If you are evaluating private vs public company in Nepal, you are already thinking strategically. The structure you choose will determine control, capital flexibility, compliance burden, and long-term scalability. For foreign companies entering Nepal, this decision is not administrative. It is foundational.
Nepal’s regulatory framework is governed primarily by the Companies Act 2063 (2006) and the Foreign Investment and Technology Transfer Act 2019 (FITTA). The wrong structure can slow approvals, complicate capital inflow through Nepal Rastra Bank, and limit exit options.
This guide breaks down everything foreign investors need to know. Clear. Practical. Actionable.
Nepal is no longer a frontier market. It is a reforming economy with improving infrastructure and policy clarity.
Key drivers:
The Government of Nepal reports increasing FDI commitments annually, particularly in energy, IT services, tourism, and manufacturing. Regulatory reforms continue under the supervision of:
Before investing, you must choose the right corporate vehicle.
Understanding private vs public company in Nepal requires clarity on legal definitions under the Companies Act 2063.
A private company:
Minimum requirements:
Private companies are the most common structure for foreign investors.
A public company:
Minimum requirements:
Public companies are typically used for large infrastructure, banking, hydropower, and large-scale manufacturing projects.
| Feature | Private Company | Public Company |
|---|---|---|
| Governing Law | Companies Act 2063 | Companies Act 2063 + Securities laws |
| Minimum Shareholders | 1 | 7 |
| Share Transfer | Restricted | Freely transferable |
| Public Share Issue | Not allowed | Allowed |
| Compliance Level | Moderate | High |
| Ideal For | FDI, SMEs, subsidiaries | Large projects, IPO |
| Capital Raising | Private placement | Public offering |
| Disclosure | Limited | Extensive |
Strategic Insight:
For 90% of foreign market entries, a private company provides flexibility, control, and faster execution.
Foreign investors must obtain approval under the Foreign Investment and Technology Transfer Act 2019 (FITTA).
Key compliance steps:
Minimum FDI threshold currently stands at NPR 20 million in many sectors, though this can change via government notification.
Both private and public companies can receive FDI. However, the private structure is typically more efficient for approval.
When analyzing private vs public company in Nepal, capital strategy matters.
Public companies provide broader fundraising access. But they come with heavier reporting obligations and regulatory oversight.
Compliance determines cost and risk exposure.
Public governance is more transparent but significantly more complex.
Corporate taxation is governed by the Income Tax Act 2002.
General Corporate Income Tax (CIT):
Dividend distribution tax applies upon repatriation.
There is no difference in basic CIT rate between private and public companies. However, public companies often face additional compliance audits and regulatory costs.
Certain industries influence structure choice.
Must be public companies due to regulatory requirements under Nepal Rastra Bank.
Often structured as public companies to facilitate IPO and infrastructure financing.
Typically structured as private companies for flexibility and foreign ownership clarity.
When choosing between private vs public company in Nepal, ask:
If control and operational speed matter, choose private.
If capital expansion and public participation are critical, consider public.
Below is an estimated compliance intensity matrix:
| Cost Element | Private | Public |
|---|---|---|
| Annual Filing | Moderate | High |
| Audit | Standard | Extensive |
| Legal Advisory | Limited | Ongoing |
| Disclosure | Minimal | Mandatory Public |
| Regulatory Interaction | DOI, NRB, IRD | DOI, NRB, IRD, SEBON |
Public companies require deeper legal infrastructure.
Under FITTA and NRB regulations:
Approval from Nepal Rastra Bank is required.
Structure does not materially change repatriation rights. But documentation standards are stricter for public companies.
Private companies:
Public companies:
For foreign strategic investors, private share sale agreements provide stronger control.
Structure drives everything.
Choose a private company if:
Choose a public company if:
Nepal’s reform trajectory shows:
Private companies will remain the preferred entry model for foreign investors. Public companies will dominate large capital projects.
The decision is strategic, not procedural.
Yes. FITTA 2019 allows full foreign ownership in many sectors, subject to approval and minimum investment thresholds.
No. Foreign investors commonly use private companies. Public status is required only in specific regulated industries.
General law does not impose a fixed minimum. However, FDI currently requires minimum NPR 20 million in many sectors.
Yes. Conversion is permitted under Companies Act 2063, subject to compliance and shareholder approval.
Both structures allow repatriation under NRB guidelines. Private companies generally involve simpler documentation.
Choosing between private vs public company in Nepal shapes your control, capital strategy, compliance exposure, and exit options.
For most foreign companies, the private limited model delivers speed, control, and flexibility. Public companies suit capital-intensive sectors and IPO ambitions.
The right structure aligns with your five-year strategy. Not just your incorporation plan.
If you are evaluating entry into Nepal, conduct a structured feasibility assessment before incorporation. Align legal structure with capital roadmap, governance capacity, and sector compliance.