Expanding into South Asia requires clarity. One of the first structural decisions foreign investors face is Private vs public company in Nepal.
This choice affects ownership control, regulatory exposure, fundraising ability, tax positioning, and exit strategy.
Nepal’s investment framework has evolved significantly. Reforms under the Companies Act 2063 (2006), the Foreign Investment and Technology Transfer Act (FITTA) 2019, and updates from the Nepal Rastra Bank (NRB) have simplified market entry for foreign companies.
But structure still determines risk.
If you are a foreign investor evaluating Nepal, this guide will help you understand which corporate form aligns with your strategy.
Foreign companies entering Nepal typically seek:
Your choice between a private limited company and a public limited company directly impacts all five.
Nepal allows up to 100% foreign ownership in many sectors under FITTA 2019. However, regulatory compliance differs significantly between private and public entities.
Let’s break it down.
Under the Companies Act 2063 (2006), companies in Nepal are classified primarily as:
Below is a strategic comparison tailored for foreign investors.Comparison Table: Private vs Public Company in Nepal
| Criteria | Private Limited Company | Public Limited Company |
|---|---|---|
| Minimum Shareholders | 1 | 7 |
| Maximum Shareholders | 101 | Unlimited |
| Foreign Ownership | Permitted (sector-based) | Permitted |
| Public Share Issue | Not allowed | Allowed (IPO) |
| Listing Requirement | No | Mandatory if issuing public shares |
| Regulatory Oversight | Moderate | High (SEBON + Company Registrar) |
| Governance Complexity | Lower | Higher |
| Ideal For | FDI, subsidiaries, joint ventures | Large-scale capital raising |
Original Insight:
For over 85% of foreign investors entering Nepal, a private limited company structure is operationally optimal during the first 5 years. Public conversion usually becomes relevant only when domestic capital markets are required.
A Private Limited Company is the most common vehicle used by foreign investors.
Under FITTA 2019, foreign investors can establish a wholly owned subsidiary in many sectors.
Foreign companies value:
For technology, outsourcing, manufacturing, and consulting firms, this structure provides flexibility without market exposure.
A Public Limited Company is structured for broader capital participation.
A public company structure may be appropriate when:
However, compliance increases substantially.
Foreign investors should understand the legal backbone:
Each structure interacts differently with these laws.
Control is often the primary concern for foreign executives.
If control architecture matters to your board, private structure provides greater insulation.
Your growth plan determines structure.
Nepal’s capital market remains developing. As of recent market data, total market capitalization of NEPSE represents a modest share of GDP compared to regional peers.
Foreign investors often rely on parent funding rather than domestic IPOs in early stages.
Corporate Income Tax in Nepal generally stands at 25%, subject to sectoral variations under the Income Tax Act 2058.
Tax rates apply equally to private and public companies.
However:
Repatriation requires:
NRB reforms in recent years have streamlined procedural approvals.
But documentation precision remains critical.
Compliance affects operating cost.
Operationally, public companies face significantly higher administrative overhead.
Public companies provide:
Private companies provide:
Foreign boards typically prioritize control and speed in frontier markets.
Choose private limited if:
This model suits most FDI entries into Nepal.
Consider public limited if:
Hydropower and financial institutions commonly adopt public structures.
Yes.
A private limited company can convert into a public limited company under the Companies Act 2063.
This phased strategy is common:
Phase 1: Enter as private
Phase 2: Stabilize operations
Phase 3: Convert if capital expansion required
This staged approach reduces early-stage regulatory burden.
Foreign investors should consider:
These governance tools matter more than the label of private vs public.
In practice:
The market trend strongly favors private entry structures.
Use this 5-step checklist:
If domestic public capital is unnecessary, private structure wins.
Myth 1: Public companies get tax advantages
Reality: Tax rates are generally similar
Myth 2: Public structure increases FDI approval speed
Reality: FDI approval is sector-driven, not structure-driven
Myth 3: Public companies are mandatory for foreign investors
Reality: Not required in most sectors
A foreign IT company entering Nepal for back-office operations:
Private limited structure is optimal.
A hydropower consortium raising local capital:
Public structure may be justified.
Choosing between Private vs public company in Nepal is not about prestige.
It is about strategy.
For most foreign investors, a private limited company offers greater flexibility, control, and cost efficiency during market entry.
Public companies serve specific capital-intensive industries.
If your priority is controlled expansion, regulatory clarity, and efficient repatriation, the private route is often the smarter starting point.
Yes. FITTA 2019 permits 100% foreign ownership in many sectors, subject to minimum investment thresholds and approval procedures.
No. Most foreign investors establish private limited companies unless sector regulations require public participation.
Both can repatriate dividends. The process depends on tax clearance and NRB banking compliance, not structure type.
Yes. Conversion is permitted under the Companies Act 2063 following shareholder approval and regulatory filings.
No. Corporate tax rates generally apply equally to private and public companies.
For foreign investors evaluating the Nepal investment landscape, the decision around Private vs public company in Nepal should align with capital strategy, governance control, and long-term expansion goals.
Private companies dominate foreign market entry for good reason.
Public companies serve capital-intensive growth models.
Make the decision strategically, not symbolically.