How To Register Private Equity and Venture Capital Company in Nepal?

Private Equity means equity investments made into companies or assets not listed in public stock exchange so as to increase their value over time before selling them. It serves an important purpose for pooling funds to support start-up firms, private middle-market firms, firms in financial distress, and public firms seeking buyout financing.

 

Venture Capital is one of the forms of equity financing that supports start-ups and early-stage companies having high growth potential through pooling capital from investors to provide not only financial backups but also technical and managerial expertise. 

 

1.1. Private Equity (PEVC) Structure

A PEVC structure includes a fund, the fund manager and the investors. Collectively, the fund managers and the investors are called the Partners, where the former are the General Partners (GP) and the latter are called the Limited Partners (LP). Funds are an investment pool which is created by sourcing investments from the LP with significant commitment and small commitments from the GP. The Investment Committee (IC) is the governing body of the fund, comprising of senior members from fund management team and investment experts, which decides on the investment. 

 

1.2. Investment Process

The funds have their own specific mandate and policies based on which the sector and area of investment is defined. The fund pools investment from several LPs (investors). The Fund then invests into several portfolio companies based on the identified areas.

 

 

Private Equity and Venture Capital is still in the nascent phase in Nepal. While informal investment schemes have existed prior, the PEVC landscape in Nepal emerged in the 2010s with the inception of One to Watch in 2010, Dolma Impact Fund in 2014, Business Oxygen in 2015, True North Associates and Team Ventures in 2016. Currently, the SEBON has granted license to 19 fund managers. 

 

In Nepal, there is no single legal regime or a single regulator to regulate Private Equity Funds or Venture Capital Funds. The laws that are generally applicable to the PEFs and VCFs are listed below: 

• Specialized Investment Fund Rules, 2019 (2075) (“SIF Rules”)

• Companies Act, 2006 (2063) (“Companies Act”)

• Foreign Investment and Technology Transfer Act, 2019 (2075) (“FITTA”)

• Foreign Exchange (Regulation) Act, 1962 (2019) (“FERA”)

 

The legal frameworks governing the PE/VC ecosystem in Nepal is spread across several laws rather than one specific Act. The core framework consists of:  

a. Companies Act

b. SIF Rules

 

In Nepal, under the SIF Rules, the formation of a PE/VC firm follows a two-step framework, comprising of the following steps: 

 

a.Registration of Fund Manager

b.Obtain additional approval for the specific fund. 

 

Prior to the registration as a Fund Manager, the SIF Rules mention that the entity must be a corporate body incorporated in accordance with Nepalese law. For the incorporation of a company, the registration process follows the following procedures as per the Companies Act of Nepal: 

 

• Step 1: Registration of company at Office of Company Registrar
• Step 2: Tax Registration at Inland Revenue Office 
• Step 3: Business registration at the concerned local government i.e. ward office
• Step 4: Bank account in the name of company
• Step 5: Share Distribution and Shareholder Registry

 

Such a company must include fund management as one of the functions in the objectives of memorandum of association and articles of association.

 

 

Anyone intending to establish and operate a specialized investment fund must first obtain approval from the Securities Board of Nepal (“SEBON”). The applicant must submit an application to SEBON in the prescribed format along with a registration fee of three lakh Nepalese rupees. 

 

6.1. Required Documents

While submitting an application for the registration as Fund Manager, such an entity must attach the following documents with the application:

 

S.N.	Required Documents to be Submitted with the Application
1	A copy of the registration certificate of the body corporate.
2	A copy of the Memorandum of Association and Articles of Association.
3	A copy of the audited financial statements of the preceding fiscal year and a copy of the annual report.
4	A copy of the Board of Directors' decision approving the application.
5	Details of any action taken against the Board of Directors or the Chief Executive Officer of the proposed fund manager under securities-related laws or any other prevailing law, if applicable.
6	Details of the shares held by the promoters and the amounts paid for those shares.
7	Names, full addresses, contact numbers, and shareholding details of shareholders holding five percent or more of the paid-up capital.
8	Details of the organizational structure and working procedures of the body corporate.
9	Details of the office location, office area, office equipment, communication devices, and human resources.
10	Details of ownership in other companies or body corporates.
11	Any other documents and particulars as required by the Board.

