Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign companies must make when entering the Nepalese market. This choice affects ownership control, regulatory exposure, fundraising ability, compliance costs, and long-term scalability. Many investors rush incorporation without understanding these differences, leading to avoidable restructuring, regulatory friction, or capital constraints later.
This guide offers a clear, authoritative breakdown tailored for foreign companies evaluating Nepal as a destination for back-office operations, technology teams, service delivery, or long-term market entry.
Nepal has steadily positioned itself as a cost-efficient, talent-rich destination for foreign businesses. Its company law framework allows foreign investors to establish operations primarily through private companies, public companies, or branches.
While both private and public companies are governed under the Companies Act, their strategic purpose and regulatory expectations differ significantly.
A private company in Nepal is the most common structure chosen by foreign investors. It is designed for closely held ownership, operational flexibility, and controlled governance.
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer is restricted
Cannot invite the public to subscribe shares
Ideal for subsidiaries, joint ventures, and FDI-backed operations
Private companies offer agility. Decision-making is faster. Compliance obligations are manageable. Ownership remains tightly controlled by the parent company or founders.
For foreign companies establishing back-office, IT, consulting, or outsourcing operations, this structure aligns well with commercial reality.
A public company in Nepal is designed for large-scale capital formation and broader ownership participation. It is heavily regulated and disclosure-driven.
Minimum shareholders: 7
No maximum shareholder limit
Can issue shares to the public
Subject to strict disclosure and reporting rules
Often regulated by the securities regulator
Public companies are typically suitable for:
Large infrastructure projects
Banks and financial institutions
Hydropower and energy projects
Businesses planning IPOs or public fundraising
For most foreign SMEs or service-oriented companies, this structure is excessive and costly.
| Criteria | Private Company | Public Company |
|---|---|---|
| Ownership | Closely held | Widely held |
| Share Transfer | Restricted | Freely transferable |
| Public Fundraising | Not allowed | Allowed |
| Compliance Burden | Moderate | High |
| Cost of Maintenance | Lower | Significantly higher |
| Suitability for FDI | Very high | Limited use cases |
| Board & Governance | Flexible | Formal and regulated |
Insight: Over 90 percent of foreign direct investment entities in Nepal are structured as private companies due to lower friction and better control.
Both private and public companies operate under Nepal’s corporate and investment laws.
Companies Act 2006
Foreign Investment and Technology Transfer Act 2019
Industrial Enterprises Act 2020
Income Tax Act 2002
Labor Act 2017
These laws collectively govern incorporation, foreign ownership, taxation, labor compliance, and profit repatriation.
Annual general meeting
Annual returns filing
Basic financial statements
Tax filings and audits
Mandatory public disclosures
Regulator reporting
Enhanced audit standards
Board committees and governance rules
For foreign companies without a public fundraising mandate, public company compliance often adds cost without value.
Private companies allow flexible capital structuring. Foreign investors can inject capital progressively and restructure shareholding through internal approvals.
Public companies require more rigid capital structuring. Any change often triggers regulatory approvals and disclosures.
This difference becomes critical when scaling operations or onboarding strategic investors.
Tax treatment is broadly similar for both structures, but compliance execution differs.
Corporate income tax applies equally
Withholding tax obligations exist in both
Dividend distribution tax applies
Transfer pricing rules apply for foreign shareholders
Public companies face higher scrutiny and reporting expectations from tax authorities.
Control is where private companies shine.
Parent company retains decision power
Board structure can remain lean
Faster operational pivots
Shareholder approvals required
Regulatory oversight on decisions
Slower execution
Foreign companies prioritizing operational efficiency almost always prefer private entities.
Your fundraising roadmap should influence your choice.
Choose a private company if you plan to:
Operate as a captive subsidiary
Fund operations internally
Maintain long-term control
Choose a public company if you plan to:
Raise capital locally
List shares
Engage public investors
For most foreign service companies, public fundraising in Nepal is unnecessary.
Choosing a public company “for credibility”
Underestimating compliance costs
Ignoring future exit and repatriation planning
Misaligning structure with business scale
These mistakes often result in restructuring within two to three years.
Regulators generally encourage private companies for foreign investment due to easier monitoring and lower systemic risk.
Public companies are scrutinized more closely due to their impact on public investors and financial markets.
The answer depends on your objectives, not assumptions.
Private companies are ideal for:
Back-office operations
IT and tech delivery
Consulting and professional services
Regional hubs
Public companies are ideal for:
Capital intensive projects
Regulated industries
Public investment models
When evaluating private vs public company in Nepal, foreign companies should prioritize control, compliance efficiency, and strategic alignment. For most foreign investors, private companies offer the optimal balance of flexibility, cost-efficiency, and regulatory clarity.
Choosing the right structure from day one saves time, money, and future restructuring headaches.