If you are evaluating Private vs public company in Nepal, you are already asking the right question. Your choice of structure determines your capital flexibility, compliance exposure, reporting burden, and long-term exit strategy.
Nepal is positioning itself as a competitive FDI destination in South Asia. But foreign investors must align structure with strategy from day one. This guide provides a board-ready breakdown based on the Companies Act 2063 (2006), the Foreign Investment and Technology Transfer Act 2019 (FITTA), the Income Tax Act 2002, and current regulatory practice.
Let’s build your roadmap.
Nepal’s economy is driven by hydropower, tourism, ICT, manufacturing, and infrastructure. The government has prioritized FDI reforms through:
The regulatory ecosystem includes:
Each plays a role depending on whether you choose a private or public company.
Under the Companies Act 2063, companies are broadly categorized as private limited or public limited entities.
A private company:
Private companies are the most common vehicle for foreign investors.
A public company:
Public companies are typically used for large infrastructure, banking, insurance, and capital-intensive sectors.
Below is a practical comparison foreign boards can use during feasibility discussions.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Share Transfer | Restricted | Freely transferable |
| Public Share Offering | Not allowed | Allowed |
| Governance Burden | Moderate | High |
| Compliance Cost | Lower | Higher |
| IPO Possibility | No | Yes |
| Best For | FDI subsidiaries, joint ventures, SMEs | Large infrastructure, banks, capital markets |
Insight:
For 90% of foreign investors entering Nepal, a private limited company offers optimal control, faster approvals, and lower compliance complexity.
Under Foreign Investment and Technology Transfer Act 2019, foreign investors must obtain FDI approval before incorporation.
This process applies to both private and public companies, but public companies require additional regulatory layers.
Under FITTA 2019:
Private companies offer flexibility in structuring:
Public companies require adherence to securities frameworks and capital disclosure standards.
Under the Income Tax Act 2002:
Dividend distribution rules apply equally to both structures.
However:
Public companies face significantly higher compliance intensity.
A public company may be justified when:
Otherwise, the private structure offers operational simplicity.
Private Company Risks
Public Company Risks
For foreign subsidiaries focused on operational delivery rather than capital markets, private companies reduce risk.
Depending on your structure, you may interact with:
Public companies may also require securities regulator interaction.
Best structure: Private company
Reason: Operational control, lower governance cost, no public capital need.
Best structure: Public company
Reason: Large capital requirement, possible public investment, regulatory framework.
Before selecting private vs public company in Nepal, ask:
If most answers favor control and simplicity, choose private.
Public status signals scale but demands discipline.
Nepal continues digitalization reforms. The Office of Company Registrar is modernizing filings. FDI approval processes are improving.
Yet compliance documentation remains essential. Foreign investors must maintain:
Structure choice determines your compliance architecture.
Yes. Under FITTA 2019, 100% foreign ownership is permitted in most sectors. Restricted sectors remain listed separately. Approval from the Department of Industry is required.
Not always. It depends on sector and capital strategy. Infrastructure and banking often require public structure. Many large manufacturing entities still operate privately.
Minimum capital varies by sector and FDI threshold rules. FITTA sets minimum FDI investment requirements that must be met.
Yes. Public companies face stricter governance, disclosure, and securities compliance obligations. Audit intensity is higher.
Yes. Conversion is allowed under Companies Act 2063, subject to regulatory compliance and shareholder approval.
For most foreign subsidiaries entering Nepal, a private limited company offers flexibility, control, and lower compliance complexity.
A public company is justified when capital markets access is strategic.
Choosing correctly at incorporation prevents restructuring costs later. If you are evaluating Private vs public company in Nepal, align your structure with long-term capital strategy, regulatory exposure tolerance, and exit plan.