 

6.2. Eligibility Qualifications of Fund Manager

The Fund Manager so intending to be registered under the SEBON must fulfill the eligibility qualifications as per the Rules.

 

S.N.	Eligibility Qualifications for Fund Manager
1	Must be a body corporate incorporated under the prevailing law.
2	Its Memorandum of Association and Articles of Association must explicitly include fund management as one of its objectives.
3	Must have a paid-up capital of at least NPR 2 crore.
4	Neither the members of the Board of Directors nor the Chief Executive Officer must have been convicted of a crime involving moral turpitude.
5	The proposed fund manager, its Chief Executive Officer, or members of its Board of Directors must not have been booked by SEBON for failing to make necessary arrangements for the trading of securities after collecting money from the general public through a public offering, or for involvement in vanishing companies, delisted companies, or failure to furnish information, notices, or particulars as required by law.
6	No director or Chief Executive Officer shall be listed on the blacklist maintained by the Credit Information Center, nor have been subject to regulatory action for violation of law, unless at least two years have elapsed since such action was taken.

 

6.3. Post Registration Process

After filing of application, the application is subject to review by the SEBON. The SEBON conducts necessary inquiry and upon fulfillment of the conditions, it either approves or rejects the application.

 

Procedural Aspect	Provisions
Inquiry Period	The SEBON shall conduct the necessary inquiry after receiving the application.
Timeline for Approval	If the application is found appropriate, the SEBON shall grant a certificate of registration within 35 days of the date of application.
Terms and Conditions	The SEBON may prescribe additional terms and conditions while granting approval.
Notice of Rejection	If the application is found to be inapt, the SEBON shall issue a notice of rejection to the applicant.

 

Once the SEBON issues the certificate, the Fund Manager must maintain its status through payment of an annual fee of One Lakh Fifty Thousand Nepalese Rupees within three months of the end of each fiscal year. 

 

6.4. Fee Requirement (Government Fee)

The application for Fund manager must be submitted along with an application fee and after the completion of registration, such a registered fund manager should pay an annual fee, as mentioned below:

 

Particulars	Fees
Initial Application Fee	NRS. 300,000
Annual Fee (After Registration)	NRS. 150,000

 

6.5. Foreign Fund Managers Operating in Nepal

The SIF Rules has mentioned certain provisions about the foreign fund managers operating in Nepal through full or majority ownership. 

 

6.5.1. Conditions for Operation

A fund or a fund manager registered abroad can operate in Nepal under the following conditions: 

a. Ownership: They can establish a fund or a fund management business in Nepal with full or majority ownership, subject to prevailing Nepalese laws. 

b. Methods of Operation: 

• The fund manager must establish a subsidiary company in Nepal and obtain approval from the SEBON. 

• Alternatively, they can operate their fund through a local fund manager that is already licensed by SEBON. 

c. Managing Foreign Funds: Conversely, a licensed Nepali fund manager is also permitted to manage foreign funds

 

6.5.2. Registration Requirements for Foreign Entities

The approval and registration process of the Fund is as provided under the SIF Rules and FITTA. Under the rules mentioned in FITTA, institutional foreign investors can establish a venture capital fund by incorporating a company for investing equity in any industry. Such an entity must obtain approval from the SEBON for the investment to be made to any industry from the fund. 

