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The Ministry of Industry, Commerce and Supplies has issued a gazette notification on September 25, 2023, invoking Section 18(1) of the Finance Act, 2080 aligning with the provisions of the budget speech for Fiscal Year 2080/81 granting temporary waiver to investors for registration and capital restructuring.

Previously, the Office of the Companies Registrar imposed certain fees based on a company’s authorized capital, its nature, investment amount. However, the newly published notification effectively waives these charges for the entirety of Fiscal Year 2080/81.

(b) Companies seeking to increase their authorized capital will also benefit from the fee waiver.

(d) Companies opting to consolidate or divide their share capital will not incur charges.

(e) Foreign companies registering branch or liaison offices in Nepal will also be granted fee exemptions.

It is important to note that this fee waiver is applicable exclusively for Fiscal Year 2080/81 and will not extend to subsequent fiscal years. Therefore, any company seeking incorporation must take advantage of this opportunity within the fiscal year 2080/81.

Disclaimer: This Pioneer Law Briefing may not necessarily deal with every important aspect of the subject matter. This Briefing is intended for general information only and not to be construed as legal or other advice.

The Government of Nepal has recently amended the minimum wage under Labor Act, 2017 (2074) (“Labor Act”) by publishing a notice in Nepal Gazette Part 5, Volume 73, Number 24, dated August 17, 2023 (2080-04-32) (“Gazette Notice”).

Separate minimum wage has been fixed for the workers/employees working in tea estate (“Tea Estate Minimum Wage”) and the workers/employees working in enterprises other than tea estate (“Other Enterprises Minimum Wage”).

The minimum wage is applicable to all workers/employees irrespective of status of the employment or the length of service. Section 3(2) of the Labor Act prohibits an employer from entering into an agreement with its employee for paying remuneration/wage and benefits that are less than prescribed by the Government of Nepal. Therefore, the prescribed minimum wage is mandatory.

Section 106 of the Labor Act mandates the Ministry of Labor, Employment and Social Security to publish the minimum remuneration in the Nepal gazette and such minimum remuneration shall come into force on the first day of the new financial year.

The Bharat Raj Upreti Memorial Foundation (the “BRU Foundation”) was founded in the loving memory of late Hon’ble Justice Mr. Bharat Raj Upreti founding member of Pioneer Law Associates; former Senior Advocate and former Justice of the Hon’ble Supreme Court of Nepal. The BRU Foundation aims to further the vision of the late Hon’ble Justice Mr. Bharat Raj Upreti by playing an instrumental role in the fields of – (1) legal profession, (2) access to quality legal education, and (3) independence of Nepalese judiciary through research, publication, capacity building, policy dialogue and reform intervention.

In furtherance of this vision, the BRU Foundation in partnership with Pioneer Law Associates has been organizing the BRU National Moot Court Competition in commercial arbitration. We are delighted to announce that we are now organizing the Fourth Bharat Raj Upreti (BRU) Moot Court Competition (Arbitration) and Conference, 2023, from the 7th to 8th of July 2023.

The Moot will see participation from 10 Nepalese Law Schools. The competitors will be judged by panels of accomplished arbitration professionals. The conference is set to bring leading professionals and law students together for an invigorating discussion with inputs from senior members of the judiciary.

Pioneer Law Associates conducted a workshop on Road to IPO : From Conversion to Listing in collaboration with NIBL ACE Capital Limited and The Association of Chartered Accountants of Nepal Chitwan Chapter on 10th May 2023 at Chitwan .

The Ministry of Industry, Commerce and Supplies has published a gazette notification regarding an Amendment to the Foreign Investment and Technology Transfer Regulation, 2079 (2023) (“Amended Regulation”) on April 20, 2023 (Baisakh 7, 2080) pursuant to Section 51 of Foreign Investment and Technology Transfer Act, 2075 (2019) (“FITTA”). The Amended Regulation is expected to simplify the procedure for foreign investors willing to invest in Nepal and encourage more foreign investors to consider investing in Nepal.

