This article will guide you with the foreign direct investment law in Nepal, documents, and procedures.

Foreign investment means the investment in domestic companies and assets of a foreign country by a foreign investor. Big multinational corporations will see and search for new opportunities for economic upliftment by opening branches and expanding their investments in other countries. Foreign investments can be made by individuals, but are most often proceed by companies and corporations looking to extend their availability.

Foreign investments can be divided into two types:

Foreign Direct Investment (FDI)
Foreign Indirect or Portfolio Investment (FPI)

Foreign Direct Investment (FDI) plays a significant role in raising capital formation and productive capacity as well as the transfer of technology, skill, innovation, and managerial ability. Analyzing the importance of FDI in economic upliftment and transformation, Nepal has adopted the policy of regular improvement of major factors determining FDI inflow.

Nepal has also introduced policy, plan, and procedural improvements along with the policy of national treatment of foreign investors. In addition, the government is committed to providing some tax and non-tax facilities, post-investment services, and a hassle-free business environment.

The government tends to attract more foreign investment through growing markets, natural resources, flexible labor markets, and bilateral investment and double-taxation avoidance agreements.

Foreign Direct Investment in Nepal is mainly guided by the Foreign Investment and Technology Transfer Act, of 2019.

For establishing an industry, the extension and diversification of existing industry, Brief Environment Study (BES), Initial Environmental Examination (IEE), and Environmental Impact Assessment (EIA) should be approved prior to the operation of the industry as per the existing environmental laws

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Documents Required for Approval of Foreign Investment in Industry

Project proposal – 2 copies
Joint Venture Agreement (in case of more than 1 investor) – 2 copies
Notarized copies of citizenship certificate of local partner or Certificate of Incorporation, including Memorandum of Association if the local party is a company – 1 copy
Notarized copy of the passport of foreign partner or Certificate of Incorporation, including Memorandum of Association and Articles of Association if the party is a company– 1 copy
Bio-Data of foreign investor or company profile – 1 copy
Financial Credibility Certificate of the Foreign Investor issued by a home country bank
Letter of Authorization from the company or the investor (if necessary)

Documents Required for Approval of Foreign Investment in Existing Industry through Share Purchase

Application from the share transferor
Share transfer agreements – 3 copies
Copy of minutes of the meeting of the Board of Directors of Nepali Company – 1 copy
Notarized copy of minutes of Board meeting, Certificate of Incorporation, and company profile if the foreign party is a company – 1 copy
Notarized copy of passport and Bio-data of the foreign party, if the party is an individual– 1 copy
Financial Credibility Certificate of the Foreign Investor issued by a bank– 1 copy, Current Share Holders’ List as recorded in the Office of Company Registrar- 1 copy and Audit Report – 1 copy
Tax Clearance Certificate – 1 copy
Letter of Authorization to sign on behalf of the company – 1 copy
Certificate of industry/company registration – 1 copy

Forms of Foreign Investment through Technology Transfer

Patent, design, trademark, goodwill, technological specificity, formula, process,
User’s license, technological know-how sharing or use of technological knowledge (franchise),
Provision of foreign technical adviser, management and marketing service, or other technological skill or knowledge.