 

a. Registration Requirement for Foreign Fund Manager: 

For the registration of a foreign fund manager, either through the establishment of a subsidiary company of through a local fund manager, such institution should obtain approval from the Board, by submitting an application along with the following documents: 

 

i.)  Copy of the company registration certificate

ii.) Copy of the memorandum and articles of association

iii.) Audited financial statements of the previous fiscal year and annual report relating to activities and transactions, prepared in the prescribed format and accounting standards. However, if an institution has not completed one fiscal year since establishment, interim financial statements certified by the management may be submitted. 

iv.) Copy of the resolution passed by the BOD regarding obtaining approval

v.) Details of any action taken against the proposed fund manager’s directors or chief executive under securities laws or any other prevailing law

vi.) Details relating to share ownership held by the promoters and the paid-up amount of shares

vii.) Name, full address, contact telephone number, and details of ownership as acquired by shareholders holding five percent or more of the paid-up capital

viii. ) Details regarding the institution’s organizational and operational structure

ix.) Details regarding office location and area, office equipment, communication facilities, and manpower

x.) Details regarding ownership in any other company or organized institution, if any

xi.) Letter certifying that the promoter shareholders are not blacklisted

xii.) If the institution’s shareholder is a foreign fund, fund manager, or other institution, then in addition to the documents mentioned above

xiii.) A certified copy of the certificate showing that the fund, fund manager, or institution is registered in accordance with the laws of the concerned country; and

xiv.) Certified copies of the memorandum and articles of association or incorporation documents of such institution.

xv.) If the institution’s shareholder is a foreign fund, fund manager, or other institution, in addition to the above-mentioned documents, a certified copy of documents disclosing the size of the funds being managed abroad by such institution;

xvi.) Any other documents and details deemed necessary by the SEBON.

 

b. Registration Requirement for Foreign Fund

A foreign fund must provide additional documentation beyond standard requirements:

 

i.) A certified copy of the certificate of registration of fund, the fund’s constitution/bylaws in accordance with the law of the home country, along with a certified Nepali translation.  

ii.) The audit report of the previous fiscal year.

iii.) A certified copy of the resolution passed by the board of directors of the foreign company regarding the registration and operation of the fund, along with a certified Nepali translation thereof.

iv.) A certified copy of the agreement entered into with the fund manager who has obtained a registration certificate from the Board. 

v.) The amount of funds to be brought in from abroad. 

vi.) Other details as prescribed by the Board from time to time. 

 

c. Specific provisions as per FITTA

For the investment to be made by foreign investors in any industry through the establishment of a Venture Capital Fund, such an investor must make an application to the Foreign Investment Approving Body (Department of Industry) to make foreign investment. Such an application must set out the details, a time schedule for bringing foreign investment into Nepal and action plan on investment in the industry. The foreign investment approval must be given within a period of seven days of the receipt of application if all documents as required are furnished. 

 

After the receipt of approval from the Department of Industry, such an investor must notify the Nepal Rastra Bank in writing, along with the self-declaration stating that the amount to be invested in Nepal has been earned from legitimate source. Only then, the foreign entities may bring the amount of such investment into Nepal.

 

However, it must be noted that where investments are made in any industry or business through a fund which is financed wholly or partly, by foreign investors, such investment must comply with the FITTA. In particular, the proposed investment must not fall within the Negative List of industries or business which identifies sectors in which foreign investment is prohibited. Such industries or businesses prohibited for foreign investment are: 

 

• Poultry farming, fisheries, bee-keeping, fruits, vegetables, oil seeds, pulse seeds, milk industry and other sectors of primary agro-production,

• Cottage and small industries,

• Personal service business (hair cutting, tailoring, driving etc.),

• Industries manufacturing arms, ammunition, bullets and shell, gunpowder or explosives, and nuclear, biological and chemical (N.B.C.) weapons; industries producing atomic energy and radio-active materials,

• Real estate business (excluding construction industries), retail business, internal courier service, local catering service, moneychanger, remittance service,

• Travel agency, guide involved in tourism, trekking and mountaineering guide, rural tourism including homestay,

• Business of mass communication media (newspaper, radio, television and online news) and motion picture of national language,

• Management, account, engineering, legal consultancy service and language training, music training, computer training, etc. 

• Consultancy services having foreign investment of more than fifty-one percent. 

