The procedure of Foreign Direct investment In Nepal

On March 27, 2019, Nepal’s Foreign Investment and Technology Transfer Act, 2019 went into effect. Foreign direct investment, also known as FDI, is permitted in Nepal. Foreign direct investment (FDI) and foreign portfolio investment (FPI/FII) are made by purchasing stock in a Nepalese company. Management involvement, joint ventures, technology transfer, and expertise transfer are all common practices. Foreign direct investment (FDI) is the acquisition of productive assets by a foreign entity, such as factories, mines, and land. Increased foreign investment is one indicator of economic globalization.

What kinds of foreign investors are there? WHO CAN BECOME A FOREIGN INVESTOR?

Prior to learning about the Foreign Investment Process, it is critical to understand who can invest in Nepal. Section 2 (k) of FIATTA 2019 includes provisions for individuals and organizations to invest in Nepal, which are listed below.

1. Any foreign individual;
2. Any foreign firm, incorporated or unincorporated;
3. Any foreign corporation; and
4. Nepali who are not permanent residents of the country.
5. Another country’s government
6. In the case of a foreign institutional investor, an international agency or other corporate body of a similar nature that makes foreign investment, as well as the ultimate beneficiary of such an institution.

2. What projects are available for foreign investment?

The term “foreign investment” is defined in Section 2(J ) of FIATTA 2019 as a foreign investor’s investment in an industry or company:

1. Purchasing foreign currency shares,
2. Reinvestment of dividends derived from foreign currency or shares in an industry,
3. Lease financing provided by airlines,
4. An investment in a venture capital fund was made.
5. Investment in listed securities made via the secondary securities market
6. Investment made by purchasing shares or assets of a Nepalese company,
7. Reinvestment of dividends derived from foreign currency or shares in an industry,
8. Lease financing provided by airlines,
9. An investment in a venture capital fund was made.
10. Investment in listed securities made via the secondary securities market
11. Investment made by purchasing shares or assets of a Nepalese company,

3. Foreign investment procedures in Nepal.

First Step: The first step is to obtain approval from the industry department, which is in charge of overseeing foreign investment in Nepal. According to Section 17 of the FITTA (Foreign Investment and Technology Transfer Act 2019), investments up to $6 billion require approval from the Department of Industry, while investments over $6 billion require approval from the Investment Board.

Second Step: If the requirements are met, the department grants approval within seven days of receiving the application for foreign investment. Following approval for foreign investment or company formation, the next step is to draft the Memorandum of Articles and Articles of Association and register the company with the Office of the Company Registrar.

Third Step: the company must be registered with the Tax Office after it has been registered with the Office of the Company Registrar. The company’s documents, as well as other relevant documents, are required in order for the company to be registered with the tax office.

Fourth Step: once your company has been registered with the tax office, it must be registered with the Municipality or Rural Municipality under the Local Governance Act 2074.                                               

Fifth Step: A recommendation from the local authority is required in order for it to be registered with the Department of Industry.

Sixth Step: is to register the industry with the Department of Industry.

Seventh Step: Pursuant to Section 16 of the FITTA Foreign Investment and Technology Transfer Act 2019, a declaration must be made that the investments brought into the country are legitimate. The procedures outlined by the Nepal Rastra Bank must be followed in order to attract foreign investment into the country.

4. DOES PRIME LEGAL HAVE EXPERIENCE WITH INTERNATIONAL CLIENTS?

Corporate Lawyer Nepal has been assisting foreign investors in establishing industries in Nepal and other related activities. We have successfully assisted many multinational corporations and foreign individuals in establishing a business presence in Pakistan. Prime Legal is currently involved in a number of foreign direct investment projects in Nepal.