KATHMANDU, June 24: The government has proposed sweeping changes to Nepal’s corporate landscape, requiring foreign direct investment (FDI)-based companies with stakes of Rs 500 million or more to mandatorily convert into public limited firms.
A draft amendment to the Companies Act, prepared by the Ministry of Industry, Commerce and Supplies (MoICS), requires all such firms to mandatorily convert into public limited companies. According to the proposed provision, FDI-based firms currently operating as private limited companies will have to complete the conversion within two years of the law’s implementation. Companies failing to meet the deadline will face a delay fee.
If enacted, the provision would directly affect long-established multinational companies such as Surya Nepal, Dabur Nepal, Asian Paints Nepal, Hongshi Shivam Cement, and Hwasin Cement Narayani, which have operated under private limited structures for decades. Analysts say the move could significantly alter the corporate framework of large foreign-invested firms in Nepal.
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Surya Nepal, established in 1986, and Dabur Nepal, established in 1989, are among Nepal’s leading manufacturing and consumer goods industries. Similarly, Hongshi Shivam Cement and Hwasin Cement Narayani represent large-scale industrial projects that have attracted substantial foreign capital in recent years. All of these companies currently operate as private limited firms, but under the draft law, they would be legally obliged to adopt a public shareholding structure.
The MoICS has argued that the conversion will enhance transparency, expand the capital market, and ensure public disclosure of ownership and financial structures. The draft bill interprets the measure as an effort to link foreign investment more closely with Nepal’s capital market.
The proposal includes a two-year transitional period. If conversion is not completed within this timeframe, companies will be required to pay a late fee. The draft specifies a fee of 0.1 percent of paid-up capital in the first year and 0.3 percent annually from the second year onward, even if the deadline is extended.
While the existing Companies Act, 2006, requires only certain types of businesses to operate as public limited companies, it does not set a clear threshold for foreign-invested firms. The new draft introduces, for the first time, a defined minimum investment requirement for mandatory public conversion.
Observers say the proposed policy could bring major changes to Nepal’s investment landscape. On one hand, it is expected to increase transparency, broaden the capital market, and encourage public participation in investment. On the other hand, it may complicate decision-making for foreign investors, with some large firms potentially reconsidering their investment strategies.
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