If you are evaluating Private vs public company in Nepal, you are already thinking like a serious foreign investor.
Structure determines control. It affects tax exposure. It shapes compliance risk.
Nepal’s legal framework for foreign direct investment (FDI) is clear but procedural. The right vehicle can reduce regulatory friction, protect repatriation rights, and simplify governance.
This guide explains everything foreign companies need to know. It draws on the:
We will compare ownership, capital structure, governance, compliance obligations, and investor suitability.
If your goal is stable, compliant, and scalable entry into Nepal, this article is written for you.
Before comparing a private vs public company in Nepal, it is critical to understand the regulatory architecture.
Nepal regulates FDI through three core layers:
The Companies Act 2006 governs incorporation, shareholder rights, directors’ duties, reporting, and liquidation.
The Foreign Investment and Technology Transfer Act 2019 defines:
Nepal Rastra Bank controls:
Foreign investors must obtain approval before capital injection.
This structure applies whether you choose a private or public company.
A private limited company is the most common FDI vehicle.
Under the Companies Act 2006:
Foreign investors usually incorporate through the Department of Industry or Investment Board (for large projects).
For most foreign SMEs, this is the preferred route.
A public limited company:
Public companies are often listed on the Nepal Stock Exchange (NEPSE).
They are typically used for:
For foreign investors, this structure is complex but powerful when raising local capital.
Below is a clear comparison tailored for foreign investors.
| Criteria | Private Company | Public Company |
|---|---|---|
| Governing Law | Companies Act 2006 | Companies Act 2006 |
| Min Shareholders | 1 | 7 |
| Max Shareholders | 101 | Unlimited |
| Public Share Issue | Not allowed | Allowed |
| Compliance Burden | Moderate | High |
| Board Structure | Flexible | Structured & regulated |
| Ideal For | SMEs, subsidiaries | Capital-intensive projects |
| Foreign Control | High | Diluted if public offering |
If control and speed matter, choose private.
If capital raising from Nepali investors matters, consider public.
Under FITTA 2019:
Foreign investors must:
Nepal Rastra Bank must verify foreign currency inflow before shares are issued.
This applies to both private and public companies.
Public companies face higher regulatory scrutiny.
For foreign strategic investors, governance flexibility is often decisive.
Regardless of structure, compliance includes:
Public companies must additionally comply with securities regulations.
Failure to comply may restrict dividend repatriation.
Corporate tax rates vary by sector.
Standard corporate tax rate: 25% (subject to sectoral variations).
Dividends distributed to foreign shareholders are subject to withholding tax.
Repatriation is allowed under FITTA 2019 after:
Private vs public status does not significantly alter tax rates.
But public companies often face more complex reporting.
If your objective is:
Choose private.
Either structure works.
Public company is better suited.
Public company required.
Private company is faster.
Typical incorporation timeline:
Public company registration may take longer due to documentation requirements.
Foreign investors usually prefer private companies for speed.
| Risk Category | Private Company | Public Company |
|---|---|---|
| Regulatory Exposure | Moderate | High |
| Disclosure Risk | Low | High |
| Shareholder Disputes | Controlled | Broader |
| Capital Flexibility | Limited | High |
| Exit Options | Strategic sale | Public market |
Public companies increase transparency but also exposure.
Foreign companies entering Nepal for operational expansion typically use private limited companies.
Under FITTA 2019, foreign investors may repatriate:
Approval from Nepal Rastra Bank is required.
Private companies provide cleaner exit structuring because shareholder numbers are limited.
Public companies allow share sale through NEPSE but require compliance with securities rules.
If you are:
The private limited company structure is usually optimal.
It provides:
Public companies make sense only when raising local capital is central to your strategy.
Yes. FITTA 2019 permits 100% foreign ownership in most sectors. Some sectors remain restricted. Approval is required before capital injection.
No. Listing is optional. However, public companies are structured to enable public share issuance.
Both allow repatriation under FITTA. Private companies are administratively simpler.
Minimum FDI threshold is defined by regulation. It may change. Always verify with DOI before filing.
Yes. Conversion is permitted under the Companies Act 2006, subject to compliance requirements.
Choosing between a Private vs public company in Nepal is not merely legal. It is strategic.
Private companies offer control, simplicity, and speed.
Public companies offer capital access and scale.
Most foreign investors entering Nepal prefer private limited companies.
Public structures are suitable for capital-intensive sectors.
The decision should align with:
If you are planning market entry, a structured compliance roadmap is critical.
Nepal offers opportunity.
The right structure ensures you capture it without regulatory friction.