Choosing the right company structure is the first strategic decision foreign investors make in Nepal.
The debate around private vs public company Nepal is not just legal.
It affects ownership, capital raising, compliance burden, and exit options.
Many foreign companies default to a private company.
Some later realise a public company would have aligned better with growth plans.
This guide gives you a clear, practical, and legally grounded comparison.
By the end, you will know exactly which structure fits your market entry, risk appetite, and long-term strategy.
Nepal’s corporate framework is governed primarily by the Companies Act, 2006.
Under this law, companies are broadly classified as:
Private Limited Company
Public Limited Company
Other forms exist.
Examples include branches, liaison offices, partnerships, and non-profits.
However, for foreign direct investment, the real comparison is private vs public company Nepal.
A private company in Nepal is designed for closely held ownership.
It is the most common structure used by foreign investors entering Nepal.
Under the Companies Act, a private company:
Restricts the right to transfer shares
Limits the number of shareholders
Prohibits public subscription of shares
Private companies are preferred by:
Foreign subsidiaries
Joint ventures with Nepali partners
Professional services firms
IT, outsourcing, and shared service centers
A public company is structured for wider ownership and capital mobilisation.
It allows shares to be offered to the public.
It can list on the Nepal Stock Exchange (NEPSE), subject to regulatory approvals.
A public company in Nepal:
Has no restriction on share transfer
Can invite public subscription
Is subject to enhanced disclosure and governance rules
Public companies are usually:
Banks and financial institutions
Insurance companies
Hydropower and infrastructure projects
Large manufacturing and trading entities
| Aspect | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | No limit |
| Public share issue | Not allowed | Allowed |
| Minimum paid-up capital | No statutory minimum (sector-based) | NPR 10 million (general rule) |
Original insight:
For foreign investors, capital flexibility makes private companies significantly faster to launch.
Control remains with founders or parent company
Share transfers require shareholder approval
Ideal for IP protection and operational control
Ownership can be diluted through public shareholding
Board composition is more regulated
Minority shareholder protection rules apply
For foreign parents, private companies offer tighter governance.
One of the biggest differences in private vs public company Nepal is compliance intensity.
Annual filings with the Office of Company Registrar
Financial statements and tax returns
Fewer disclosure requirements
Mandatory audits with stricter standards
Public disclosures and reporting
Securities regulations and regulator oversight
Public companies face significantly higher recurring costs.
Private companies raise capital through:
Parent company equity
Shareholder loans
Foreign direct investment inflows
They cannot raise funds from the general public.
Public companies can raise capital through:
Initial Public Offering (IPO)
Rights issues
Debentures and public instruments
This flexibility comes with regulatory scrutiny.
From a tax rate perspective, Nepal does not differentiate heavily.
However, compliance exposure differs.
Corporate income tax applies equally
Dividend distribution is regulated
Transfer pricing scrutiny applies to foreign entities
Private companies usually manage tax risk more efficiently due to simpler structures.
For FDI, both private and public companies are permitted.
However, regulatory experience differs.
Faster incorporation
Easier capital injection
Lower compliance friction
Clear parent-subsidiary control
Public companies are generally chosen only when public capital is essential.
Operational agility is critical for foreign companies.
Private companies allow:
Faster board decisions
Easier restructuring
Simpler exit or share transfer
Public companies require:
Regulatory approvals
Shareholder disclosures
Compliance alignment with securities laws
Despite complexity, a public company is justified when:
Large-scale capital is required
The project is infrastructure-heavy
Public participation is mandated by law
Long-term listing is a strategic objective
For most foreign entrants, this is not the starting point.
Choose a Private Company if you:
Want speed and control
Are entering Nepal for operations or services
Plan to fund via parent company
Choose a Public Company if you:
Need public capital
Operate in regulated sectors
Plan for IPO or large-scale expansion
Public companies are not “more legitimate”
Private companies can scale significantly
Conversion from private to public is possible later
Structure choice should follow strategy, not perception.
For most foreign companies, yes.
Private companies offer flexibility, speed, and control with lower compliance costs.
Yes.
100% foreign ownership is permitted in many sectors, subject to FDI approval.
Generally NPR 10 million, though sector-specific rules may apply.
Yes.
Conversion is legally permitted with regulatory approvals and compliance upgrades.
A private company is usually the most practical entry vehicle for FDI.
The decision between private vs public company Nepal should align with your investment horizon.
Private companies dominate foreign investment for good reason.
They are faster, leaner, and easier to manage.
Public companies serve specific capital-intensive use cases.
They are not default entry vehicles.
A well-chosen structure reduces risk, cost, and regulatory friction.
Planning to register a company in Nepal?
Need clarity on private vs public structures for foreign investment?
Book a consultation with our Nepal incorporation specialists.
Get a structure aligned with law, tax, and long-term growth.