Nepal Proposes Mandatory Public Listing for Large Foreign-Invested Companies, Potentially Affecting Surya Nepal, Dabur Nepal

KATHMANDU: The government is preparing a major overhaul of Nepal’s corporate regulatory framework that could significantly alter the operating structure of large foreign-invested companies in the country.

A draft amendment to Nepal’s company law prepared by the Ministry of Industry, Commerce and Supplies proposes making it mandatory for all companies with foreign investment of Rs 500 million (Rs 50 crore) or more to convert into public limited companies.

If enacted, the provision would require foreign-invested companies currently operating as private limited entities to complete the transition within two years from the date the law comes into force. Companies failing to meet the deadline would face financial penalties.

The proposed reform is expected to affect several prominent multinational and foreign-invested enterprises that have operated in Nepal for decades under private company structures. These could include Surya Nepal, Dabur Nepal, Asian Paints Nepal, Hongshi Shivam Cement and Huasin Cement Narayani, among others.

Many of these companies have operated in Nepal for years as private limited entities despite making substantial foreign investments. Under the proposed legislation, they could be required to adopt a public ownership structure and comply with additional disclosure and governance requirements.

Greater Transparency and Market Participation

According to the draft bill, companies converting into public limited entities would be required to disclose ownership structures more extensively, strengthen financial reporting standards, and adopt greater operational transparency.

The proposal is also viewed as an effort to connect large foreign-invested enterprises with Nepal’s capital market, potentially creating opportunities for broader public participation in ownership through share issuance.

Industry observers say the move could help deepen Nepal’s stock market, improve corporate governance standards, and increase transparency among some of the country’s largest foreign-invested businesses.

The draft provides a two-year transition period for compliance. Companies that fail to convert within the stipulated timeframe would be required to pay delay fees. The proposal sets the penalty at 0.1 percent of paid-up capital during the first year of non-compliance and 0.3 percent annually thereafter.

Significant Shift in Foreign Investment Policy

The current Companies Act, 2006 (2063 BS) requires only certain categories of businesses to operate as public limited companies. However, it does not impose a specific threshold requiring foreign-invested firms to become public companies based on the size of their investment.

The proposed amendment would introduce, for the first time, a clear foreign investment threshold of Rs 500 million, marking a significant policy shift in Nepal’s corporate and investment landscape.

If implemented, the reform could reshape how multinational companies structure their operations in Nepal. While supporters argue it would enhance transparency, strengthen corporate accountability, and expand the capital market, critics may raise concerns about increased compliance requirements and reduced operational flexibility for foreign investors.

Investment analysts note that some multinational companies could be required to reassess their ownership structures and long-term investment strategies if public listing or broader shareholding requirements become mandatory.

The proposal comes as Nepal seeks to attract higher levels of foreign direct investment while simultaneously strengthening corporate governance, improving market transparency, and expanding participation in the country’s capital markets.