Public, Private & Non-Profit Companies Nepal 2026: Comparison

The Companies Act 2063 (2006) recognises three principal categories of company that account for the overwhelming majority of corporate registrations at the Office of the Company Registrar (OCR) — the private limited company, the public limited company, and the profit-not-distributing company (the corporate vehicle for non-profit and charitable purposes). Each category has different rules on shareholder limits, share transfer, minimum capital, governance, public disclosure, and tax. Choosing the right form at incorporation is the first commercial decision a founder makes; restructuring a company from one form to another later is possible but expensive.

This guide is the practitioner's comparison of the three forms — when each is the right choice, what the operational differences look like, and what the conversion options are if circumstances change. For the broader landscape of company types (including foreign-investment companies, branch offices and one-person companies), see our types of companies pillar guide.

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Our corporate team handles incorporations, conversions, and ongoing compliance across all three forms. The most common form-selection mistake we see at first consultation is incorporation as a public limited company by founders who actually need a private — adding governance overhead and audit costs without using the public-form benefits (capital raising, listing, broad shareholder base). The opposite mistake — starting as private when the funding plan requires public-form mechanics — is also common and forces a costly conversion later. The right form depends on the funding plan, the shareholder structure, and the long-term governance preference, not on the size of the initial business.

The private limited company — the SME default

The private limited company is the default form for most Nepali businesses. The Companies Act 2063 sets the shareholder range at 1 to 101 — a single founder can incorporate as a One Person Company (the OPC variant), and the upper limit of 101 captures all but the very largest closely-held businesses. Share transfer is restricted by the articles of association, typically with pre-emption rights for existing shareholders. The shares cannot be offered to the public and are not eligible for stock-exchange listing.

The governance overhead is light — minimum two directors (one for OPC), a relatively simple AGM cycle, an audit requirement that scales with size, and standard returns to the OCR. There is no statutory minimum paid-up capital under the Companies Act 2063 — businesses incorporate at NPR 1 lakh, NPR 5 lakh, NPR 10 lakh or whatever the operational plan needs. Sectoral regulators can impose minimum capital for licensed activities (banking, insurance, telecoms, money exchange) but the corporate-form default is flexible. Detailed registration walkthrough in our private company registration guide.

The public limited company — for capital-market participants

The public limited company is structured for raising capital from the public — through stock-exchange listing on NEPSE, through public share offerings (IPOs), through bond issuances, and through the broad-shareholder governance that goes with a listed entity. Minimum 7 shareholders, no upper limit; minimum 3 directors with independent-director requirements above asset and turnover thresholds; freely transferable shares; mandatory listing-style disclosure; quarterly and annual reporting to OCR and (for listed companies) to the Securities Board of Nepal (SEBON) and NEPSE.

The governance overhead is materially heavier than for a private company — board committees (audit committee mandatory), independent director appointments, NEPSE listing rules where applicable, SEBON disclosure rules, and the broader corporate-governance regime that comes with public ownership. Minimum capital is sector-specific — banks have NPR several billion floor under NRB rules, insurance has its own floor under the Insurance Act and Beema Samiti rules, telecom has its own under NTA. For ordinary public companies (not in regulated sectors), the floor is set by OCR guidelines but the practical floor is the capital that supports a credible IPO.

The profit-not-distributing company — the NGO corporate vehicle

The profit-not-distributing company is the corporate form for non-profit and charitable purposes. It sits alongside the older NGO-registration framework under the Association Registration Act 2034 — a non-profit can choose to register as an Association (under the older Act) or as a Profit-Not-Distributing Company (under the Companies Act 2063). The Profit-Not-Distributing Company form has the advantage of corporate-style governance, separate legal personality, and the limited liability that comes with a corporate entity.

The key constraint: profit cannot be distributed to members. All operating surpluses must be reinvested in the stated charitable, educational, scientific, religious or social-purpose objects. Membership is by application and acceptance, not by share purchase; no share capital is issued. Funding is from donations, grants, fees for services rendered in furtherance of the objects, and limited income-generating activities consistent with the non-profit purpose. Tax: income from charitable activities is exempt under the Income Tax Act 2058 framework; income from non-charitable sources (commercial sub-activities, surplus from fees) is taxable. The detailed registration framework is in our profit-not-distributing company registration guide.

Comparing governance and disclosure burden

Governance overhead increases sharply from private to public to profit-not-distributing-with-grant-funding. A private limited company can run with a two-director board, simple resolutions, an annual AGM, an audit by a Chartered Accountant, and the standard OCR annual return. A public limited company adds independent directors, a mandatory audit committee, listed-company disclosure rules where applicable, quarterly financial reporting, related-party-transaction disclosure, insider-trading rules, and SEBON regulation. A profit-not-distributing company adds the donor-and-regulatory reporting that comes with grant-funded operations — donor compliance, sectoral regulator oversight (e.g. Social Welfare Council for many NGOs), expenditure restrictions tied to grant terms, and a much higher transparency expectation around fund usage.

The disclosure-and-compliance cost typically tracks the governance form — a private SME might spend NPR 50,000 to NPR 200,000 a year on compliance; a mid-sized public company several lakh to a few million; a large grant-funded NGO may spend more on compliance and reporting than on direct programme costs in its early years. Form selection is also a budget decision.

Conversion between forms — possible but expensive

Conversion from private to public is the most common transition — typically driven by a planned IPO or a fund-raising round that needs the broader shareholder base. The conversion process involves a special resolution of the existing shareholders, amendment of the memorandum and articles, OCR approval, and the additional steps required to meet public-company requirements (additional directors, governance committees, prospectus preparation if a public offering is planned). The process takes months and involves substantial documentation and regulatory work.

Conversion from public to private is rarer — typically a privatisation transaction where a controlling shareholder buys out the public minority and takes the company private. The process involves a tender offer or scheme of arrangement, NEPSE delisting where the company is listed, OCR approval, and the unwinding of public-company governance. Conversion from a profit company (private or public) to a profit-not-distributing form is uncommon because of the fundamental different purpose; conversion the other way around is also restricted. Counsel evaluates conversion against alternatives (subsidiary structure, joint venture, holding-company restructuring) before committing to the formal conversion route.

Why retain counsel for company-form selection?

Form selection is a one-time decision with multi-year consequences. The right form aligns with the funding plan, the governance preference, the shareholder structure, and the long-term commercial trajectory. The wrong form imposes ongoing compliance costs that the business does not need (over-incorporation as public when private is sufficient) or constraints that block growth (under-incorporation as private when public is needed for a planned IPO). Counsel runs the form-selection analysis at first consultation along with the related decisions on capital structure, shareholder agreement, and tax planning.

Alpine Law Associates handles incorporations across all three forms and the related conversions. Our corporate team coordinates the OCR registration, the sectoral-regulator licensing where applicable, the IRD tax-registration, the bank-account opening, and the post-incorporation compliance that the new entity will need to meet on a continuing basis. As a full-service law firm in Nepal we coordinate corporate work with the related employment, IP, regulatory, tax and dispute-resolution practice areas. Speak with our lawyers today →.

Last reviewed: April 2026