment confirmation
Reserve company name
Draft constitutional documents
Register with the Company Registrar
Open a local bank account
Remit foreign capital
Document fund utilization purpose
Permanent Account Number registration
VAT registration (if applicable)
Local authority registrations
Private companies enjoy operational flexibility.
Typical obligations include:
Annual general meeting
Annual audit
Basic statutory filings
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.
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.
Share sale to strategic investors
Group restructuring
Conversion to public company later
Public share offerings
Secondary market exits
Mergers and acquisitions
Strategic insight: Many successful investors start private and convert public only when scale demands it.
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
Conversion makes sense when:
Shareholders exceed 50
Public fundraising becomes essential
Regulatory requirements mandate public status
Conversion is legally permitted but procedurally intensive.
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.
Private companies are better for most foreign investors due to flexibility, speed, and lower compliance costs.
Yes, in approved sectors, foreigners can own 100% of a private company.
The minimum foreign investment is NPR 20 million, subject to sector rules.
Yes, after conversion into a public company.
Private company registration typically takes 3–6 weeks, depending on approvals.
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.