 

After the registration as a Fund Manager, such licensed entity must comply with the standards and obligations as set out by the SIF Rules.

 

Compliance Area	Key Legal Requirements
Financial and Fee Obligations	Annual Fee: NRS. 150,000. Service Fee: Within two months after the end of each fiscal year, the fund manager must deposit 10% of the total service fees collected into the SEBON's account. Failure to deposit the service fee within the prescribed period attracts an additional charge at the rate of 10% per annum, calculated on a daily basis.
Conflict of Interest	The fund manager must ensure that its directors, Chief Executive Officer (CEO), and employees have no financial interest in any organization in which the fund invests. If such financial interest exists, a resolution must be passed at the Annual General Meeting (AGM) of unit holders. The SEBON must be notified within 7 days of passing such resolution.
Accounting, Auditing and Reporting	Maintain separate books of accounts and financial statements for the fund manager and for each managed fund. Appoint a recognized Chartered Accountant (CA) to audit the accounts. The auditor's report must specifically confirm whether the fund complied with prescribed investment procedures and acted in the best interests of unit holders. Submit the annual report, audited financial statements, and summary of activities to the SEBON within 6 months after the end of each fiscal year. Hold the AGM of unit holders within 6 months after the end of the fiscal year. Submit the AGM report to the SEBON within 30 days of the conclusion of the meeting.
Administrative Compliance and Record Keeping	Notify the SEBON within 15 days of any amendment to the Memorandum of Association (MoA) or Articles of Association (AoA). Notify the SEBON within 15 days of the appointment of a new Board of Directors (BOD) or Chief Executive Officer (CEO). Immediately inform the SEBON if any promoter, director, or CEO is blacklisted by the Credit Information Center. Provide any information or documents requested by the SEBON within 7 days. Maintain all records relating to the establishment, operation, investment activities, and unit holders of the fund for at least 5 years after the fund is wound up.
Appointment of Board of Directors (BOD) and CEO	The company must have a Board of Directors consisting of a minimum of 5 and a maximum of 7 directors. Each director must satisfy at least one of the following qualifications: At least 5 years of experience in industries, commerce, the stock market, financial sector, accounting, finance, commercial law, or management. A Master's degree from a recognized university in economics, commerce, finance, accounting, management, or commercial law. At least one Independent Director must be appointed, who: Has at least 5 years of experience after obtaining a Master's degree in economics, commerce, finance, management, or commercial law; or Has at least 10 years of experience after obtaining a Bachelor's degree in economics, commerce, finance, accounting, management, commercial law, Chartered Accountancy (CA), Chartered Financial Analyst (CFA), or an equivalent qualification. Has no direct or indirect ownership in the fund management company. The Board of Directors must appoint one Chief Executive Officer (CEO) who has: At least 10 years of relevant experience after obtaining a Master's degree in economics, commerce, finance, management, or commercial law; or At least 15 years of relevant experience after obtaining a Bachelor's degree in economics, commerce, finance, management, or commercial law.
Disqualifications for BOD or CEO	Being declared insolvent in Nepal or abroad. Not having completed at least 3 years since being removed from a blacklist or defaulters' list maintained by banks or financial institutions in Nepal or abroad. Not having completed 10 years since being penalized for theft, cheating, forgery, corruption, banking offenses, or any criminal offense involving moral turpitude in Nepal or abroad.

 

Once the fund manager’s license is obtained, there is a specific procedure to register and operationalize an actual investment fund. 

