Joint Venture Process in Nepal

This guide explains the joint venture process in Nepal, detailing steps, legal requirements, procedures and documents for establishing and terminating JV’s.

A joint venture in Nepal is a formal business arrangement where two or more parties agree to combine resources for a specific project or business purpose. Foreign companies often form joint ventures with local Nepali partners to enter the market, participate in government tenders, or establish operations.

The joint venture process in Nepal involves mutual agreement, legal documentation, government registration, and regulatory approval. This arrangement allows foreign investors to leverage local expertise while complying with Nepali laws.

Step-By-Step Process for Joint Venture

Step 1: Both parties reach a mutual agreement on business objectives, profit sharing, responsibilities, and management structure for the joint venture partnership.

Step 2: Legal professionals draft a comprehensive joint venture agreement that outlines all terms, conditions, capital contributions, and operational guidelines between the parties.

Step 3: Authorized representatives from both parties sign the joint venture agreement, and the document is notarized and registered with relevant authorities.

Step 4: The parties file a formal application with the appropriate government agency such as Department of Industry, Office of Company Registrar, or Nepal Rastra Bank.

Step 5: The government agency reviews the application, verifies documents, and issues approval or authorization for the joint venture to operate legally in Nepal.

Step 6: After approval, parties either complete the specific project or continue operations according to the joint venture agreement and regulatory requirements.

What Is a Joint Venture in Nepal?

A joint venture in Nepal represents a strategic business partnership between two or more entities. These entities combine their resources, expertise, and capital to achieve specific business goals. The joint venture structure allows foreign companies to collaborate with Nepali partners for market entry and business expansion.

The joint venture process in Nepal follows specific legal frameworks established by government authorities. Companies must register their partnership with designated government departments. The Department of Industry handles industrial joint ventures. The Office of Company Registrar manages company-based partnerships. Nepal Rastra Bank supervises joint ventures in the banking and financial sectors.

Foreign investors commonly use joint ventures to meet local partnership requirements for certain business activities. Many government tenders require foreign companies to partner with local firms. Joint ventures also help foreign entities navigate local regulations and cultural business practices. This arrangement benefits both parties through shared risks, resources, and market knowledge.

Types of Joint Ventures in Nepal

Different sectors and purposes require specific types of joint venture registrations in Nepal. Each type follows distinct procedures and regulatory requirements.

Type	Registering Authority	Purpose	Key Requirements
Department of Industry (DOI)	Department of Industry	Manufacturing, industrial production, foreign direct investment	Minimum capital investment, environmental clearance, industrial license
Investment Board Nepal (IBN)	Investment Board Nepal	Large-scale infrastructure, energy projects exceeding threshold amounts	Project proposal, financial capacity proof, technical expertise demonstration
Tender-Based JV	Relevant tender authority	Government contract participation, public procurement projects	Tender document compliance, local partnership percentage, technical qualification
Company Registration	Office of Company Registrar	General business operations, service sector, trading activities	Company formation documents, minimum capital, shareholder agreements
Banks & Financial Institutions	Nepal Rastra Bank	Banking, insurance, financial services, microfinance operations	High capital requirements, fit and proper test, regulatory compliance
NGOs & INGOs	Social Welfare Council	Development projects, humanitarian work, social welfare programs	Non-profit objectives, project proposals, funding sources disclosure

Where To Register a Joint Venture in Nepal?

The registration location for a joint venture in Nepal depends on the business sector and purpose. Different government agencies handle various types of joint venture registrations. Parties must identify the correct authority before beginning the registration process.

The Department of Industry registers joint ventures for manufacturing, industrial projects, and foreign direct investment activities. This department operates under the Ministry of Industry, Commerce and Supplies. Foreign investors seeking to establish production facilities or industrial operations must register here. The department issues necessary approvals and monitors compliance with industrial policies. Visit their official portal at https://www.doi.gov.np for detailed information.

The Office of Company Registrar handles joint ventures structured as private limited companies or public limited companies. This office maintains records of all registered companies in Nepal. Joint ventures forming a new company entity must complete registration here. The office ensures compliance with the Companies Act and related regulations. Access their services through https://www.ocr.gov.np for company registration procedures.

