Foreign Liaison Office Registration in Nepal
Foreign Liaison Offices in Nepal serve as representative entities for international companies seeking to establish a presence in the Nepalese market. These offices act as a bridge between the parent company abroad and potential business partners, clients, or government agencies in Nepal. The primary purpose of a liaison office is to facilitate communication, gather market information, and promote the parent company’s interests without engaging in direct commercial activities. In Nepal, the establishment of Foreign Liaison Offices is governed by specific regulations and procedures designed to ensure compliance with local laws while fostering international business relationships. These offices play a crucial role in exploring business opportunities, conducting market research, and maintaining relationships with local stakeholders. Legal Framework Governing Foreign Liaison Office Registration The legal framework for Foreign Liaison Office registration in Nepal is primarily governed by the following laws and regulations: The Department of Industry (DOI) under the Ministry of Industry, Commerce, and Supplies is the primary regulatory body responsible for overseeing the registration and operation of Foreign Liaison Offices in Nepal. Eligibility Criteria for Establishing a Liaison Office To establish a Foreign Liaison Office in Nepal, the following eligibility criteria must be met: Step-by-Step Process for Liaison Office Registration The process for registering a Foreign Liaison Office in Nepal involves several steps: Detailed Steps: Required Documents for Foreign Liaison Office Setup The following documents are typically required for setting up a Foreign Liaison Office in Nepal: Government Fees and Charges for Registration The government fees and charges for registering a Foreign Liaison Office in Nepal include: Additional charges may apply for notarization, translation, and other administrative processes. Timeline for Liaison Office Registration Approval The timeline for obtaining approval and completing the registration process for a Foreign Liaison Office in Nepal can vary. However, a general estimate is as follows: The entire process typically takes between 6 to 10 weeks, depending on the completeness of the application and the efficiency of the relevant government departments. Permitted Activities and Restrictions for Liaison Offices Foreign Liaison Offices in Nepal are permitted to engage in the following activities: Restrictions on Liaison Offices include: Taxation and Compliance Requirements for Liaison Offices Foreign Liaison Offices in Nepal are subject to specific taxation and compliance requirements: Reporting Obligations to Nepalese Authorities Foreign Liaison Offices in Nepal have several reporting obligations to various authorities: Employment Regulations for Foreign Liaison Offices Foreign Liaison Offices must comply with Nepalese labor laws when employing staff: Bank Account Opening Procedures for Liaison Offices To open a bank account for a Foreign Liaison Office in Nepal: Read More Renewal and Closure Process for Liaison Offices Renewal Process: Closure Process: Differences Between Liaison Office and Branch Office Key differences between a Liaison Office and a Branch Office in Nepal: Recent Changes in Liaison Office Registration Policies Recent changes in Liaison Office registration policies in Nepal include: FAQs:
Foreign Direct Investment (FDI) Process in Nepal
Foreign Direct Investment (FDI) is the procedure of establishing company or investing in Nepal as a Foreigner. Foreign Businesses or Investors can establish companies by obtaining FDI Approval from the Department of Industry. Nepal’s FDI framework is governed by the Foreign Investment and Transfer of Technology Act, 2075 (2019). The FDI process in Nepal involves obtaining regulatory approvals, meeting investment thresholds, complying with sectoral restrictions, and fulfilling post-investment obligations. Foreign investors can invest through equity participation, technology transfer, loan financing, or establishing branch operations. The Government of Nepal has procedures through the Department of Industries and Investment Board of Nepal, offering protections including repatriation rights, national treatment, and dispute resolution mechanisms. This guide has been prepared by Axion Partners after assisting clients from more than thirty countries in successfully making investments in Nepal. It includes the process, timelines, requirements, investment regulations, investment vehicles, and other relevant details. 1. What is the Statutory Procedure for FDI Approval in Nepal Step 1: Verify business eligibility under positive and negative lists. Step 2: Obtain FDI approval from Department of Industries or Investment Board of Nepal. Step 3: Register company with Office of Company Registrar within seven days. Step 4: Complete tax registration with Inland Revenue Department immediately after incorporation. Step 5: Obtain industry registration certificate from Department of Industries within fifteen days. Step 6: Bring investment amount to Nepal through banking channels within prescribed timeline. 