 

As per the SIF rules, the following types of investment funds can be registered: 

 

Types of Fund	Statutory Definition
Private Equity Fund	A fund that provides initial equity, equity-related instruments, or investments based on the agreement of the partners of a company. It may invest in: Instruments convertible into ordinary shares or equity capital; Debt instruments; Loans; or Other debt- or equity-related instruments. Provided that the percentage of investment permitted in debt instruments or loans shall be determined by the SEBON.
Venture Capital Fund	A fund established to invest, through equity, debt instruments, or loans, in enterprises or innovative ventures that: Are not listed; Are in the initial stage of operation; Are in the process of commencement; or Are already in operation and engaged in innovative knowledge, skills, technology, intellectual property, or the development of new goods or services. Provided that the percentage of investment permitted in debt instruments or loans shall be as determined by the SEBON.
Hedge Fund	A fund established to make investments in sectors involving high risks.
Other Funds	Any other category of fund as may be prescribed by the SEBON from time to time.

 

8.1. Fund Registration and Unit Issuance

The SIF Rules prescribes a specific procedure in relation to Fund Registration by the Fund Manager and the subsequent issuance of its units. 

 

8.1.1.  Registration Requirement

Anyone intending to operate a fund must register it with the SEBON by submitting an application in the prescribed format by attaching the particulars and documents, along with the required fees.

 

Category	Key Requirements
Particulars and Documents to be Attached with the Application for Fund Registration	A copy of the constitution of the fund. A copy of the audited financial statements of the preceding fiscal year prepared in the format prescribed by the prevailing law and applicable accounting standards, along with a copy of the annual report. If the fiscal year has not been completed following incorporation, a copy of the periodic financial report shall be submitted. A three-year business plan, including projected financial statements for the upcoming three fiscal years. A copy of the Board of Directors' resolution approving the registration and issuance of the fund. Details of any action taken against the Board of Directors or the Chief Executive Officer of the proposed fund manager under securities-related laws or any other prevailing law, if applicable. A commitment letter from unit holders confirming their commitment to retain their investment throughout the fund period and collectively invest at least 10% of the proposed fund. Particulars regarding the proposed fund's investment procedures. Details of the office location, office area, office equipment, communication facilities, and human resources. Details of the investment agreement proposed to be entered into with the unit holders. Particulars regarding the issuance of units where the units are proposed to be issued in phases. The following particulars regarding the Board of Directors and the Chief Executive Officer: Name and full address. Details of ownership or involvement in other companies or fund managers, if any. Any other particulars or documents prescribed by the SEBON, including additional information where a Non-Resident Nepali (NRN) is a promoter.
Matters to be Mentioned in the Constitution of the Fund	Name of the fund. Type of the fund (Private Equity Fund, Venture Capital Fund, Hedge Fund, or any other category prescribed by the SEBON). Size and duration of the fund. Details of investors committing to invest at least 10% of the fund as promoters. Provisions relating to the operation, record-keeping, and audit of the fund. Details of the targeted investment sectors and investment procedures. Provisions regarding projected returns or profits from investments. Provisions relating to the repatriation of investments. Provisions for dispute resolution. Provisions regarding hurdle rates. Provisions regarding fund management fees. Provisions regarding the winding up of the fund. Any other matters as may be prescribed by the SEBON from time to time.

 

The fund manager must attach the government fees along with the application to be submitted to SEBON. The Fund Registration fee is prescribed as follows:

 

Fund Capital	Registration Fee
NRS. 10,000,000 to NRS. 500,000,000	NRS. 500,000
Above NRS. 500,000,000 up to NRS. 1,000,000,000	NRS. 700,000
Above NRS. 1,000,000,000	NRS. 1,000,000

 

8.1.2.  Minimum Standards for Registration

To be eligible for registration, a fund must meet several operational criteria:

 

Minimum Standards for Registration	Requirements
Minimum Capital	The fund must have a minimum capital of NPR 15 crore.
Manager's Stake	The fund manager must continuously hold at least 2% of the fund's units. Exception: This requirement does not apply to investments made by bilateral or multilateral international agencies.
Unit Holder Limit	The number of unit holders shall not exceed 200.
Closed-ended Nature	The fund must be established and operated as a closed-ended fund.
Investment Limit	An individual unit holder may invest in units only up to NPR 50 lakh.
Distribution of Cash Dividend	Cash dividends shall be distributed only to the unit holders of the fund.