Nepal Rastra Bank oversees joint ventures in banking, financial institutions, and insurance sectors. Foreign banks or financial companies must obtain approval from the central bank. The bank evaluates financial stability, capital requirements, and regulatory compliance. Joint ventures involving significant foreign exchange transactions also require central bank approval. Check https://www.nrb.org.np for banking sector guidelines.

What Are the Requirements for Joint Venture in Nepal?

The joint venture process in Nepal requires specific conditions to be met before registration. The primary requirement involves having at least two parties interested in forming a business partnership. These parties can be two foreign entities or one foreign entity and one local Nepali partner.

Two Foreign Parties: Foreign companies from different countries can form a joint venture to conduct business in Nepal. Both parties must be legally registered entities in their home countries. They must provide valid incorporation documents and business licenses. This arrangement is common for large infrastructure projects or international collaborations.

Foreign and Local Partnership: A foreign company can partner with a Nepali individual or company. This is the most common joint venture structure in Nepal. Local partners provide market knowledge and help navigate regulatory requirements. Foreign partners bring capital, technology, and international expertise.

Tender Participation: Many government tenders require foreign companies to form joint ventures with local firms. The tender documents specify partnership requirements and local participation percentages. Foreign companies must establish joint ventures before submitting tender applications. This requirement ensures local business involvement in major projects.

Non-Profit Purposes: International NGOs and foreign organizations form joint ventures for development projects. These partnerships focus on social welfare, education, healthcare, or community development. The joint venture agreement must clearly state non-profit objectives. Registration follows different procedures under NGO regulations.

Investment Purposes: Foreign investors use joint ventures to invest in Nepali businesses and industries. The Foreign Investment and Technology Transfer Act governs these arrangements. Investors must meet minimum capital requirements specified by law. The joint venture structure provides legal protection and operational framework for investments.

How To Complete the Joint Venture Process in Nepal?

Step 1: Establish Mutual Agreement Between Parties

Step 2: Prepare the Joint Venture Agreement

Step 3: Sign and Register the Joint Venture Agreement

Step 4: File Application to Government Agency

Step 5: Obtain Approval and Authorization of JV

Step 6: Complete or Continue Joint Venture Operations

Step 1: Establish Mutual Agreement Between Parties

The joint venture process in Nepal begins with parties reaching a mutual understanding. Both entities must agree on fundamental business objectives and partnership terms. This initial agreement covers the scope of business activities, target markets, and expected outcomes. Parties discuss capital contributions from each side and determine ownership percentages. Management structure and decision-making authority require clear definition at this stage.

Profit and loss sharing ratios must be agreed upon before proceeding. Both parties should conduct due diligence on each other’s financial stability and business reputation. Legal advisors help draft preliminary terms and identify potential issues. This step establishes the foundation for the formal joint venture agreement. Clear communication and transparency between parties ensure smooth progression to documentation.

Step 2: Prepare the Joint Venture Agreement

Professional legal experts draft a comprehensive joint venture agreement based on the mutual understanding. The agreement document includes detailed terms and conditions governing the partnership. It specifies each party’s rights, obligations, and responsibilities throughout the venture. Capital contribution amounts, payment schedules, and asset ownership are clearly documented.

The agreement outlines management structure, appointment of directors, and operational control mechanisms. Profit distribution formulas and loss-sharing arrangements are precisely defined. Dispute resolution procedures and arbitration clauses protect both parties’ interests. The document includes termination conditions and exit strategies for partners.

Intellectual property rights, confidentiality obligations, and non-compete clauses are incorporated. Legal professionals ensure compliance with Nepali laws and international standards. Both parties review the draft agreement and suggest necessary modifications before finalization.

Step 3: Sign and Register the Joint Venture Agreement

After finalizing the agreement, authorized representatives from both parties sign the document. Signatures must be witnessed and notarized by a licensed notary public in Nepal. Foreign parties may need to authenticate signatures through their embassy or consulate.

The signed agreement is then registered with the relevant government authority. Registration provides legal validity and enforceability to the joint venture arrangement. The Office of Company Registrar maintains records of registered joint venture agreements. Some sectors require additional registration with specific regulatory bodies.

Parties must pay applicable registration fees and submit required documentation. The registration process creates an official record of the partnership. Registered agreements receive legal protection under Nepali law and can be enforced in courts.

