Choosing between a private vs public company in Nepal is one of the first strategic decisions foreign businesses must make. It affects ownership, compliance, capital raising, and even how your company name is approved. Within the first 100 days of market entry, most regulatory delays come from selecting the wrong structure or misunderstanding name registration rules.
This guide is written for foreign founders, CFOs, and legal teams. It explains the differences clearly, links them to company name registration in Nepal, and gives you a practical roadmap to move forward with confidence.
You will not just learn definitions. You will understand consequences.
Foreign investors often assume that public companies offer credibility while private companies are limiting. In Nepal, the reality is different.
Your choice impacts:
How many shareholders you can have
Whether foreign ownership is allowed
How your company name is reviewed and approved
Reporting, audit, and disclosure requirements
Exit options in the future
Most foreign-owned operating companies in Nepal start as private limited companies. Public companies are usually reserved for banks, hydropower, insurance, or capital-market-driven ventures.
Understanding this distinction early prevents restructuring later.
Nepal’s corporate framework is governed primarily by the Companies Act, 2006 and sectoral regulations.
The two most relevant structures are:
A closely held entity with limited shareholders and restricted share transfer.
A company allowed to invite the public to subscribe to shares, subject to strict regulation.
Both must register with the Office of Company Registrar, commonly known as OCR.
A private company in Nepal is the default choice for foreign investors entering through FDI or joint ventures.
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer is restricted
Cannot invite the public to subscribe to shares
Foreign ownership allowed, subject to sector approval
Private companies offer flexibility and speed.
They are suitable for:
Back-office operations
IT and software development
Consulting and professional services
Trading and distribution
Wholly foreign-owned subsidiaries
From a name registration perspective, private companies face fewer objections, as long as the proposed name is distinctive and compliant.
A public company in Nepal is designed for large-scale capital mobilization.
Minimum shareholders: 7
No maximum shareholder limit
Shares may be offered to the public
Mandatory compliance with securities regulations
Higher paid-up capital requirements
Public companies are common in:
Commercial banking
Hydropower and infrastructure
Insurance
Large manufacturing enterprises
For most foreign SMEs, this structure is unnecessarily complex.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Maximum shareholders | 101 | Unlimited |
| Foreign ownership | Permitted (sector-based) | Restricted and regulated |
| Public share offering | Not allowed | Allowed |
| Compliance burden | Moderate | High |
| Name approval scrutiny | Standard | High |
| Typical setup time | 2–4 weeks | 2–3 months |
This comparison alone explains why over 90 percent of foreign companies choose private incorporation.
Company name registration is not a branding exercise alone. It is a legal vetting process.
All companies must apply through the OCR’s online system, followed by document verification.
Your proposed name must:
Not be identical or deceptively similar to an existing company
Reflect the company type (Private Limited or Limited)
Not violate morality, public order, or national interest
Avoid restricted or regulated terms unless approved
Foreign companies often face rejection due to similarity or misuse of regulated words.
This roadmap applies whether you choose a private or public company, but private companies move faster.
Conduct a similarity check on the OCR database.
Submit up to three name options, ranked by preference.
OCR reviews for legal compliance, not marketing appeal.
You may receive approval or a request for modification.
Once approved, the name is reserved for incorporation filing.
This process typically takes 2–5 working days for private companies.
This is where private vs public company in Nepal becomes practical.
Greater flexibility in naming
Fewer sector-specific objections
Faster approval cycles
Stricter scrutiny
Often require sector regulator no-objection letters
Higher likelihood of name modification
If speed matters, private incorporation is the safer path.
Foreign investors often underestimate local nuances.
Common rejection triggers include:
Using “international” or “global” without justification
Using regulated terms like “bank,” “insurance,” or “finance”
Transliteration conflicts in Nepali language
Similarity to dormant or inactive companies
These risks increase significantly for public companies.
Foreign investment is governed by the Foreign Investment and Technology Transfer Act, 2019.
Key points:
Most service and manufacturing sectors allow 100 percent foreign ownership
Certain sectors require minimum investment thresholds
Approval is needed before incorporation if foreign capital is involved
Private companies integrate more smoothly with FDI approvals.
Choosing the wrong structure affects your operational life.
Annual filings with OCR
Tax filings and audits
Board meetings as per Articles
Enhanced disclosures
Mandatory external audits
Securities reporting obligations
Foreign SMEs rarely benefit from public company compliance.
The smartest foreign investors treat incorporation as a phase.
Start private. Scale later.
Nepalese law allows conversion from private to public when your capital and governance are ready. The reverse is far more difficult.
Despite the complexity, public companies are justified when:
You plan to raise capital from the Nepali public
Your sector requires public status
You are preparing for a future IPO
If none of these apply, private is the rational choice.
Before choosing between private vs public company in Nepal, ask:
Do I need public capital now?
Is my sector regulated?
Do I want speed or scale first?
Am I prepared for high disclosure?
For most, the answer points to private incorporation.
For foreign investors, yes in most cases. Private companies are faster, simpler, and fully compliant for operations.
Yes, in permitted sectors under FITTA 2019, typically through a private company.
Usually 2–5 working days if the name complies with OCR rules.
Yes, but it requires shareholder resolutions and OCR approval.
Yes. Nepalese law allows conversion once legal requirements are met.
Understanding private vs public company in Nepal is not about theory. It is about execution.
For foreign companies, private incorporation offers speed, control, and regulatory clarity. It simplifies company name registration and aligns with FDI rules. Public companies serve a different purpose and should be chosen only with intent.
If your goal is to enter Nepal efficiently, protect your capital, and stay compliant, start private. You can always scale later.