Nepal is entering a decisive growth phase. Hydropower, IT outsourcing, tourism, manufacturing, and fintech are expanding fast. But before you invest, you must decide on structure. The debate around private vs public company in Nepal is not academic. It determines control, compliance burden, fundraising options, and exit strategy.
Foreign companies exploring Nepal under the Foreign Investment and Technology Transfer Act 2019 (FITTA) or the Companies Act 2006 must understand this distinction clearly.
This guide breaks it down in plain English. It is written for foreign investors, CFOs, and strategy teams evaluating Nepal as a market entry destination.
Nepal’s GDP growth has remained steady in recent years. The government is actively encouraging foreign direct investment. Priority sectors include:
The Department of Industry (DOI) facilitates foreign investment approvals. The Office of the Company Registrar (OCR) handles incorporation.
For large-scale projects, the Investment Board Nepal may be involved.
But incorporation structure is your first strategic decision.
Under the Companies Act 2006, companies in Nepal are primarily categorized as:
Both can be used for foreign investment, subject to sectoral restrictions and minimum capital rules under the Foreign Investment and Technology Transfer Act 2019.
Let’s break down what truly differentiates them.
A private limited company is the most common structure for foreign investors entering Nepal.
Private companies are ideal for:
Most FDI projects in Nepal begin as private limited companies.
A public limited company is designed for larger capital structures.
Public companies may list on the Nepal Stock Exchange (NEPSE) after regulatory approvals.
They are typically used for:
Below is a strategic comparison tailored for foreign investors.
| Criteria | Private Company | Public Company |
|---|---|---|
| Governing Law | Companies Act 2006 | Companies Act 2006 + Securities Laws |
| Min. Shareholders | 1 | 7 |
| Public Share Offering | Not allowed | Allowed |
| Share Transfer | Restricted | Freely transferable |
| Regulatory Oversight | Moderate | High |
| Capital Raising | Limited to private investors | Public + institutional |
| Compliance Cost | Lower | Higher |
| Ideal For | Subsidiaries, SMEs, tech firms | Large projects, IPO strategy |
| Control Retention | High | Diluted over time |
Strategic Insight:
If your objective is operational control and streamlined compliance, a private company is usually optimal. If your goal is large capital mobilization or eventual IPO, public company status becomes necessary.
Foreign investment capital must comply with FITTA thresholds.
While capital minimums vary by sector, investors must:
The Nepal Rastra Bank regulates foreign currency inflows and repatriation.
Private and public companies both require capital documentation. However, public companies often require higher paid-up capital.
Compliance intensity differs significantly.
In addition to the above:
If compliance simplicity matters, private companies offer flexibility.
Corporate tax in Nepal is governed by the Income Tax Act 2002.
Standard corporate tax rate: typically 25% (subject to sector incentives).
Hydropower, SEZ manufacturing, and export businesses may enjoy tax holidays.
Both private and public companies are taxed similarly at corporate level. The difference lies in dividend distribution structure and reporting transparency.
Choose a private company if:
This structure is commonly used by:
It provides speed and operational control.
A public company makes sense if:
Hydropower projects often require public structure due to financing scale.
Let’s examine three investor profiles.
Best Structure: Private Company
Reason: Control, lean compliance, operational flexibility.
Best Structure: Public Company
Reason: Capital mobilization and public subscription.
Best Structure: Private Company (initially)
Later conversion to public possible if expansion requires capital.
Yes.
The Companies Act 2006 allows conversion subject to compliance.
This provides flexibility. Many investors start private and convert later.
Foreign investors must think beyond structure.
Key risk areas:
Public companies face greater scrutiny. Private companies offer more confidentiality.
The process typically takes 4–8 weeks, depending on sector approvals.
The private vs public company in Nepal decision should align with:
Do not choose structure based on cost alone.
Choose based on long-term control and capital architecture.
Yes. FITTA allows 100% foreign ownership in most sectors. Some sectors remain restricted.
Often yes for large-scale projects. Financing models typically require public participation.
Private companies generally have lower compliance and disclosure obligations.
Yes, subject to Nepal Rastra Bank approval and tax clearance.
Usually 4–8 weeks, depending on FDI approval and documentation completeness.
Nepal offers serious growth potential. But structure determines outcome.
The debate around private vs public company in Nepal is about control versus capital scale.
Private companies provide flexibility and confidentiality. Public companies unlock large capital pools.
For most foreign companies entering Nepal, starting private is strategic. You can always scale later.
If you are evaluating market entry, capital structuring, or regulatory compliance, now is the time to build a compliant foundation.
Ready to structure your Nepal investment correctly?
Speak with our advisory team to receive a tailored incorporation roadmap and compliance blueprint aligned with your sector.