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The Government of Nepal has promulgated few Ordinances including the Ordinance to Amend Certain Acts relating to the Promotion of Good Governance and Public Service Delivery (“Ordinance”). The Ordinance has amended Section 147 of the Labor Act, 2017 (2074), among other things. Section 147 of the Labor Act deals with the compulsory retirement age of employees. The Ordinance has amended the compulsory retirement age of employee from completion of 58 years to 60 years.
The Ordinance is published in Nepal Gazette dated January 13, 2025 (2081-09-29 BS) which has been made available on January 16, 2025 (through the website of Department of Printing). The Ordinance is issued with immediate effect. It means that the Ordinance is effective from January 13, 2025.
The Ordinance has the same effect as an Act enacted by the Parliament pursuant to Article 114 of the Constitution. Thus, it should be implemented as law from January 13, 2025.
The Ordinance will cease to be effective in certain situations. It will cease to be effective if it is (a) rejected by both Houses of the Federal Parliament held after the promulgation of the Ordinance, or (b) repealed by the President at any time, or (c) expiry of sixty (60) days from the date on which the meeting of both Houses is held even if it is not rendered ineffective or repealed as per (a) and (b) above.
Link to the Ordinance published in the Nepal Gazette: http://rajpatra.dop.gov.np/welcome/book/?ref=25822
The Ministry of Industry, Commerce and Supplies (MOICS) issued a gazette notification on 2nd October 2023 whereby it has prescribed (a) upper ceiling of total capital investment and (b) permissible industrial sectors for making foreign investment through Automatic Route (the “Notice”). This Notice is in alignment with the provision of the budget speech for Fiscal Year 2023-2024 (2080/81 B.S.) where it had also envisioned to provide approval through automatic route for industries permissible for foreign investment, except for those that need approval.
Link to Notice: http://rajpatra.dop.gov.np/welcome/book/?ref=25417
Foreign investors are one step closer to making foreign investments via Automatic Route. Once the Department of Industry launches updated online system, investors will be able to make filings for foreign investments through Automatic Route.
Previously, all foreign investments required pre-approval from either the Department of Industry or Investment Board of Nepal, depending on the amount of foreign investment. However, this Notice effectively waives the pre-approval requirement for industry having total capital investment up to NPR Fifty Crores (i.e., NPR 50,00,00,000).
The Notice has identified various industrial sectors that are open for foreign investment through automatic route, which are enlisted below:
| S.N | Industry Sector |
|---|---|
| 1 | The industry manufacturing machines, and equipment used to generate energy from air, solar power, biomass or other sources. |
| 2 | Energy based on Biogas |
| 3 | Energy Produced as a by-product of the Sugar Industry |
| 4 | Study of Potential of Energy |
| S.N | Industry Sector |
|---|---|
| 1 | Fruits and Vegetables Processing |
| 2 | Establishment and Operation of Green-Houses |
| 3 | Silk Processing |
| 4 | Tea and Coffee Processing |
| 5 | Herb Processing |
| 6 | Rubber Processing |
| 7 | Cold Storage (to store Local Fruits and Vegetables) |
| 8 | Natural Fiber Processing |
| 9 | Based on other Non-Timber Forest Products including Paper and Resin |
| 10 | Producing Plants through New Technology (Tissue Culture) |
| 11 | Cotton Processing |
| S.N | Industry Sector |
|---|---|
| 1 | Vehicle Parking |
| 2 | Export Based Goods Processing Zone |
| 3 | Polluted Water Purification Industries (Wastewater Treatment Plant) |
| 4 | Building Film City/ Building Film Studio |
| 5 | Construction and Operation of Warehouses |
| S.N | Industry Sector |
|---|---|
| 1 | Motel, Hotel, Resort, Bar and Restaurant |
| 2 | Fun Park, Water Park |
| 3 | Conference and Sports Tourism |
| S.N | Industry Sector |
|---|---|
| 1 | Technology Park |
| 2 | I.T. Park |
| 3 | Biotech Park |
| 4 | Software Development |
| 5 | Data Processing |
| 6 | Digital Mapping |
| 7 | Business Process Outsourcing (B.P.O), Knowledge Process Outsourcing (K.P.O) |
| 8 | Data Center, Data Mining, Cloud Computing |
| 9 | Web Portal, Web Design Service |
The minimum capital requirement shall not be triggered while investing through automatic route for industries based on information technology.