 

Upon making necessary inquiry, the SEBON shall issue a fund registration and issuance certificate to the applicant if it deems necessary.

 

8.1.3. Unit Issuance and Investment Provisions

Once a fund is registered, the fund must start the unit issuance process to targeted investors via circular or personal contact within three months of receiving approval from the SEBON and must complete the entire issuance within two years.  Prior to the issuance of units, the fund manager shall have to prepare prospectus in the prescribed format. 

 

The liability of a unit holder is strictly limited to the units they have subscribed to, and also, they shall have the right to vote in general meetings, receive cash dividends and to repatriate their investments based on their subscribed units. 

 

There are separate provisions relating to investment into the Fund. The Fund must identify the targeted investors and fulfill the key investment criteria, as follows: 

 

 

 

Investor Category	Scope
Financial Institutions	Banks and Financial Institutions. Insurance companies.
Recognized Funds	Retirement Funds. Welfare Funds. Provident Funds. Citizen Investment Trust. Any other funds recognized under the prevailing laws.
International and Foreign Investors	Bilateral or multilateral international institutional investors. Foreign individuals, firms, companies, or institutional investors. Funds registered abroad or foreign fund managers.
Domestic Entities	Institutions established in Nepal under the prevailing laws specifically for the purpose of making investments.
Individual Investors	Nepali citizens and Non-Resident Nepalis (NRNs).
Other Designated Entities	Any other body or individual specified by the SEBON from time to time.

 

The Fund Manager must enter into a formal investment agreement with the qualified investors. The agreement must include the following matters: 

 

a. Amount and period to be invested 

b. Projected profit on investments

c. Procedures regarding reimbursement

d. Provision of hurdle rate

e. Details regarding fund management fees

f. Expenditure headings of the fund

g. Provision regarding issuance of units and phase wise collection of money thereof

h. Provision regarding settlement of all liabilities of the fund and distribute the remaining amounts to unit holders by converting all types of property into cash following its winding up.

 

8.1.4. Special Provisions and Exemptions for Foreign Investors

The regulations provide certain flexibilities for international and multilateral investors:

 

a. Issuance as Debt: When units are issued to international associations or multilateral institutional investors, the fund may issue them in the form of debt.

b. Installment Payments: These international investors are permitted to provide their committed investment in installments over time, as specified in the fund's bylaws.

c. Equity Maintenance Exemption: While typical fund managers must maintain at least a 2% equity stake in their fund, this requirement does not apply to funds where bilateral or multilateral international organizations have invested.

 

8.1.5. Fund Fees 

The Fund manager may levy the following fees:

 

a. Management Fees: The fee is levied as provided in the investment agreement, typically collected on a trimestral basis, within the lapse of one month of each fiscal year.  

b. Performance Fees: Additional fees can be charged on annual net profits if the profit exceeds the “hurdle rate” as defined in the constitution. 

 

8.2. Duration and Termination of Fund

The lifespan of a fund is set between five to fifteen years, as mentioned in the investment agreement. The fund then may be terminated on various grounds. 

 

8.2.1. Termination Grounds

The fund can be terminated on the following grounds: 

 

a. If a period given by the SEBON has been completed; 

b. If approval given by the SEBON to operate Fund has been cancelled;

c. If SEBON has issued directions to wind up the fund being satisfied that it cannot be operated further owing to arising unavoidable circumstances or financial crisis.

 

8.2.2. Voluntary Termination of Fund by Fund Manager

The fund manager may terminate the fund is a resolution has been passed by the Annual General Meeting of the unit holders, representing 75% capital and 50% of the unit holders of the fund. 

 

8.2.3. Post Termination Requirements

The Fund Manager has to settle down all liabilities of the fund, through conversion of all types of property into cash, and the remaining amount shall be reimbursed to the unit holders, as per the investment agreements. 

 

After the liabilities of the fund have been settled, a notice to that effect shall be communicated to the Board within 3 days following the completion of the process. 

