The government has proposed major changes to Nepal’s corporate sector by making it mandatory for foreign direct investment (FDI)-based companies with investments of Rs 500 million or more to convert into public limited companies.
According to a draft amendment to the Companies Act prepared by the Ministry of Industry, Commerce and Supplies (MoICS), foreign-invested companies currently operating as private limited firms will be required to complete the conversion within two years after the law comes into force. Companies failing to do so will be subject to delay charges.
If implemented, the provision would affect several long-established multinational companies operating in Nepal, including Surya Nepal, Dabur Nepal, Asian Paints Nepal, Hongshi Shivam Cement and Hwasin Cement Narayani, all of which have long operated under private limited structures.
Established in 1986, Surya Nepal and, in 1989, Dabur Nepal are among Nepal’s leading manufacturing and consumer goods companies. Meanwhile, Hongshi Shivam Cement and Hwasin Cement Narayani represent some of the largest recent foreign-invested industrial projects in the country.
The ministry argues that the move would enhance corporate transparency, promote public disclosure of ownership and financial information, and deepen Nepal’s capital market by linking foreign investment more closely with public shareholding.
The draft bill provides a two-year transition period. Companies failing to convert within that timeframe would be required to pay a late fee equivalent to 0.1 percent of paid-up capital during the first year, rising to 0.3 percent annually from the second year onward, even if additional time is granted.
Under the existing Companies Act, 2006, only certain categories of enterprises are required to operate as public limited companies, and there is no specific threshold for foreign-invested firms. The proposed legislation introduces, for the first time, a clear investment benchmark triggering mandatory public conversion.
Analysts say the proposal could significantly reshape Nepal’s investment landscape. While it could improve transparency, expand the stock market and encourage broader public participation in corporate ownership, it may also complicate management structures for foreign investors and influence future investment decisions by multinational firms.
