Foreign Direct Investment and Business Incorporation in Nepal

Foreign Direct Investment and Business Incorporation in Nepal

Our firm helps foreign investors set up in Nepal the right way. We stay with the client through every step of establishing a business here, from selecting the most suitable entity to getting the paperwork accepted by the correct government office.

A foreign-invested company in Nepal typically deals with the Department of Industry, Investment Board Nepal, the Office of the Company Registrar and Nepal Rastra Bank, each with its own documentation rules. We manage that journey from start to finish: advising on structure, obtaining FDI approval, incorporating the company, recording the investment and taking care of the compliance work once operations begin.

The Legal Framework

Foreign investment is regulated mainly by the Foreign Investment and Technology Transfer Act, 2019 (FITTA), together with the Industrial Enterprises Act, 2020, the Companies Act, 2006 and the Foreign Exchange (Regulation) Act, 1962. FITTA defines which sectors are open to foreign capital, which are restricted, and whether an investment follows the standard approval route or the automatic route available for smaller investments in eligible sectors. Larger and infrastructure-related projects are approved by Investment Board Nepal, while Nepal Rastra Bank oversees how funds move into and out of the country.

The system works, but it is slow when documents are incomplete or the chosen structure does not fit the business. Avoiding those two problems is where our involvement makes the biggest difference.

What We Do

• Market entry and structuring: advice on the right ownership and equity structure for a subsidiary, joint venture, branch office or liaison office.
• Due diligence: review of a target company’s finances, liabilities and regulatory standing before an investor commits to a joint venture or acquisition.
• FDI approval: preparing and filing the application with the Department of Industry or Investment Board Nepal and following it through to the approval letter.
• Company registration: incorporation at the Office of the Company Registrar along with any related industry registration.
• Ongoing compliance: renewals, tax filings and foreign exchange reporting so that nothing lapses after the business is running.
• Day-to-day advisory: practical answers to the legal questions that arise as the business operates.
• Exit strategy: guidance on winding down or selling, including repatriation of capital.

Representation in Disputes

If an investment runs into difficulty, we represent clients before Nepal’s courts and quasi-judicial bodies and, where relevant, before international dispute settlement forums. We have worked with multinational companies, start-ups, private equity investors and individual foreign investors, so most situations a new client faces are ones we have handled before.