Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies must make.
It affects ownership control, compliance burden, fundraising options, timelines, and long-term exit strategies.
Nepal welcomes foreign investment, but its corporate framework follows clear legal distinctions.
Understanding these differences early prevents delays, compliance risks, and costly restructuring later.
This guide gives foreign founders a clear, practical, and authoritative comparison so you can choose confidently.
Company registration in Nepal is governed mainly by:
Companies Act, 2006
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
Under this framework, companies are primarily classified as private companies or public companies.
A private company in Nepal is the most common entry vehicle for foreign investors.
It is designed for closely held ownership and operational control.
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer restrictions apply
Cannot publicly invite share subscriptions
Faster incorporation timeline
Private companies suit foreign firms testing the market or building operational teams.
A public company in Nepal is structured for large-scale operations and public fundraising.
Minimum shareholders: 7
No maximum shareholder limit
Can issue shares to the public
Subject to stricter governance and disclosures
Mandatory regulatory approvals before incorporation
Public companies are typically chosen for infrastructure, banking, hydropower, or capital-intensive projects.
Private companies offer tight ownership control.
Public companies allow broad ownership and investor participation.
Nepal does not impose a universal minimum paid-up capital.
However, sectoral regulators may require thresholds for public companies.
Private companies raise capital privately
Public companies raise capital through IPOs and public offerings
Private companies enjoy lighter compliance.
Public companies face ongoing regulatory scrutiny.
Private company compliance typically includes:
Annual general meeting
Annual return filing
Tax compliance
Public company compliance additionally includes:
Prospectus approval
Securities board oversight
Independent directors
Mandatory audits and disclosures
| Criteria | Private Company in Nepal | Public Company in Nepal |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share issue | Not allowed | Allowed |
| Regulatory approvals | Basic | Extensive |
| Compliance cost | Low to moderate | High |
| Ideal for | Foreign SMEs, startups | Large investors, IPO plans |
This table highlights why most foreign companies start private.
For most foreign investors, the answer is clear.
Want quick market entry
Need operational flexibility
Plan to scale gradually
Prefer limited disclosure
Require large capital inflows
Plan public fundraising
Operate in regulated sectors
Target IPO or mass investment
Foreign Direct Investment is allowed in both structures.
However, private companies dominate FDI inflows due to simplicity.
Foreign investors must:
Obtain FDI approval
Register the company
Inject capital through banking channels
Comply with reporting obligations
Private companies streamline this process.
Tax rates are broadly similar.
However, public companies often face additional compliance costs.
Key tax considerations include:
Corporate income tax
Withholding taxes
Dividend distribution tax
Tax planning is simpler in private companies due to fewer stakeholders.
Many foreign firms misunderstand Nepal’s corporate landscape.
Avoid these mistakes:
Choosing public structure too early
Underestimating compliance costs
Ignoring sector-specific approvals
Misjudging shareholder limits
Strategic planning upfront avoids restructuring later.
Follow this practical decision path:
Define your investment size
Assess fundraising needs
Evaluate compliance capacity
Consider exit strategy
Select private or public structure
Most foreign companies reach the same conclusion: start private.
Yes.
A private company can convert into a public company in Nepal.
This approach offers flexibility:
Start lean
Validate the market
Convert when scale demands
This staged approach reduces early-stage risk.
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Private companies are better for most foreign investors due to lower compliance, faster registration, and greater control.
Yes. Subject to sector eligibility, foreigners can hold 100 percent ownership in a private company.
Private company registration typically takes 2–4 weeks once approvals are in place.
Yes. Public companies must comply with securities laws, audits, and disclosure obligations.
Yes. Nepalese law allows conversion from private to public when requirements are met.
Nepal’s laws are clear, but execution matters.
Foreign companies benefit from advisors who understand:
Regulatory sequencing
Investment approvals
Tax structuring
Long-term scalability
The right structure at the start saves time and cost.
Choosing between a private vs public company in Nepal shapes your entire investment journey.
For most foreign companies, a private company offers speed, flexibility, and control.
Public companies serve a specific purpose but are rarely the right starting point.
A strategic, informed decision ensures compliance today and scalability tomorrow.