Foreign investors evaluating Private vs public company in Nepal often ask one core question: which structure best supports long-term growth and Foreign Direct Investment (FDI)?
The answer shapes governance, capital access, compliance exposure, and exit strategy. It also directly affects how your investment contributes to Nepal’s economic development.
Nepal is positioning itself as a competitive South Asian investment destination. The government actively promotes FDI through policy reforms and sectoral incentives. Yet the legal vehicle you choose determines how smoothly you can operate.
This guide breaks down the structural, regulatory, and strategic differences between private and public companies in Nepal. It is designed specifically for foreign companies entering the market.
We will cover:
Let’s start with the fundamentals.
Foreign investors must structure their operations under Nepal’s corporate and investment laws.
Key governing laws include:
All companies are registered with the Office of the Company Registrar.
FDI approval is obtained from the Department of Industry or the Investment Board Nepal, depending on project size.
Nepal Rastra Bank regulates foreign currency inflows and profit repatriation.
Understanding this framework is critical before comparing private and public company structures.
Under the Companies Act 2006, a private limited company:
This structure is the most common vehicle for foreign direct investment in Nepal.
Private companies are ideal for:
They are particularly suitable for early-stage market entry.
A public limited company in Nepal:
Public companies are regulated by the Securities Board of Nepal.
If listed, they trade shares on the Nepal Stock Exchange.
Public companies are used for:
They are appropriate for capital-intensive projects seeking local capital participation.
| Feature | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | Minimum 7, unlimited |
| Public share issue | Not allowed | Allowed |
| Capital raising | Private equity | IPO + public issue |
| Compliance level | Moderate | High |
| Regulatory oversight | OCR + DOI | OCR + SEBON |
| Governance | Flexible | Structured & regulated |
| Disclosure | Limited | Extensive |
| Best for | Controlled FDI | Large-scale capital projects |
Original Insight:
Private companies maximize control and operational agility. Public companies maximize capital access and national integration.
Your choice signals your strategic intent in Nepal.
FDI is a critical pillar of Nepal’s economic development.
According to government data, Nepal continues to attract FDI in hydropower, ICT, tourism, and manufacturing.
Foreign investment supports:
Public companies contribute more directly to capital market development.
Private companies contribute through operational efficiency and employment creation.
Both are essential. The choice depends on your investment model.
Foreign investors must assess governance appetite carefully.
Higher transparency increases credibility but also regulatory exposure.
Capital access is often the defining factor.
Public companies improve domestic capital mobilization.
However, IPO timelines and compliance costs are significant.
Corporate tax is governed by the Income Tax Act 2058.
Standard corporate tax rate in Nepal is generally 25% for most industries. Certain sectors may have different rates.
Dividend distribution is subject to withholding tax.
Profit repatriation requires approval from Nepal Rastra Bank.
Both private and public companies can repatriate profits under FDI regulations.
There is no structural disadvantage in repatriation between the two.
The difference lies primarily in disclosure and reporting obligations.
Choose a private limited company if:
This is the most common entry structure for foreign subsidiaries.
Choose a public company if:
Hydropower and banking investors often follow this model.
Before deciding between private vs public company in Nepal, evaluate:
If your model is operational efficiency-focused, private is better.
If your model is capital-intensive and market-integrated, public is stronger.
| Risk Factor | Private Company | Public Company |
|---|---|---|
| Regulatory scrutiny | Medium | High |
| Market volatility | Low | High |
| Compliance costs | Moderate | High |
| Governance complexity | Low | High |
| Capital access risk | Medium | Low |
Public companies reduce funding risk.
Private companies reduce governance risk.
Nepal’s development strategy prioritizes:
Private companies accelerate operational growth.
Public companies strengthen capital markets and investor participation.
Both structures support FDI inflows under FITTA 2019.
Choosing wisely ensures compliance while contributing to Nepal’s economic transformation.
The debate around Private vs public company in Nepal is not about which is better.
It is about alignment.
Private companies offer control, speed, and confidentiality.
Public companies offer scale, capital depth, and national integration.
Foreign companies entering Nepal must align structure with strategy.
The correct vehicle protects governance, simplifies compliance, and enhances returns.
If you are considering foreign direct investment in Nepal, structuring correctly from day one is critical.
Strategic legal structuring reduces risk and maximizes long-term value.
Yes. Under FITTA 2019, 100% foreign ownership is allowed in most sectors, except restricted industries.
No. A public company can exist without listing, but public offering requires SEBON approval.
Private companies are faster due to fewer regulatory approvals and documentation requirements.
Yes. Conversion is allowed under the Companies Act 2006 subject to regulatory compliance.
Public companies are preferred for capital-intensive infrastructure investments.