2. What Is FDI in Nepal? Foreign Direct Investment in Nepal refers to investment made by foreign individuals, companies, or entities in Nepalese industries and businesses. FDI is governed by the Foreign Investment and Transfer of Technology Act, 2075 (2019), commonly known as FITTA. This legislation replaced the earlier Foreign Investment and Transfer of Technology Act, 2049 (1992). FDI in Nepal is permissible only in industrial activities, not in trading activities. The law distinguishes between sectors where foreign investment is allowed and those where it is restricted. Foreign investors must commit to invest a minimum of approximately USD 140,000 (NPR 20 million) in convertible foreign currency with the exception of IT Sector. The investment can take various forms including equity participation, technology transfer, loan financing, asset purchase, lease financing, or establishment of branch operations. Nepal’s FDI regime operates primarily through an approval-based mechanism. Foreign investors must obtain approval from either the Department of Industries (DOI) for investments up to NPR 6 billion or the Investment Board of Nepal (IBN) for investments exceeding this threshold. The recently enacted Foreign Investment and Foreign Loan Management Bylaws, 2021 by Nepal Rastra Bank has introduced elements of automatic route, eliminating the need for central bank approval except for share purchase transactions. 3. Where To Apply for FDI Approval? The primary approving authorities are the Department of Industries and the Investment Board of Nepal. The Department of Industries, operating under the Ministry of Industry, Commerce and Supplies, handles FDI applications for investments up to NPR 6 billion (approximately USD 51 million). For larger investments exceeding NPR 6 billion, the Investment Board of Nepal serves as the approving authority. IBN was established to facilitate and promote large-scale foreign investment in Nepal. The board operates independently and has authority to approve mega projects across various sectors. Foreign investors can access IBN services at their office in Kathmandu. More information is available at https://www.ibn.gov.np. Nepal Rastra Bank, the central bank of Nepal is also involved in the process. While the recent bylaws have reduced NRB’s approval requirements for most investments, approval is still mandatory for foreign investment through share purchase. All foreign investors must notify NRB before bringing investment amounts into Nepal. 4. What Are the Requirements for FDI in Nepal? 4.1. Eligibility Criteria Foreign investors must meet several eligibility requirements to invest in Nepal. The proposed business activity must not fall under the negative list specified in FITTA. The negative list includes sectors such as small and cottage industries, personal service businesses, retail trading, real estate business (except construction), arms and ammunition manufacturing, and certain agricultural activities. The business must qualify as an industry under the Industrial Enterprises Act, 2076 (2020). 4.2. Investment Threshold Requirements Foreign investors must invest a minimum of NPR 20 million (approximately USD 140,000) in convertible foreign currency. This threshold applies regardless of the ownership percentage held by the foreign investor. The investment amount must be brought into Nepal through proper banking channels within the prescribed timeline. 4.3. Timeline for Investment 5. What Documents Are Required for FDI Approval? Foreign investors must submit comprehensive documentation to obtain FDI approval from DOI or IBN. The required documents include a detailed project proposal outlining the nature of business, investment amount, business plan, and projected financial statements. If multiple investors are involved, a Joint Venture Agreement must be submitted. For individual foreign investors, biodata and notarized passport copies are required. Corporate foreign investors must provide their certificate of incorporation, charter documents including Memorandum of Association and Articles of Association, details of direct and indirect shareholders with names, addresses, and shareholding percentages, company profile stating registered office address, business objectives, share capital, and key management personnel. Board resolution authorizing investment in Nepal, copies of directors’ passports, and latest audit reports (for investments above USD 100 million) are mandatory. All foreign investors must obtain a Financial Credibility Certificate from their bank confirming sufficient funds for the proposed investment. If the investor cannot appear in person in Nepal, a Power of Attorney must be submitted. Additional sector-specific approvals may be required from concerned regulatory authorities. For example, telecommunications investments require approval from Nepal Telecommunications Authority, available at https://www.nta.gov.np. 6. How To Obtain FDI Approval in Nepal? The Process of Obtaining FDI Approval in Nepal is: Step 1: Prepare Project Proposal and Obtain FCC · Step 2: Submit FDI Application to DOI or IBN · Step 3: Obtain DOI/IBN Approval and Register Company · Step 4: Complete Tax and Industry Registration · Step 5: Notify NRB and Open Bank Account · Step 6: Bring Investment Amount and Record at NRB Step 1: Prepare Project Proposal and Obtain FCC Foreign investors should begin by conducting a feasibility study
