General outline regarding approval for Foreign Investment in Nepal:

  1. Obtaining Investment Approval: This initial stage necessitates securing approval either from the Department of Industry or the Investment Board of Nepal, depending on the scale of the investment.
  2. Business and Industry Registration: Following the receipt of investment approval, it is imperative to enroll the business and industry in accordance with the foreign investment authorization.
  3. Approval from Nepal Rastra Bank: Acquiring the necessary approval from Nepal Rastra Bank to transfer foreign currency in compliance with the approved investment is a pivotal step.
  4. Currency Remittance and Documentation: The transfer of foreign currency occurs through established banking channels and is meticulously documented by Nepal Rastra Bank.

Possible Ways and Procedure

1. Foreign Investment in a New Industry

Step 1 Obtaining Foreign Investment approval from DOI/IPBNAlong with the Approval, the investor should also get the submitted project proposal certified.
Step 2Incorporation of Company at OCRObtain certified copies of Memorandum of Association, Articles of Association and Incorporation Certificate. The PAN (for tax registration) is also allotted.  
Step 3Business registration at Local level ward officeAlso obtain recommendation from the ward office for industry registration.(Enter into a lease agreement for registered officeLease agreement is required for local authority and tax registration. If the monthly rent is above NPR. 1,00,000/, the agreement should be registered with the local ward office.)
Step 4Tax Registration at IRDThe authorized representative (in case of corporate investor) and one of the promoter (in case of individual) has to be physically present for biometric registration).
Step 5Industry registration at DOIThe industry may be required to conduct and comply with the environmental examination or assessment which shall be a prior condition before the industry operates. 
Step 6Open Bank Account(at any commercial bank in Nepal) Bank account for the company can be obtained after obtaining PAN certificate too. However, the investor may remit the investment amount to the bank account only after registration of industry.
Step 7Submit a notification for inward remittance of investment (at Nepal Rastra Bank)No prior approval is required and only a notification in a prescribed format is to be submitted. 
Step 8Remit investment to company’s bank account The investor may remit the investment amount to the Company’s bank account as per the investment timeline and within 6 months of such inward remittance, should apply to the Nepal Rastra Bank for recording of the investment.
Step 9Start operation and notify to the Department of IndustryIf the industry is unable to commence its commercial operation within the specified time (specified in the industry registration certificate), it should apply for extension prior to 30 days from the expiry of such deadline. 

2. Investment by Technology Transfer

A foreign investor has the option to invest in any industry within Nepal by means of technology transfer. The conditions governing this technology transfer should align with the agreement pertaining to technology transfer. This agreement must receive approval from the relevant authority responsible for overseeing foreign investments.

For approval from Department of industries, the industry is required to apply to the DOI on a prescribed application along with the following documents:

S.N.DocumentCopiesOriginal or copyRemarksStatus
1Application for approval of technology transfer1Original
2Agreement between technology transferor and transferee2Original
3Certificate of Industry Registration1Copy
4Certified Copy of approved scheme1Copy
5Minute of BOD deciding upon obtaining technology and appointing authorized representative of company to sign in TTA1Copy
6Minute of BOD deciding upon obtaining technology and appointing authorized representative of company to sign in TTA1CopyIf the transferor is a company
7Certificate of Incorporation of foreign company1Notarized CopyIf the transferor is a company
8MOA, AOA (English translation when required)1Notarized CopyIf the transferor is a company
9Self-verified profile of foreign company1CopyIf the transferor is a company
10Details of directors, capital structure (certified by company)If the transferor is a company
11POA 1Notarized Copy
12 Trademark Registration Certificate1CopyIf trademark is being transferred

3. Foreign Investment in an Existing Industry by Share Transfer

There are two methods for conducting share transfers: one involves transferring shares from an existing shareholder, while the other entails issuing new shares to a foreign partner. The new shares can come from reserved shares or by increasing the company’s issued capital. To obtain approval for foreign investment from the Department of Investment (DOI), each investor must make a minimum investment of Rs 2 million.

Share transfer from an existing shareholder to a foreign investor

The industry is required to apply to the DOI on a prescribed application form along with the following documents.

  1. Request from the share transferor
  2. Request from the share transferee
  3. Share Transfer/Purchase Agreement 
  4. Copy of minute of the Board meeting of Nepalese company regarding inclusion of foreign investor into the company 
  5. Copy of minute of Board meeting, Certificate of incorporation and company profile of the foreign party if the participant is a company
  6. Copy of passport and Bio-data of foreign party, if participant is an individual
  7. Financial Credibility Certificate of the Foreign Investor provided by a bank
  8. Current Share Holders’ List as certified by the Company Registrar’s Office
  9. Industry Registration Certificate
  10. Auditor’s Report
  11. Tax clearance certificate
  12. Authority letter(s) from the companies concerned to sign on behalf of the companies.

(At the time of approval, the share transferor shall be present in person at the DOI. If the industry is not operational as of the date of application, the application should be accompanied with the Project Report, too.)

Share transfer from reserved share or by increasing the issued capital of the company 

The industry is required to apply to the DOI on a prescribed application form along with the documents mentioned above, except A and B. 

Regarding A & B, the following documents are to be enclosed. 