Step 4: File Application to Government Agency

The parties submit a formal application to the appropriate government agency for approval. The Department of Industry receives applications for industrial and manufacturing joint ventures. Company-based joint ventures file applications with the Office of Company Registrar. Banking sector partnerships apply to Nepal Rastra Bank for authorization.

The application includes the registered joint venture agreement and supporting documents. Parties must provide detailed business plans, financial projections, and operational strategies. Information about both partners’ backgrounds, experience, and financial capacity is required.

The application specifies the business sector, location, and expected investment amounts. Government agencies review applications for compliance with sector-specific regulations. Additional information or clarifications may be requested during the review process. Complete and accurate applications expedite the approval timeline.

Step 5: Obtain Approval and Authorization of JV

Government agencies evaluate applications based on legal requirements and policy guidelines. The review process examines financial viability, technical capability, and regulatory compliance. Officials verify the authenticity of submitted documents and partner credentials.

The Department of Industry assesses industrial projects for environmental and social impact. Nepal Rastra Bank evaluates financial sector joint ventures for capital adequacy and risk management. The Office of Company Registrar ensures compliance with company law provisions. Agencies may conduct site visits or request additional documentation during evaluation.

Upon satisfactory review, the agency issues formal approval or authorization. The approval document specifies conditions, restrictions, and operational guidelines for the joint venture. Parties receive official certificates or licenses permitting business operations. This authorization is essential for legal operation and accessing government services.

READ MORE: FDI Approval Process in Nepal

Step 6: Complete or Continue Joint Venture Operations

After receiving approval, the joint venture commences operations according to the agreement. Parties implement the business plan and begin commercial activities. Regular compliance reporting to government agencies is mandatory. Financial statements, tax returns, and operational reports must be submitted periodically.

The joint venture must maintain proper accounting records and corporate governance standards. Some joint ventures are project-specific and conclude upon project completion. Others continue as ongoing business operations requiring annual renewals and updates.

Parties must notify authorities of any significant changes in ownership or operations. Disputes between partners should be resolved according to agreement provisions. Successful joint ventures may expand operations or modify partnership terms with regulatory approval.

What Documents Are Required for Joint Venture in Nepal?

The Documents required for Joint Ventures:

• Complete profile and business history of all participating parties
• Certificate of incorporation or business registration of foreign company
• Certificate of incorporation or business registration of Nepali company
• Board resolution authorizing joint venture participation from each party
• Passport copies of individual investors or authorized representatives
• Signed and notarized joint venture agreement
• Detailed business plan outlining objectives and operations
• Power of attorney if representatives are signing on behalf of parties
• Sector-specific licenses or permits if required

How Long Does the Joint Venture Process Take in Nepal?

The joint venture process in Nepal requires careful planning and adherence to timelines. The standard completion time is exactly 30 working days from application submission to approval.

The timeline calculation begins when parties submit a complete application to the relevant government agency. The following factors influence the overall timeline:

• Document preparation time: Gathering all required documents from both parties takes 5-10 working days depending on complexity and international coordination requirements.
• Agreement drafting and negotiation: Legal professionals need 7-15 working days to draft, review, and finalize the joint venture agreement between parties.
• Government agency processing: Official review and approval by Department of Industry, Office of Company Registrar, or Nepal Rastra Bank takes 15-20 working days.

What Are the Costs for Joint Venture in Nepal?

The joint venture process in Nepal involves minimal direct government fees. However, parties incur various expenses for professional services and documentation. Understanding cost components helps in budget planning and financial preparation.

Cost	Description
Government Registration Fee	Nominal fee for registering joint venture agreement with authorities
Legal Drafting Services	Professional fees for drafting and reviewing joint venture agreement
Notarization Charges	Notary public fees for authenticating signatures and documents
Translation Services	Translation of foreign documents into Nepali language if required
Due Diligence Costs	Background verification and financial assessment of partners
Consultation Fees	Professional advice from lawyers, accountants, and business consultants
Document Authentication	Embassy or consulate authentication of foreign company documents
Application Processing	Government agency application fees depending on business sector

What Are the Renewal Process Requirements for JV’s in Nepal?

Joint ventures in Nepal require ongoing compliance and periodic renewals depending on their structure. Parties must understand renewal obligations to maintain valid business status.