The Amended Regulation adds a new provision as Section 8(a) in the Foreign Investment and Technology Transfer Regulation, 2077 (2021) (the “Regulation”). This Section specifies the conditions for operation of the automatic route. It allows automatic route into two forms of foreign investment – (a) incorporation of a new company as 100% subsidiary or as a joint venture, and (b) capital increment in an existing company with foreign investment.

However, it is important to note that the permissible threshold up to which automatic route shall be applicable will be provided through another gazette notification. This means that foreign investors will have to wait for further information regarding the maximum amount of investment that will qualify for automatic approval.

The Department of Industries (DOI) is implementing an electronic system for foreign investors to submit files and documents required by FITTA and the Regulation. Investors will upload documents online, with the option to revise and correct them before submission. After review and verification by the DOI, investors can obtain foreign investment approval certificate electronically along with an e-mail confirmation. This system envisages an efficient and convenient approval process for foreign investors.

Overall, the automatic route for foreign investment is a positive development for the country’s investment climate and is likely to attract more foreign investment in the near future.

“Update: Notice published on Automatic Route where Upper Ceiling and Industries Permissible for FDI has been prescribed by the GON” .

Please find the link : https://pioneerlaw.com/automatic-route-upper-ceiling-and-industries-permissible-for-fdi-prescribed-by-the-gon/

In accordance with the Start-Up Enterprise Loan Fund Procedure, 2079 (the “Procedure”), the Government of Nepal has issued a notice for all interested start-up enterprises regarding eligibility of applying for loan concessions dated 26 March 2023 (2079/12/16) (the “Notice”). The validity of this publication is for 21 days from the date of publication of the notice (starting from 26 March 2023), in the given timeframe, interested start-up enterprises must submit their project proposals in accordance with the given format. The following sections will provide extra clarity regarding this notice.

1. What are the start-up industries that are eligible to apply for concessional loans?

Following are the list of startup industries who can apply for concessional loan,

j. Sectors dedicated to improving processes related to traditional technology, production methods and services,

2. What are the criteria that must be satisfied by start-ups to apply for business and enterprise loans?

Start-up entrepreneur which falls under following criteria can apply for the startup business and enterprise loans,

2.1 Registered and in operation, but for not more than 7 years before the publication of this notice, and

2.2 Fulfil at least 3 of the following criteria from (a) – (d), and 2 of the following criteria from (e) – (g):

a. Paid up Capital: Paid up capital of not more than NRs 5 million (NRs 50 lakhs),

b. Gross Income: Gross income of the enterprise not more than NRs 5 million (NRs 50 lakhs),

c. Fixed Capital: Fixed capital (except land and building) of not more than NRs 20 million (NRs 2 crore),

e. Use of Information Technology: Utilisation of technology and innovation (creative thinking) in resolving consumer issues in production and distribution of goods and services,

f. Allocation of Expenditure: Expenditure allocation of at least 5% of total expenditure for product development, market research & development,

g. Intellectual Property Protection: Either registered intellectual property of industry as patent or design or software or eligible to be registered as patent, design or software.

3. What businesses and enterprises are not eligible to apply for the start-up loan?

The procedure as well as notice has highlighted on the list of enterprises which cannot apply for the business and enterprise loans,

b. Trading: Not utilising technology and innovation and simply importing goods and services from foreign countries,

c. Identity of the Company: A company working as a subsidiary company or firm of an existing company or business,

d. Blacklist: A business or a person that is blacklisted in the Credit Information Bureau,

e. Tax Registration: Not obtained PAN (Permanent Account Number) for tax purposes,

f. Medium and Large Holding Company: A business classified as medium and large holding company as per Industry Enterprises Act (IEA) 2076,

4. What are the maximum loan limit and collateral security for concessional loans that are applicable for start-ups?

The maximum limit of loan is NRs 2.5 million (25 lakhs) and project shall be considered as collateral security.

5. How can a project proposal be submitted?

Proposal can be submitted as per Schedule 1 to Department of Industry (DOI) or online at startup@doind.gov.np. All related/required documents for the proposal must be submitted as a single scanned PDF file. One enterprise/business group cannot submit for more than one proposal.

6. What documents are required to be submitted with the proposal?

d. A photocopy of citizenship certificate of the authorised representative of firm/company or industry.