A. Request letter from the share transferor 

It is an application letter from the existing shareholder (duly authorised by the Board meeting) of the existing company stating that the company agrees to transfer all/some of the shares from the stock of the company. 

B. Request letter from the share transferee 

It is an application letter from the prospective foreign investor stating that he/she wants to invest in the existing Nepalese industry and agrees to buy the shares of the Nepalese company of the stated amount. 

4. Loan Investment in an Existing Nepalese Industry

If a Nepalese company desires to access a loan or loan services from a foreign lending entity or an individual, it must submit an application to the DOI using the specified Application Form.

Additionally, the company should provide the following documents along with the application.

  • Loan Agreement 
  • Certificate of Incorporation, including Memorandum of Association and Articles  of Association of the lending agency 
  • Company profile of the lending agency 
  • Industry Registration Certificate 
  • Copy of the minute of the Board of the recipient company regarding the loan to 
  • be acquired 
  • Auditor‟s Report 
  • Tax clearance certificate 

4. Creating an Investment Company

Step 1Obtaining Foreign Investment approval from DOI/IPBNThe minimum amount for foreign investment for investment company is 1,000,000,000 Nepalese rupees. (Based on notice published in Nepal Gazette of 2 March 2023)
Step 2Incorporation of Company at OCRCopy of foreign investment approval (license) issued by DOICopy of Citizenship certificate of Nepali PromotersCopy of passport of the foreign investors-promotersCopies of company’s proposed Memorandum of Association and Articles of Association in Nepali languagePlease note here that Articles and Memorandum have to be submitted in Nepali languageIdentity document or passportThe project proposal that was sent to DOIApplication of reserved company name (obtained from CRO or online at letter or power of attorney (for representatives)
Step 3Business registration at Local level ward officeAlso obtain recommendation from the ward office for industry registration.
Step 4Tax Registration at IRDCopy of the Certificate of IncorporationCopy of Certificate of Memorandum and Articles of AssociationCopy of the Citizenship certificate (or passport in case of foreign national) who signs the applicationPassport size photo of the individual who signs the applicationHand drawn sketch of the business location of the applicantPower of Attorney
Step 5Industry registration at DOIAfter getting foreign investment approval and incorporation of company, the industry is required to get registered at DOI within 35 days. The following documents will have to be submitted:Prescribed application form.A copy each of the Certificate of Incorporation, Memorandum and Articles of Association of Company.Other documents as required by DOI
Step 6Informing Nepal Rastra Bank The entity willing to foreign investment in Nepal should inform the NRB that it brining foreign investment in Nepal. In inform the NRB that it is brining foreign investment in Nepal it should make application on prescribed format. Once the foreign investor informs the NRB with regards to foreign investor. The foreign should make application with following document to the Bank for the deposit of foreign investment amount.Application to deposit the Foreign Investment AmountDecision of Board of Director or Authorized Person to deposit the Foreign Investment AmountCopy of the Foreign Investment ApprovalCertificate issued by Credit Information Center that entity brining foreign investment is not blacklistedCopy of Passport of foreign investor
Step 8Recording the Foreign InvestmentOnce the entity brings the foreign investment in Nepal, it should record such foreign investment in NRB. In order record foreign investment, the entity should make application to NRB with following documents.Application on prescribed formatDecision of Board of Director or Authorized Person to record the foreign investmentCopy of Foreign Investment ApprovalCopy of Company and Industry Registration CertificateCopy of PAN/VAT Registration CertificateCopy of MOA and AOA of Company.Copy of latest audit reportCopy of latest Tax Clearance CertificateCopy of latest Share Registry certified by OCRSystem generated evidence provided to bank to prove that foreign investment is brought is NepalEvidence to prove that prior information of foreign investment is given to NRBCopy of passport of Foreign Investor

Additional provision with regards to Foreign Investment Company by the Notice published in Nepal Gazette of 2 March 2023 (2079/11/18)

 a.The sector of industry in which investment would be made must be within the boundaries of Nepal.
b.  Investment can only be made on the industries classified by Industrial Enterprise Act and on the industries in which Foreign Investment and Technology Act has allowed for foreign investment. 
c.      The investment company shall invest only in the form of share capital and cannot invest through loans, credit facilities, bonds and debentures. 
d.      Investment company shall not perform any act according to the prevailing laws related to banks and financial institutions
e.      Foreign investment company while investing in various sector shall acquire foreign investment approval from industry registering body for every sector. 
f.       Industrial Enterprise Act and other applicable laws shall govern the registration and regulation of investment company. 
g.      Foreign investment company while bring or repatriating the amount shall comply with Foreign Investment and Technology Transfer Act, its regulation and policy, guidelines and procedure published by Nepal Rastra Bank 
h.      Investment Company shall not perform the activities of a cooperative established and operated in accordance with the Cooperative Act. 
i.       Investment through shell company and financial transaction with shell bank shall not be allowed. 
j.       Investment company shall not be allowed to buy share, debenture from secondary market of stock exchange limited. 
k.      Investment company shall not invest in sectors like securities exchange broker, and real estate transactions.
l.       Investment companies shall not take loans from national banks and financial institutions as well shall not be allowed on the basis of bank guarantees from foreign banks. 
m.    The monitoring of investment company shall be done by the department of industries. 
We, at Jurist and Company are well-experienced with the practices and are available at your service!