• Company-based joint ventures must renew registration annually with the Office of Company Registrar before the deadline specified in company law.
• Sector-specific licenses such as industrial licenses or business operation permits require renewal according to respective regulatory timelines.
• Joint ventures must file annual tax returns and maintain good standing with the Inland Revenue Department for continued operations.
• Joint ventures with foreign investment must report to the Department of Industry annually regarding investment status and operations.
• Partnership continuation requires annual board meetings and resolutions confirming ongoing commitment from both parties.
• Any changes to joint venture terms require formal amendments registered with the original approving authority.

What Laws Govern Joint Ventures in Nepal?

Several legal frameworks regulate the joint venture process in Nepal. These laws ensure proper registration, operation, and compliance of business partnerships.

• Companies Act, 2063 (2006): This act governs the formation and operation of companies in Nepal. Joint ventures structured as companies must comply with all provisions. The act specifies registration procedures, shareholder rights, and corporate governance requirements.
• Foreign Investment and Technology Transfer Act, 2075 (2019): This law regulates foreign investment in Nepal. It defines permissible sectors for foreign investment and partnership requirements. The act provides incentives and protections for foreign investors in joint ventures.
• Industrial Enterprises Act, 2076 (2020): This act covers industrial joint ventures and manufacturing businesses. It specifies registration procedures with the Department of Industry. The law outlines industry classifications and operational requirements.
• Nepal Rastra Bank Act, 2058 (2002): This act governs banking and financial sector joint ventures. It establishes licensing requirements and capital adequacy norms. Foreign banks must comply with central bank regulations for joint venture operations.
• National Civil Code, 2074 (2017): This law governs contractual agreements including joint venture agreements. It defines legal requirements for valid contracts and enforcement mechanisms. Parties must ensure their joint venture agreement complies with contract law provisions.
• Labor Act, 2074 (2017): Joint ventures employing workers must follow labor law requirements. The act specifies employment terms, worker rights, and workplace safety standards. Compliance ensures legal protection for both employers and employees.

Our Experiences with Joint Venture

Axion Partners has extensive experience facilitating the joint venture process in Nepal for international clients. The firm has successfully assisted companies from Russia, China, Japan, Canada, USA, Sri Lanka, and the United Kingdom. Each joint venture required customized approaches based on business sectors and partnership structures. Russian clients formed joint ventures for infrastructure development and construction projects. Chinese companies partnered with Nepali firms for manufacturing and trading operations. Japanese investors established joint ventures in technology and service sectors. Canadian and American clients focused on energy, tourism, and consulting businesses. Sri Lankan companies formed partnerships for cross-border trade and logistics. UK-based organizations created joint ventures for education and professional services. The success of these joint ventures depended on thorough preparation and legal compliance. Proper documentation and clear partnership agreements prevented future disputes.

What Benefits Does a Joint Venture Offer in Nepal?

Joint ventures provide numerous advantages for foreign and local businesses operating in Nepal:

• Market Access: Foreign companies gain immediate access to the Nepali market through local partner networks and established business relationships.
• Risk Sharing: Both parties share financial risks, operational challenges, and market uncertainties, reducing individual exposure to potential losses.
• Local Expertise: Nepali partners provide valuable knowledge about local business practices, consumer behavior, and cultural considerations essential for success.
• Regulatory Compliance: Local partners help navigate complex regulatory requirements and maintain good relationships with government authorities.
• Resource Pooling: Combining financial resources, technology, equipment, and human capital creates stronger competitive advantages than individual operations.
• Tender Eligibility: Joint ventures enable foreign companies to participate in government tenders and public procurement projects requiring local partnerships.
• Cost Efficiency: Sharing operational costs, infrastructure, and administrative expenses reduces overall business expenses for both parties.
• Technology Transfer: Foreign partners bring advanced technology and international best practices while local partners provide implementation support.
• Brand Credibility: Association with established local or international partners enhances brand reputation and customer trust in the market.
• Flexibility: Joint venture structures offer flexibility in ownership percentages, management control, and operational arrangements based on partner agreements.
• Tax Benefits: Certain joint ventures qualify for tax incentives and exemptions under Nepal’s foreign investment promotion policies.
• Exit Strategy: Joint venture agreements include clear exit mechanisms allowing parties to conclude partnerships when objectives are achieved.