 

A PE/VC exit means the sale or divestment of an investment in a portfolio company to realize returns on investment. Since the exit serves as the primary source of returns for their funds, PE/VC firms require a robust exit strategy. 

 

The most common exit strategies employed by PE/VC firms include: 

 

a. Trade Sales (Strategic Sales): This involves selling the investee company to a strategic buyer who sees value in the acquisition, often paying a premium for potential synergies. Historically, this has been the most dominant exit strategy globally, accounting for 80% of the total exit value in 2023. In Nepal, strategic sales are increasingly utilized as firms seek regional consolidation or merger-acquisition opportunities.

 

b. Secondary Buyouts (SBOs): In an SBO, a PE/VC firm sells its stake in an investee company to another PE firm or institutional investor. This allows the original investor to exit while the new buyer takes over the value-creation process. While SBOs accounted for 42.2% of total exit value in the United States in 2023, they are less common in Nepal (representing only 4.2% of total exits) due to the country’s fledgling investment ecosystem.

 

c. Initial Public Offerings (IPOs): Going public involves offering shares of the company to the public on a stock exchange, providing liquidity for shareholders and access to public capital markets. IPOs are common for mature companies and can enhance a fund's reputation. While they only constituted 3% of global exit volume in 2023, they are a predominant strategy in India and Nepal, where primary markets are often eager for new subscriptions.

 

d. Promoter Buybacks (Founder Buyouts): This strategy occurs when the original promoters or founders of the company buy back the shares from the PE/VC firm. In Nepal, where many portfolio companies are family-owned or controlled by a dominant shareholder, this is a widely adopted route, with approximately 21.6% of exits in the country being implemented or considered through this method.

 

e. Debt/Dividend Recapitalization: This is a partial exit strategy that enables firms to extract cash from companies, often funded by cash balances or leverage, without affecting the company’s overall structure. It serves as a backup option when a full exit is not immediately possible, and it is a prominent practice in Nepal’s real estate investments. 

 

PE/VC funds can be categorized based on their types. 

 

a. Local funds are established as a limited liability company sourcing investments exclusively from Nepalese investors. 

b. Offshore FDI Funds are such funds registered outside Nepal but invest directly in Nepal’s portfolio, without the fund’s local presence.

c. Onshore FDI Funds are such funds created as limited liability companies in Nepal, but which sources investment fully or partially from foreign investors. 

d. SIF Funds are such funds that are licensed under the SIF Rules.

 

Type of Funds	Number of Operational Funds
Local Funds	7
Offshore FDI Funds	4
Onshore FDI Funds	1
SIF Funds	7
Total	19

 

The Nepal Private Equity Association (“NPEA”) which was established as a profit non-distributing entity under the Companies Act, is a representative entity of private equity and venture capital fund managers in Nepal. NPEA currently consists of 22 ‘regular’ members including private equity and venture capital fund managers and 9 ‘associate’ members comprising business service providers such as law firms and audit firms. 

 

The NPEA aims to advance Nepal’s PEVC landscape, particularly through its efforts in policy advocacy, capacity building, networking, and research. The NPEA envisions to promote and strengthen the alternative investment ecosystem in Nepal by bringing together stakeholders in Nepal’s expanding entrepreneurial landscape. Unlike the role of SEBON as a regulatory institution, the NPEA is more like a bridge among its members to foster a sustainable investment environment through initiatives ranging from training programs and networking events to awareness campaigns.

 

 

Private Equity and Venture Capital have emerged as important alternative investment mechanisms so as to address the needs of startups and high-growth enterprises that may not have access to conventional capital sources. Although the PEVC ecosystem in Nepal is at a relatively early stage of development, the SIF Rules has established a system for the regulation of specialized investment funds. With the growth of licensed fund managers an investment funds, a clear understanding of the applicable legal and regulatory requirements is essential for the fund managers as well as the investors. 

 

 

Date of Publication: 27 July 2026 

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