About Investment & Business Structuring Law in Nepal
Investment and business structuring law in Nepal governs how individuals and companies establish, own, operate and grow businesses. The framework blends corporate law, foreign investment regulation and investment promotion policies. Key aims include clear ownership structures, predictable governance, and safe cross border transactions.
In practice, you will encounter domestic company law, foreign investment rules, and investment promotion guidelines that influence what entities you can form, how you can fund them, and how profits may be repatriated. Understanding these rules helps you plan legal structures, compliance calendars and risk allocations. A targeted approach with a qualified attorney helps you avoid common pitfalls in Nepal's regulatory environment.
Why You May Need a Lawyer
Incorporating a Nepalese company or forming a joint venture requires choosing between a private limited company, public company or branch structure. An attorney helps draft the articles of association, determine shareholding limits for foreign investors, and ensure Board and member approvals comply with law.
Seeking foreign investment approval under the Foreign Investment and Technology Transfer Act (FITTA) demands precise documentation, sector eligibility checks and alignment with investment promotion policies. A lawyer coordinates with the Investment Board Nepal and the Department of Industry to minimize delays.
Drafting and negotiating technology transfer, licensing or service agreements with Nepali counterparts requires careful consideration of local contract norms, governing law provisions and enforcement in Nepal. A legal counsel helps tailor terms to Nepali enforceability standards and regulatory constraints.
Planning cross border repatriation of profits or dividend flows must comply with Nepal Rastra Bank directives and foreign exchange rules. An attorney ensures the approvals, documentation and timing align with NRB requirements to avoid penalties.
When setting up in a special economic zone or negotiating a large scale project with government support, you need bespoke structure design, risk allocation and compliance mapping. A lawyer coordinates with multiple agencies to secure approvals and minimize regulatory overlap.
Local Laws Overview
Nepal uses a set of core laws to govern investment and corporate activity. These include statutes that regulate company formation, foreign participation, and the promotion of investment through a central facilitation body. For up to date text and interpretations, consult Nepal's official legal resources and government portals.
Foreign Investment and Technology Transfer Act, 2019 (FITTA)
FITTA governs registration of foreign investments, allowed ownership structures, repatriation of profits and technology transfer arrangements. It provides a framework for processing investment proposals and defining incentives. The Act has guided the modernization of Nepal's approach to foreign participation since 2019.
Company Act, 2006 (as amended)
The Company Act regulates the formation, governance, and dissolution of Nepalese companies. It addresses share capital, directors, annual general meetings and financial reporting. Amendments in recent years have improved corporate governance provisions and alignment with foreign investment norms.
Investment Board Act and Investment Board Nepal
The Investment Board Nepal acts as the primary government entity for investment promotion and facilitation. It coordinates with investors to provide project screening, site visits and approvals required for large or foreign funded ventures. Its role is to streamline approvals and support investment through one window service where possible.
Source note: Official Nepal government and legal resources such as the Law Commission of Nepal and Invest Nepal describe FITTA 2019, the Company Act 2006 and the role of the Investment Board in investor facilitation. See Law Commission of Nepal: https://www.lawcommission.gov.np and Invest Nepal: https://www.investnepal.gov.np
Frequently Asked Questions
What is FITTA and what does it cover?
FITTA is the key statute governing foreign investment in Nepal. It covers registration, ownership limits, repatriation of profits and technology transfer. It provides the framework for approving foreign projects and defines investor rights and obligations.
How do I register a foreign investment project in Nepal?
Registration typically involves preparing a project proposal, submitting it to the Investment Board Nepal, and obtaining sector specific clearances. A lawyer helps assemble the required documents, ensures compliance with FITTA, and tracks approval timelines.
When can profits be repatriated after a Nepali investment?
Profit repatriation is subject to Nepal Rastra Bank rules and exchange regulations. An attorney helps confirm the necessary approvals, currency convertibility provisions and timing to comply with NRB requirements.
Where do I incorporate a domestic company in Nepal?
Domestic companies are registered with the Office of the Company Registrar under the Ministry of Industry. A lawyer assists with articles of association, shareholding structure and director appointments to satisfy statutory requirements.
Why should I hire a local lawyer for a joint venture?
A local attorney understands Nepali corporate governance norms, regulatory approvals, and contract enforceability. They help draft joint venture agreements that align with statutory requirements and protect minority interests.
Do foreign investors need a Nepali partner for all sectors?
No, but many sectors impose foreign ownership limits or require joint participation. An attorney can review sector specific limits and structure the investment to maximize compliance and flexibility.
How long does it typically take to register a new company?
Registration can take 2 to 8 weeks depending on the entity type and sector. A lawyer can prepare documents in advance to reduce back and forth and expedite processing.
What is the difference between a private and a public company in Nepal?
A private company restricts share transfer and has fewer shareholders. A public company can issue shares to the public and has stricter disclosure requirements. A lawyer explains which structure fits your capital and governance needs.
How much does it cost to start a business in Nepal?
Costs vary by entity type and sector. Typical expenses include registration fees, legal retainer, and advisory charges. A qualified attorney provides a detailed cost estimate based on your planned structure.
Can I own land if I am a foreign investor?
Land ownership by foreigners is tightly regulated and typically restricted. In practice, foreign investors may lease land or use corporate structures to hold property under Nepalese law. A lawyer will explain current restrictions and alternatives.
Is Nepal’s tax regime favorable for new investments?
Nepal offers tax incentives in certain sectors and for specific investment types. A tax and corporate law specialist can map incentives to your project and forecast effective tax burdens and reliefs.
Do I need to register a branch office or a liaison office in Nepal?
Branch and liaison offices serve different purposes for foreign entities. A lawyer helps decide the correct structure, obtain approvals, and draft internal governance documents for compliance.
Additional Resources
Next Steps
Define your investment objectives and preferred business structure. Prepare a one page overview of your plan and potential sectors, markets and timelines.
Engage a Nepal licensed lawyer with experience in investment structuring and corporate law. Schedule an initial consult to outline the regulatory path and required documents.
Gather preliminary documents such as your business plan, passport copies, corporate ownership details, and any existing agreements. Your lawyer will create a checklist tailored to your case.
Submit initial proposals to the Investment Board Nepal or relevant authority and track the approval timeline. Your attorney coordinates responses and amendments as needed.
Draft and finalize all corporate documents, including articles of association, shareholder agreements and any technology transfer or licensing agreements. Ensure compliance with FITTA and the Companies Act.
Complete registrations for the chosen entity, obtain necessary licenses, and arrange for foreign currency remittance or repatriation approvals if applicable. Plan for ongoing compliance and annual filings.
Establish a compliance calendar with deadlines for annual returns, board meetings and regulatory filings. Maintain ongoing legal review to adapt to regulatory changes.
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Disclaimer:
The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation.
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