The notice also provides that any proposals containing inaccurate or falsified self-certified/disclosed documents and details will be disqualified. Such persons will remain disqualified for future purposes.

7. What are details to be Disclosed for a loan application?

The prescribed format of an application has been provided in the Annexure I of this document. The brief detail of the information to be disclosed are as follows, (a) name of the company, (b) address of the company, (c) date of registration, (d) registration number, (e) PAN Details, (f) license Number, (g) license Validity Date, (h) Main Address of the Company including Province, District, ward no. , tole, (i) telephone number, (j)e-mail, (k) name of authorised representative, designation, number and e-mail Id, (l) name of director, citizenship number, district of issue, date of issue, (m) permanent and current address, (n) main business / head office address, province, district, ward number and tole, (o) details of proposed project, project introduction (max. 200 words), project objective (max. 50 words), area of business (in relation of Section 5), estimated budget of project in NRs, expenditure to-date on project, (p) project analysis and other related details.

The Office of the Company Registrar (OCR) has announced the establishment of a separate desk for providing registration services to companies with foreign investment. According to a notice published on 7^th March 2023 (2079/11/23 B.S.), the OCR aims to expedite the Foreign Direct Investment (FDI) process and bring positive reforms in foreign investment by offering consistent and prompt registration services to such companies. The OCR has outlined specific procedures that must be followed by companies with foreign investment, branch office and contact office of the foreign company to acquire the mentioned services. This service has been introduced by the OCR to expedite the subsequent process that follows the completion of the procedures outlined in the Foreign Investment and Technology Transfer Act, 2019 (2075) and Public Private Partnership and Investment Act, 2019 (2075).

The respective company must provide company details by selecting the FDI company (including branch or contact office) option in the menu according to the company’s online portal of OCR. A service has also been included where the desk shall create a separate list of applications and promptly work on the given list and notify.

The desk located on the first floor of OCR will also aid with the initial registration procedure of branch and contact/liaison office of the foreign company. However, Post-Registration Services will be provided in accordance with OCR’s standard procedure.

To expedite the registration process, the desk will approve the proposed requested name of the company by adopting the short route. Once the company submits its Memorandum of Association and Articles of Association, the desk will act as a facilitator in the registration process. Moreover, the OCR has stated that it will complete the company’s registration procedure with foreign investment, branch, and contact/liaison office within 10 working days.

This initiative has been launched to facilitate the FDI procedure. The OCR hopes that this new desk will provide a positive impact on the foreign investment sector in Nepal.

Pioneer Law Associates and NIBL Ace Capital Ltd collaboratively conducted a workshop on “Road to IPO to make corporate house aware of IPO process in terms of legal and financial perspective”. The workshop was conducted on September 18, 2022, Sunday at Aloft Kathmandu, Thamel. Mr. Anup Raj Upreti Managing Partner of Pioneer Law Associates and Mr. Sachindra Dhungana Deputy General Manager of NIBL Ace Capital Limited were the presenters of the session.

The workshop covered vivid issues regarding IPO focusing on legal aspects, corporate governance, capital structuring IPO pricing, size timeline and methods.

Number of participants from various corporate houses, got the insights on various aspects of IPO.

2.      The Banks and Money Changer can directly provide the exchange facility to Expatriates to repatriate their salary and benefits. The Expatriates can repatriate up to 75 % of their salary and benefits after tax to their own country. They can repatriate the entire amount of provident fund or retirement fund after tax. However, if the Expatriates wants to repatriate the amount borrowed from such funds during the term of his/her employment, then s/he can repatriate up to 75% of such amount borrowed.

3.       In accordance with the Repatriation Directive the Expatriates are allowed to repatriate up to USD 6,000 per month or USD 72,000 in a year. The restriction on amount does not apply to the Indian nationals. Specific approval of NRB is required for the Expatriates to repatriate the additional amount exceeding such ceiling.  

4.      The Repatriation Directive specifies the documents required for such exchange facilities. The document requirement list varies for Indian nationals and other foreign foreign nationals. The foreign nationals other than Indian nationals are required to submit: (a) application of the concerned employee, (b) recommendation letter of the employer firm or organization, (c) work permit issued by the Department of Labor, (d) contract/appointment letter and identity card of an employee, (e) receipt of payment of employment tax, (f) evidence regarding validity period of the visa.

