If you are evaluating Private vs public company in Nepal, you are already asking the right question. The legal structure you choose will define your capital strategy, tax exposure, governance burden, and exit options.
For foreign companies entering Nepal, this decision is not administrative. It is strategic.
Nepal’s regulatory framework anchored in the Companies Act 2006, the Foreign Investment and Technology Transfer Act 2019 (FITTA), and capital market rules under the Securities Board of Nepal (SEBON) offers clear pathways. But the implications differ sharply between a private limited company and a public limited company.
In this guide, we break down the legal, financial, and strategic differences. You will see when to choose each structure. And more importantly, how to align it with your long-term investment strategy in Nepal.
Nepal is transitioning from a frontier market to a structured investment destination. Hydropower, ICT, tourism, and manufacturing are expanding.
Foreign investors can:
However, when comparing private vs public company in Nepal, the choice depends on:
Let us break this down properly.
Under the Companies Act 2006, a private company:
It is the most common vehicle for FDI.
Foreign investors typically prefer this structure for:
It offers flexibility and tighter ownership control.
A public limited company is designed for capital markets.
It can:
Minimum requirements include:
This structure is typically used by:
Here is a strategic comparison tailored for foreign companies.
| Criteria | Private Limited Company | Public Limited Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7, no upper limit |
| Share Transfer | Restricted | Freely transferable |
| Public Share Issue | Not allowed | Allowed |
| Listing on NEPSE | Not possible | Possible |
| Governance | Simplified | SEBON-compliant structure |
| Capital Raising | Private placement | IPO, FPO, public bonds |
| Compliance Burden | Moderate | High |
| Suitable For | FDI, subsidiaries | Large-scale capital projects |
Original Insight:
Most foreign investors start as private companies and convert to public only when preparing for IPO or sector-mandated listing (e.g., hydropower licensing requirements).
Understanding compliance is critical.
Defines incorporation, governance, reporting, and shareholder rights.
The Foreign Investment and Technology Transfer Act 2019 governs:
Corporate tax rate generally stands at 25%, with variations for banks and special industries.
Public companies must comply with disclosure, reporting, and listing norms enforced by the Securities Board of Nepal.
The biggest difference in private vs public company in Nepal lies in capital access.
If your project requires mass retail participation, public structure becomes necessary.
Public companies face stricter oversight.
Private companies operate with:
For foreign subsidiaries, lower compliance complexity often makes private companies preferable.
Here is a simple decision logic:
If most answers favor control and flexibility, choose private.
If scaling via public participation is central, consider public.
Conversion is possible under the Companies Act.
Companies typically convert when:
Conversion requires:
Often structured as public companies due to IPO norms.
Prefer private structures for agility.
Mandated public structure under sector laws.
Foreign companies must also consider:
The right structure reduces friction later.
Nepal’s capital market is expanding. Retail investor participation is growing. Hydropower IPOs are frequently oversubscribed.
However, private companies remain dominant for foreign-owned subsidiaries.
The debate of private vs public company in Nepal will increasingly depend on capital strategy rather than compliance alone.
Yes. FITTA 2019 allows 100% foreign ownership in most sectors, subject to negative list restrictions.
In many cases, yes. Licensing frameworks often require public share issuance before project completion.
The Companies Act does not mandate fixed minimum capital, but sectoral regulators may impose thresholds.
Yes. Conversion is allowed through shareholder resolution and regulatory approval.
Most foreign subsidiaries prefer private companies for flexibility and control.