If you are a foreign company planning to enter Nepal, understanding private vs public company in Nepal is one of the most important early decisions you will make. The choice directly affects your setup cost, regulatory burden, fundraising ability, and long-term scalability.
Many investors assume that public companies are only for very large enterprises. In Nepal, however, the distinction is more nuanced. Costs vary not only at registration, but also every year thereafter through audits, disclosures, and compliance obligations.
This guide breaks down the real costs, legal requirements, and strategic implications so you can confidently choose the right structure.
Nepal’s corporate framework is governed primarily by the Companies Act, 2006, with oversight by the Office of the Company Registrar (OCR). Under this framework, companies are broadly classified as private or public.
A private company in Nepal is designed for closely held businesses, subsidiaries, and foreign-owned operating entities.
Key characteristics
Minimum 1 shareholder, maximum 50 shareholders
Shares cannot be offered to the public
No requirement to issue a prospectus
Lower disclosure and compliance burden
This structure is overwhelmingly preferred by foreign investors, especially for:
Wholly owned subsidiaries
Back-office and support centers
Technology and service companies
A public company is intended for large-scale operations that may raise capital from the public or institutional investors.
Key characteristics
Minimum 7 shareholders
Shares can be offered to the public
Mandatory prospectus approval
Higher capital, governance, and reporting standards
Public companies are common in banking, insurance, hydropower, telecom, and infrastructure sectors.
Before diving into costs, it helps to see how the two structures differ structurally.
| Aspect | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 50 | Unlimited |
| Public share offering | Not allowed | Allowed |
| Prospectus | Not required | Mandatory |
| Regulatory scrutiny | Moderate | High |
| Typical foreign use case | Subsidiary, cost center | Capital-raising vehicle |
When comparing private vs public company in Nepal, formation costs are often the deciding factor.
Company registration fees are calculated based on authorized capital and paid to the Office of the Company Registrar.
NPR 1 million capital: approx. NPR 1,000
NPR 10 million capital: approx. NPR 9,500
NPR 100 million capital: approx. NPR 19,000
Private companies benefit from lower marginal increases as capital rises.
NPR 10 million capital: approx. NPR 15,000
NPR 100 million capital: approx. NPR 40,000+
Additional prospectus and approval costs apply
Public company registration is materially more expensive, even before professional fees.
Foreign companies rarely register alone. Professional support is critical.
Legal structuring and incorporation
Shareholding and foreign investment documentation
Articles and memorandum drafting
Estimated range: USD 1,500–3,000
Prospectus drafting and vetting
Regulatory liaison
Corporate governance setup
Estimated range: USD 5,000–10,000+
The gap widens significantly when compliance advisory is included.
Capital planning is another area where costs diverge.
No statutory minimum capital (except in regulated sectors)
Foreign investment thresholds apply under FITTA
Capital can be injected gradually
This flexibility makes private companies ideal for phased market entry.
Higher minimum capital norms in practice
Often sector-specific thresholds
Capital must often be fully subscribed upfront
For foreign investors, this ties up cash early.
Formation costs are only the beginning. Annual compliance is where public companies become significantly more expensive.
A private company must typically prepare:
Annual financial statements
Annual return to OCR
Tax filings and withholding compliance
Statutory audit
Annual cost range: USD 1,000–2,500
Public companies must additionally:
Publish audited financials
File detailed annual reports
Maintain stricter governance records
Comply with sector regulators (where applicable)
Annual cost range: USD 3,000–6,000+
Private companies enjoy simpler governance:
Fewer board formalities
Limited public disclosures
Faster decision-making
This translates to lower legal and advisory spend.
Public companies require:
Independent directors
Formal board committees
Public disclosures and notices
These requirements add recurring professional costs.
A common misconception is that tax rates differ.
Reality:
Both private and public companies are generally subject to the same corporate income tax rates under Nepal’s Income Tax Act.
The difference lies in:
Compliance intensity
Audit scope
Documentation standards
Public companies incur higher tax compliance costs, not higher tax rates.
For most foreign investors, the answer is clear.
Setting up a wholly owned subsidiary
Operating a back-office or service center
Testing the Nepal market
Seeking cost control and flexibility
Raising capital from the public
Operating in regulated infrastructure sectors
Planning a future IPO in Nepal
Here is a simplified view of what foreign companies typically go through.
Name reservation with OCR
Preparation of constitutional documents
Foreign investment approvals (if applicable)
Company registration
Tax and statutory registrations
This streamlined process keeps time and cost under control.
Avoid these frequent errors:
Over-capitalizing at incorporation
Choosing a public company unnecessarily
Underestimating annual compliance costs
Ignoring foreign investment structuring rules
Each mistake can add years of avoidable expense.
| Cost Category | Private Company | Public Company |
|---|---|---|
| Registration cost | Low | Medium–High |
| Legal advisory | Moderate | High |
| Capital lock-in | Flexible | Rigid |
| Annual compliance | Low | High |
| Governance overhead | Minimal | Significant |
Yes. A private company has lower registration fees, fewer disclosures, and lower annual compliance costs.
Yes, subject to foreign investment approval under applicable laws.
Generally no, unless operating in regulated sectors.
To raise capital from the public or operate in sectors that require public company status.
Yes. Conversion is allowed, but it involves additional approvals and costs.
When weighing private vs. public company in Nepal, cost is not just an entry-level concern. It shapes your cash flow, governance burden, and long-term flexibility.
For most foreign companies, a private company offers the optimal balance of low cost, control, and compliance efficiency. Public companies remain a powerful tool, but only when scale and capital strategy justify the expense.
If you are planning to enter Nepal and want clarity on costs, structure, and compliance, professional guidance can save you significant time and money.