Choosing between a private vs public company in Nepal is one of the first and most strategic decisions a foreign investor will make. It shapes ownership control, fundraising options, compliance costs, and long-term exit plans. Nepal offers a clear legal framework for both models, but each serves a very different purpose. In this guide, we break down the differences in plain English, backed by law, practice, and on-the-ground insight so you can register with confidence.
Nepal’s corporate regime is governed primarily by the Companies Act and administered by the Office of Company Registrar. Foreign investment overlays apply through the Foreign Investment and Technology Transfer Act and sectoral directives.
At a high level, companies are categorized as private or public based on share transferability, shareholder limits, and capital-raising rules.
A private company is the most common entry vehicle for foreign firms testing or scaling in Nepal.
1 to 101 shareholders.
Share transfer is restricted by the Articles.
No public share issuance.
Lower compliance burden.
Private companies align well with controlled growth and operational subsidiaries. They offer flexibility without public scrutiny.
Typical use cases
Wholly owned foreign subsidiaries.
Joint ventures with local partners.
Service delivery and back-office operations.
A public company is designed for scale, capital markets, and broad ownership.
Minimum 7 shareholders.
Shares freely transferable.
Eligible to issue shares to the public.
Higher disclosure and governance standards.
Public companies fit capital-intensive sectors or long-term plans involving IPOs or broad local participation.
Common scenarios
Hydropower and infrastructure.
Banks and financial institutions.
Large manufacturing projects.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Public share issuance | Not allowed | Allowed |
| Compliance level | Moderate | High |
| Best for | Control and speed | Capital raising |
| Typical setup time | Faster | Longer |
Insight: For most foreign entrants, private companies reduce friction during the first three to five years.
No statutory minimum capital for most sectors.
Funding via equity injections or shareholder loans.
Ideal for phased investment.
Often subject to sector-specific minimum capital.
Can raise funds through public offerings.
Mandatory regulatory approvals for issuance.
Investor tip: Start private, convert later if public capital becomes necessary.
Annual General Meeting optional in some cases.
Fewer disclosure filings.
Simplified board structure.
Mandatory AGM.
Audited financials with stricter standards.
Enhanced reporting to regulators.
Numbered checklist for compliance planning
Statutory filings with the Registrar.
Tax registrations and annual returns.
Sector approvals if applicable.
Ongoing corporate governance reporting.
Foreign investors must align company type with investment approvals.
Approval under FITTA where required.
Capital repatriation rules via Nepal Rastra Bank.
Tax registration and local compliance.
Most foreign investors register private companies first due to faster approvals and operational ease.
Tax rates do not differ by company type, but compliance depth does.
Typical obligations
Corporate income tax.
Withholding taxes on payments.
VAT if applicable.
Public companies face more scrutiny during audits and disclosures.
Yes. Nepal allows conversion from private to public companies.
To raise public capital.
To exit partially through IPOs.
To comply with sector mandates.
Conversion requires shareholder approvals and regulatory filings, but it is a common growth path.
Choose a private company if you want
Full ownership control.
Lower compliance costs.
Faster setup.
Choose a public company if you need
Large-scale capital.
Public participation.
Long-term market visibility.
Choosing public status too early.
Underestimating compliance costs.
Ignoring sector-specific restrictions.
Bulleted takeaway list
Start lean.
Match structure to strategy.
Plan conversion, not complication.
A European tech firm entered Nepal via a private subsidiary. After five years of growth and local traction, it converted to a public company to fund regional expansion. This staged approach minimized early risk.
The private vs public company in Nepal decision is less about legality and more about timing and intent. For most foreign companies, a private company offers the right balance of control, speed, and compliance. Public companies serve ambition at scale but only when the business is ready.