Foreign Direct Investment and Business Incorporation in Nepal

Bhandari Law and Partners is one of the leading law firms in Nepal, and our FDI team spends most of its time doing one thing well: helping foreign investors get set up properly. We guide clients through every stage of establishing a business in Nepal, from choosing the right vehicle to getting the paperwork through the right government office.

Setting up a foreign-invested company here means working with the Department of Industry, Investment Board Nepal, the Office of the Company Registrar, and Nepal Rastra Bank — often in that order, and each with its own documentation requirements. We manage that process end to end: advising on the most suitable business vehicle, securing FDI approval, registering the company, recording the investment, and handling the compliance work that follows once the business is up and running.

Legal Framework

Foreign investment in Nepal is governed primarily by the Foreign Investment and Technology Transfer Act, 2019 (FITTA), alongside the Industrial Enterprises Act, 2020, the Companies Act, 2006, and the Foreign Exchange (Regulation) Act, 1962. FITTA sets out which sectors are open to foreign investment and which fall under the government's restricted list, and it determines whether an investment goes through the standard approval route or, for smaller investments in eligible sectors, the automatic route. Larger projects — generally above NPR 6 billion, or anything infrastructure-related — are approved by Investment Board Nepal rather than the Department of Industry. Nepal Rastra Bank sits alongside both, regulating how capital moves in and out of the country.

It's a workable system, but it isn't a fast one if the paperwork isn't right the first time. Most of the delays we see come down to incomplete documentation or a business vehicle that wasn't the right fit to begin with — which is really where our job starts.

What We Do

We work with local subsidiaries, joint ventures, branch offices, and liaison offices, and we help clients figure out early which of these actually suits what they're trying to do in Nepal — that decision shapes almost everything that comes after it.

Due diligence

Before an investor commits to a joint venture or acquisition, we look into the target company itself — its financials, its liabilities, its regulatory standing — so there are no surprises after the money moves.

Market entry and structuring

We advise on how a foreign investor should enter the Nepali market, including the right ownership and equity structure for the business they're building.

Setting up the entity

We handle formation of the business, whatever form it takes — subsidiary, joint venture, or branch office.

FDI approval

We prepare and submit the application to the Department of Industry or Investment Board Nepal, depending on the size and nature of the investment, and see it through to an approval letter.

Company registration

Once approval is in hand, we take the company through incorporation at the Office of the Company Registrar and any related industry registration.

Ongoing compliance

After registration, foreign-invested companies have recurring obligations — industry registration renewals, tax filings, foreign exchange reporting to Nepal Rastra Bank, among others. We keep clients on top of these so nothing lapses.

Day-to-day advisory

Beyond the initial setup, we advise on the legal questions that come up as a business actually operates in Nepal.

Exit strategy

When it's time to wind down or sell, we advise on the legal side of exiting the Nepali market, including repatriation of capital.

We've done this work for multinational corporations, startups, private equity firms, and individual foreign investors, and that range means we've generally seen whatever situation a new client is facing.

Representation in Disputes

Where an investment runs into trouble, we represent clients before Nepal's courts and quasi-judicial bodies, and, where relevant, before international dispute settlement bodies — because protecting an investment sometimes means defending it after the fact, not just structuring it well at the outset.

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