Choosing between a private vs public company in Nepal is one of the most important decisions foreign companies make before entering the market. The wrong structure can slow approvals, raise compliance costs, and restrict growth. The right structure can unlock faster registration, easier governance, and long-term scalability.
This guide gives foreign investors a clear, practical, and legally grounded comparison. It reflects Nepal’s current regulatory framework and real-world investor experience. By the end, you will know which structure fits your entry strategy and what to do next.
Nepal welcomes foreign investment, but it is a regulated jurisdiction. Your company type determines:
Eligibility for foreign direct investment approval
Shareholding limits and transferability
Ongoing compliance and reporting burden
Capital raising and exit options
Foreign investors most commonly choose a private limited company. Public companies are used only in specific growth or capital market scenarios.
Understanding the private vs public company in Nepal distinction early prevents costly restructuring later.
Company formation and governance are primarily regulated by:
Companies Act, 2006
Foreign Investment and Technology Transfer Act, 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
All companies are incorporated through the Office of Company Registrar. Foreign investment approvals are coordinated with the Department of Industry or Investment Board Nepal, depending on project size.
A private company in Nepal is a limited liability entity that restricts share transfers and limits the number of shareholders. It cannot invite the public to subscribe for shares.
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer restricted
Cannot issue shares to the public
Separate legal personality
For foreign investors, this is the default and most efficient entry vehicle.
A public company is permitted to offer shares to the public and may be listed on Nepal’s stock exchange. It is subject to stricter governance, disclosure, and capital requirements.
Minimum shareholders: 7
No maximum shareholders
May issue shares to the public
Higher paid-up capital requirements
Mandatory compliance with securities laws
Public companies are rarely used at the entry stage by foreign businesses.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share offering | Not allowed | Allowed |
| Paid-up capital | Lower | Significantly higher |
| Compliance burden | Moderate | High |
| Suitable for foreign entry | Yes | Rarely |
| Speed of incorporation | Faster | Slower |
This table reflects why most foreign investors choose private companies when evaluating private vs public company in Nepal options.
There is no fixed statutory minimum capital. However, for foreign-owned entities, regulators expect capital aligned with the business plan. In practice, this usually starts from NPR 20 million for FDI projects, depending on sector.
Public companies require substantially higher paid-up capital. Additional capital thresholds apply if listing or issuing securities.
For market entry, private companies offer flexibility and faster approval.
Private companies must:
Maintain statutory registers
File annual returns and financials
Conduct annual general meetings
Comply with tax and labor laws
Public companies must also:
Publish audited financial statements
Follow securities disclosure rules
Appoint independent directors
Comply with regulator inspections
From a compliance perspective, private vs public company in Nepal is a clear cost and complexity trade-off.
Both private and public companies are taxed at the corporate income tax rate under the Income Tax Act, 2002. However, public companies may face additional disclosure scrutiny and compliance costs.
Foreign investors should focus more on operational tax planning than entity tax rates when choosing between private and public structures.
Are entering Nepal for the first time
Want full foreign ownership where permitted
Plan controlled operations
Prefer faster setup and lower compliance
Plan large-scale capital raising in Nepal
Intend to list shares publicly
Have long-term local investor participation plans
For over 90 percent of foreign investors, a private company is the correct choice.
Name reservation with the Office of Company Registrar
Preparation of Memorandum and Articles of Association
Foreign investment approval
Company incorporation filing
Tax registration and post-incorporation compliance
This process typically takes four to eight weeks when properly managed.
Foreign companies often struggle due to:
Choosing a public structure too early
Underestimating compliance requirements
Misaligning capital with business plans
Ignoring sector-specific restrictions
These mistakes are avoidable with proper advisory support.
Some investors start as private companies and later convert to public status. Nepalese law permits conversion, subject to approvals.
This staged approach offers flexibility without locking investors into high compliance costs early.
For most foreign investors, yes. Private companies are faster, simpler, and more cost-effective for market entry.
Yes, in sectors open to foreign investment, full foreign ownership is permitted.
Yes. Conversion is allowed with regulatory approval and compliance upgrades.
No. Large projects may still operate as private companies unless public fundraising is planned.
Private company registration usually takes four to eight weeks, depending on approvals.
Choosing between a private vs public company in Nepal is a strategic decision. For foreign companies, private companies offer speed, control, and regulatory clarity. Public companies are best reserved for advanced growth stages.
If you want a smooth, compliant, and scalable entry into Nepal, start with the right structure.