Act Restricting Investment Abroad, 1964 of Nepal : Main Highlights

The Act Restricting Investment Abroad, 1964 (2021) (“Act”) imposes stringent controls on Nepali individuals and entities seeking to invest overseas. The Act prohibit Nepalese individuals or entitles from making any form of investment at foreign country except exemption provided the Nepal Government.

Section 3 (1) of the Act stipulates that no Nepalese individuals or company are prohibited from making any form of investment abroad.

Section 2 (a) of the Act has defined the term “Investment” as any investment made in the following forms:

a. Foreign securities

b.Partnership with a foreign firm

c. Foreign bank account

d. Real estate situated abroad

e. Any other kind of cash or in-kind investment made abroad except that as specified by GON by notification in the Nepal Gazette

Further the Act defines “Foreign Securities” and “Securities” as:

i. Foreign Securities: Foreign Securities is defined as securities created or issued abroad and securities of which principal or interest is to be paid or payable in any foreign currency.

ii. Securities: Securitas is defined as Shares, stocks, bonds, debentures, debenture stocks, and government securities, receipts of securities, units and sub units and the term also includes the certificate of entitlement to securities.

3.1 Permission through publication on Notice on Nepal Gazette by Nepal Government:

Section 3(2) of the Act incorporate the provision that permission to invest in abroad may be granted by Government of Nepal through notification in Nepal Gazette. These notifications will specify the scope and duration of such exemptions.

As per our understanding till the date the Government of Nepal has not granted a separate permission allowing investment abroad by the Nepali Citizen through Nepal Gazette.

1. 3.2 Permission to Invest Abroad by Non-Resident Nepali (NRN) and NRN Citizen

2. Despite of the restriction, Non-Resident Nepali (“NRN”) and NRN Citizen having foreign passport are allowed to invest from the amount that they have earned in abroad.
3.  

Any individual who violates this Act or any notice, order, or instruction issued under it may be punished with a fine equivalent to the amount in question or with imprisonment for a duration not exceeding six months or both.

Further if someone who has already received punishment for the offense as mentioned above continues to commit the same offense, even after being informed of the penalty's order, they will be subject to a fifty rupee fine for every day that this occurs.

Date of Publication: 25 May 2024

This article published on our website is just for information purpose only. It shall not be taken as the legal advice, advertisement, personal communication, solicitation or inducement. Bhandari Law and Partners or any of the team members of the firm shall not be liable for the consequence arising of the information provided. The factual situation may be different on your case, thereof if you need further legal advice on the subject matter, please Contact Us.