The Role of Public Companies in Nepal’s Growing Economy

Understanding private vs public company in Nepal is one of the most important early decisions for foreign companies entering the Nepali market.
The choice affects capital access, compliance burden, credibility, and long-term scalability.

Nepal’s economy is transitioning. Infrastructure, hydropower, banking, insurance, and capital markets are expanding. Public companies play a growing role in mobilizing domestic savings and institutional capital. At the same time, private companies remain the preferred entry vehicle for most foreign direct investment.

This guide gives you a practical, investor-focused explanation.
You will learn how private and public companies differ, where public companies add strategic value, and how foreign businesses should decide.

Nepal’s Corporate Landscape at a Glance

Nepal recognizes two main company forms under the Companies Act.

• Private Limited Company

• Public Limited Company

Both are regulated by Office of the Company Registrar and governed by the Companies Act 2006.

Foreign investment is further regulated by the Foreign Investment and Technology Transfer Act 2019 and sector-specific regulators such as Nepal Rastra Bank and Securities Board of Nepal.

Private vs Public Company in Nepal: Core Structural Differences

At a high level, the distinction is about ownership, capital access, and regulatory intensity.

What Is a Private Company in Nepal?

A private company is designed for controlled ownership and operational flexibility.

Key characteristics:

• Minimum 1 shareholder

• Maximum 101 shareholders

• Shares are not publicly tradable

• Common structure for FDI and joint ventures

Most foreign companies start here.

What Is a Public Company in Nepal?

A public company is designed to raise capital from the public and institutional investors.

Key characteristics:

• Minimum 7 shareholders

• No maximum shareholder limit

• Eligible to list shares on Nepal Stock Exchange

• Subject to higher disclosure and governance standards

Public companies act as vehicles for large-scale capital formation.

Why Public Companies Matter in Nepal’s Economic Growth

Public companies are not just larger private companies.
They play a structural role in Nepal’s economy.

1. Capital Mobilization at Scale

Nepal has limited private equity depth.
Public offerings allow companies to raise capital from:

• Retail investors

• Pension funds

• Insurance companies

• Banks and institutional investors

This is critical for hydropower, banking, telecom, and infrastructure.

2. Market Transparency and Governance

Public companies must follow:

• Audited financial reporting

• Continuous disclosure requirements

• Board and governance norms

This builds trust in the broader investment ecosystem.

3. Wealth Creation and Financial Inclusion

Listing on NEPSE allows ordinary Nepali citizens to participate in corporate growth.
This has made public companies central to Nepal’s savings culture.

Legal Comparison – Private vs Public Company in Nepal

The table below offers a practical comparison foreign investors rarely see summarized.

When a Private Company Makes Sense for Foreign Investors

For most foreign companies, private incorporation is the right first step.

Common use cases

1. Market entry and testing

2. Wholly owned subsidiaries

3. Joint ventures with Nepali partners

4. Service and outsourcing operations

Advantages of private companies

• Faster incorporation

• Lower compliance cost

• Greater control over ownership

• Easier exit or restructuring

For regulated sectors, approvals are still required, but governance remains manageable.

When a Public Company Structure Adds Strategic Value

Public companies are not entry vehicles.
They are scale vehicles.

Ideal scenarios for public companies

• Capital-intensive infrastructure projects

• Banking and financial services

• Insurance and hydropower

• Consumer brands seeking mass participation

Foreign investors typically convert a mature private company into a public one rather than starting public from day one.

Compliance Burden – What Foreign Companies Must Prepare For

Public companies carry heavier obligations.

Ongoing requirements include

• Annual general meetings

• Quarterly and annual reporting

• External audits

• SEBON disclosures

• Share registry maintenance

Private companies face fewer mandatory disclosures and simpler annual filings with the OCR.

This compliance delta is a decisive factor in the private vs public company in Nepal decision.

Taxation Perspective for Private and Public Companies

From an income tax standpoint, rates are broadly similar under the Income Tax Act 2002.

However, public companies may benefit from:

• Enhanced credibility with banks

• Easier access to debt financing

• Better valuation benchmarks

Tax efficiency alone rarely justifies going public.
Strategic financing does.

Sectoral Restrictions and Foreign Ownership

Not all sectors allow public foreign participation.

Foreign investment must comply with:

• FITTA sectoral limits

• Negative list restrictions

• Central bank approvals

Some public companies cap foreign shareholding.
Others require special approval for foreign participation post-listing.

This makes early structuring critical.

Conversion from Private to Public Company in Nepal

Foreign investors often ask if conversion is possible.

Yes.
Nepal allows conversion subject to:

1. Shareholder approval

2. Capital restructuring

3. OCR approval

4. SEBON compliance

Conversion should be planned 12–24 months in advance to avoid regulatory friction.

Risks Foreign Companies Often Underestimate

Before choosing a public structure, consider these realities.

• Slower decision-making

• Public scrutiny of financials

• Market volatility risk

• Dilution of control

Public companies bring visibility and capital, but they reduce privacy.

How to Choose: A Practical Decision Framework

Ask these questions:

• Do you need public capital within 3 years?

• Is your sector capital-intensive?

• Are you prepared for public governance?

• Is foreign ownership permitted post-listing?

If the answer is no to most, start private.

Private vs Public Company in Nepal – Strategic Takeaway

For foreign investors, private vs public company in Nepal is not a binary choice.
It is a timeline decision.

Private companies enable entry, control, and flexibility.
Public companies enable scale, capital, and national impact.

The most successful foreign investors plan for both.

Frequently Asked Questions 

Is a public company better than a private company in Nepal?

Not always. Public companies suit large, capital-intensive businesses. Private companies suit most foreign investors entering Nepal.

Can foreigners own shares in public companies in Nepal?

Yes, subject to sectoral limits and regulatory approvals under FITTA and sector regulators.

How long does it take to convert a private company into a public company?

Typically, 6 to 12 months, depending on restructuring complexity and regulatory approvals.

Do public companies pay lower tax in Nepal?

No. Tax rates are similar. Benefits are strategic, not tax-driven.

Is NEPSE listing mandatory for public companies?

No. A company can be public without listing, but listing enables public trading and capital access.

Conclusion: Making the Right Choice for Long-Term Success

Choosing private vs public company in Nepal shapes your investment trajectory.
Foreign companies should align structure with strategy, not hype.

Start private.
Scale deliberately.
Go public only when the business is ready.