If you are a foreign company evaluating market entry, private vs public company in Nepal is one of the first strategic decisions you must make. This choice directly affects company formation fees in Nepal, regulatory exposure, ownership flexibility, and long-term scalability.
Nepal welcomes foreign investment, but its corporate framework is precise. Understanding how private and public companies differ helps you avoid overpaying, over-complying, or choosing a structure that limits growth. This guide is written specifically for foreign founders, CFOs, and legal teams who need clarity, not theory.
We will walk through costs, legal thresholds, compliance obligations, and real-world use cases so you can choose confidently.
Nepal’s company law is governed primarily by the Companies Act, 2006, supported by sectoral laws and foreign investment regulations.
For foreign companies, the most common incorporation choices are:
Private Limited Company
Public Limited Company
Both are registered in Nepal and regulated by the Office of the Company Registrar.
A private limited company in Nepal is the most common structure for foreign investors entering the market.
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer restrictions apply
No public invitation to subscribe shares
Can be 100 percent foreign-owned, subject to sector approval
Private companies are simpler, faster, and cheaper to operate. They are ideal for subsidiaries, operating companies, holding entities, and service centers.
Typical use cases include:
IT and software development subsidiaries
Consulting and professional services firms
Trading companies (where permitted)
Back-office and support operations
A public limited company is designed for large-scale enterprises that plan to raise capital from the public.
Minimum shareholders: 7
No maximum shareholder limit
Shares can be offered to the public
Mandatory higher paid-up capital
Heavily regulated disclosure regime
Public companies are rarely the right choice at market entry. They are suitable only if you plan to:
Raise capital through public offerings
Operate in regulated or infrastructure-heavy sectors
Build a nationally scalable enterprise in Nepal
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share offering | Not allowed | Mandatory eligibility |
| Compliance burden | Moderate | High |
| Formation cost | Lower | Significantly higher |
| Foreign investor suitability | Excellent | Limited |
This distinction alone explains why most foreign companies choose private incorporation.
Understanding company formation fees in Nepal is critical for budgeting and approvals.
Registration fees are linked to authorized capital.
Private Company (indicative):
NPR 1 million capital: low registration fee
NPR 10 million capital: moderate fee
Scales progressively
Public Company:
Higher base fees
Additional regulatory charges
Prospectus and approval costs
Foreign investors should also budget for:
Legal drafting and compliance structuring
Certified translations into Nepali
Notarization and apostille of parent documents
Tax and regulatory advisory
In practice, public company formation costs can be 2 to 3 times higher than private company setup.
Nepal does not impose a universal minimum capital for private companies, except in regulated sectors.
This flexibility allows foreign investors to:
Start lean
Increase capital later
Align capital with real operational needs
Public companies must meet statutory minimum paid-up capital thresholds, often running into tens or hundreds of millions of NPR depending on sector.
This alone excludes most early-stage foreign investors.
A private company must handle:
Annual financial statements
Annual general meeting
Income tax filings
Statutory registers
Audit (mandatory once thresholds apply)
Public companies face everything above plus:
Mandatory quarterly disclosures
Prospectus compliance
Continuous reporting obligations
Stronger audit and governance requirements
For foreign companies, compliance effort directly translates into cost and management bandwidth.
Foreign investors are permitted to own up to 100 percent of a private company in Nepal, provided the sector is open under foreign investment laws.
Public companies often face:
Sectoral caps
Additional scrutiny
Approval complexity
This is another reason the private route dominates foreign incorporations.
Both private and public companies are taxed at standard corporate rates, depending on sector.
There is no tax advantage to choosing a public company purely from a corporate tax standpoint.
Dividend distribution tax applies equally
Withholding obligations remain the same
From a tax lens, structure choice should be driven by governance and funding, not rates.
Are entering Nepal for the first time
Want operational control
Need cost efficiency
Do not plan public fundraising
Intend to raise public capital in Nepal
Operate in infrastructure or finance-heavy sectors
Have long-term, large-scale investment plans
For most foreign companies, the answer is clear.
Overestimating the need for a public company
Assuming higher capital improves approval chances
Ignoring long-term compliance costs
Choosing structure based on home-country norms
Nepal’s legal environment rewards right-sized structuring, not overengineering.
From a risk-adjusted viewpoint:
Private companies offer faster setup
Lower sunk costs
Easier exit or restructuring
Cleaner governance for parent control
Public companies introduce regulatory risk before revenue certainty.
Choosing between a private vs public company in Nepal is less about ambition and more about timing, risk, and capital efficiency. For foreign companies, private incorporation offers flexibility, speed, and cost control without sacrificing legitimacy or growth potential.
Public companies have their place, but rarely at entry stage.
If your goal is to establish operations, test the market, or build a long-term subsidiary, a private company is almost always the smarter first move.
Yes. Foreigners can own 100 percent of a private company in Nepal if the sector is open to foreign investment.
No. Large investments can be structured through private companies unless public fundraising is planned.
There is no universal minimum for private companies. Capital depends on business needs and sector rules.
No. Corporate tax rates are generally the same for private and public companies.
Private companies register significantly faster due to simpler approvals and documentation.