5.      The Indian nationals can repatriate their income on the submission of the following documents (a) application from the Expatriates, (b) recommendation from the employer, (c) employment letter/contract/identity, and (d) receipt of the payment of employment tax.

Disclaimer: This Pioneer Law Briefing may necessarily deal with every important aspects if the subject matter. This Briefing is intended for general information only and not to be construed as legal or other advice.

The Government of Nepal (“GON”) has published gazette notification dated 4^th August 2022 (2079/4/19 B.S.) pursuant to Section 64 of the Industrial Enterprises Act (2020) (“IEA”) to ease the current difficulties on the industry operation timeline extension.

The notice provides that any industry which fails to apply for the extension of; (i) industry operation timeline, or (ii) commencement of commercial operation/transaction timeline, to make an application at the concerned industry registration body by depositing prescribed delay fees. Upon receiving an application for such extension, the industry registration body can provide extension of an industry operation timeline or commercial operation/transaction period based on the work progress as well as nature of industry.

The BRU Foundation in partnership with Pioneer Law Associates organized the 3rd Bharat Raj Upreti Memorial Foundation Moot Court Competition (Arbitration) and Conference, 2022 from 12th to 13th August 2022. The venue partner for the 1st day of the moot court was National Law College, Lalitpur (NaLC). The moot court saw participation from 6 law schools from across Nepal with teams participating in the preliminary, semi-final and final rounds. The 6 teams were from Bright Vision Law College, Biratnagar (BVLC); Kathmandu School of Law, Bhaktapur (KSL); Kathmandu University School of Law, Dulikhel (KUSL), National Law College, Lalitpur (NaLC); Nepal Law Campus, Kathmandu (NLC); and Prithvi Narayan Campus, Pokhara (PNC). The teams from BVLC, KSL, KUSL, and PNC made it to the semi-final rounds. And the teams from KSL and KUSL competed in the final rounds, with the team from KUSL winning the final rounds. The best speaker award was given to Ms. Anjali Sharma Neupane from KUSL and the best memorial award was given to the team from KSL.

The moot problem was about issues relating to arbitration arising out of a construction contract (FIDIC contract) in the background a global pandemic.

The preliminary rounds were judged by Mr. Himesh Kharel, Mr. Shardul Thapa and Mr. Ashankan Malla. The semi-final rounds were judged by Mr. Semanta Dahal, Mr. Prakrit Shrestha, Mr. Shirshak Ghimire, Mr. Avdhesh Pant, Mr. Rastra Bimochan Timalsena and Mrs. Nida Doon Malla.

The final rounds and the panel for the arbitration conference were graced by Hon’ble Justice Mr. Anil Kumar Sinha of the Hon’ble Supreme Court of Nepal, Senior Advocate Satish Krishna Kharel and Advocate Sameer Sharma. The panel discussion was moderated by Advocate Anup Raj Upreti. The discussion was held on the topic of “Role of Judiciary in Arbitrations” with an interactive audience comprising of Hon’ble Justice Manoj Kumar Sharma of the Hon’ble Supreme Court of Nepal, various Hon’ble Justices of Hon’ble High Courts across Nepal, and top legal minds across the arbitration sector in Nepal.

S.N.	Nature of Payment	Minimum Monthly Remuneration (in NPR)	Dearness Allowances (in Rs.)	Total (in Rs.)
1.	Monthly	8,934/-	4,959/-	13,893/-
2.	Daily Wages	323/-	177/-	500/-
3.	Per hour	43/-	23/-	66/-
4.	Daily Allowances for the workers at tea refinery and tea factories including Sardar, Naike and Gatekeeper working in the tea estate	–	–	63/-

S.N.	Nature of Payment	Minimum Monthly Remuneration (in NPR)	Dearness Allowances (in Rs.)	Total (in Rs.)
1.	Monthly	10,820/-	6,480/-	17,300/-
2.	Daily Wages	418/-	250/-	668/-
3.	Per hour	56/-	33/-	89/-
4.	Per hour minimum remuneration of the part time employees	–	–	95/-