| S.N | Industry Sector |
|---|---|
| 1 | Mechanical Workshop |
| 2 | Construction Business |
| 3 | Hospital |
| 4 | Nursing homes, Clinics, Polyclinics, Rehabilitation homes, Physiotherapy Clinics, Ayurvedic and other alternative Hospitals |
| 5 | Sports Services, Swimming pools |
| 6 | Solid Wastes collection and Sanitation, Recycling of Solid Wastes |
| 7 | Veterinary services |
| 8 | Health check-up services (such as X-ray, CT scan, MRI and Ultra-sound) and Health check-up Laboratory |
| 9 | International Courier Services |
| S.N | Industry Sector |
|---|---|
| 1 | Livestock and fishery feed production |
| 2 | Processing and Packaging of Livestock and Fishery Meat |
| 3 | Production of oil fat from basic raw materials |
| 4 | Production of Starch, Glucose, etc. |
| 5 | Bakery Goods Production |
| 6 | Confectionery and Biscuit Production |
| 7 | Sugar Production |
| 8 | Beverage Production (Non-Alcoholic) |
| 9 | Textiles, Garments and Fabrics Production and Reuse |
| 10 | Production of Electronic Household Appliances |
| 11 | Production of goods using Plastic and Rubber |
| 12 | Production of Bags, Pouch, Suitcases, Trolley bags and other bags carrying similar Goods |
| 13 | Making Wooden materials other than items based on Traditional and Cultural Art |
| 14 | Production of Toiletries Products such as Toothpaste, Soap and Shampoo |
| 15 | Production of Goods using Glass |
| 16 | Making Bicycles, Scooters, Motorcycles and Automobiles and making Equipment used in them |
| 17 | Making Electric Lights, Switches, Meters, Meter Fuses, Wiring Wires, Compressors and other such items |
| 18 | Making materials used in Medical, Surgical, Orthopedic Sectors |
| 19 | Production of Electrical Wire |
PLA Note: This Notice has been published by the MOICS by invoking Sub-section (1) of Section 42 of the Foreign Investment and Technology Transfer Act, 2019 (2075 B.S.).
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.
The key highlights of the notice are as follows:
(a) The fee for incorporating private and public companies has been waived.
(b) Companies seeking to increase their authorized capital will also benefit from the fee waiver.
(c) Companies looking to expand by issuing new shares will be exempt from fees.
(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.
(f) Fee for incorporation of profit-not-distributing companies has been waived.
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.
Link: http://rajpatra.dop.gov.np/welcome/book/?ref=25404
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.
| 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/- |
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.
Link: http://rajpatra.dop.gov.np/welcome/book/?ref=25252
“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/
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.
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.
Following are the list of startup industries who can apply for concessional loan,
a. Agriculture and poultry based,
b. Forest (herbs, forestry products) based,
c. Tourism promotion, entertainment and hospitality related,
d. Science, technology, information, and communications technology based,
e. Human health services related,
f. Education and educational institutions related,
g. Related to accessible and safe travel and transportation,
h. Infrastructure construction related,
i. Automobile related,
j. Sectors dedicated to improving processes related to traditional technology, production methods and services,
k. Mines and mining research and development related,
l. Aiding domestic and daily affairs to become easy, convenient, safe,
m. Production and processing of edibles based,
n. Waste management and environment related.
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),
d. Employees: Not more than 10 full time employees,
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.
The procedure as well as notice has highlighted on the list of enterprises which cannot apply for the business and enterprise loans,
a. Registration Requirement: One which is not legally registered in Nepal,
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,
g. General Prohibition: Banned by existing laws for other reasons,
h. Single shareholding company.
The maximum limit of loan is NRs 2.5 million (25 lakhs) and project shall be considered as collateral security.
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.
Following are the list of documents to be submitted along with the proposal,
a. A photocopy of certificate of registration of the firm/company or industry,
b. A photocopy of the PAN,
c. A photocopy of tax clearance certificate for last fiscal year,
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.
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.
Download Start up Loan Form here
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 7th 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.
Link : 1678186664_270762843_document.pdf (ocr.gov.np)
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 Department of Industry (DOI) published a notice on 12 December 2022 (2079/8/26 B.S.) in attention to companies/industries who have brought foreign investment into Nepal but have not succeeded in recording the same with the Nepal Rastra Bank, such companies have been given a 35 days period to record the details of such foreign investment with the Foreign Investment and Technology Transfer Section, DOI in the prescribed format. The DOI will assess the volume and nature of submissions and take it up to the Industry and Investment Promotion Board in the future to provide a solution that enables the companies with unrecorded foreign investment to sell shares, make reinvestment and repatriate earnings.
Link : https://doind.gov.np/detail/149
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.
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 4th 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 link of the Nepal Gazette has been given as follows:
http://rajpatra.dop.gov.np/welcome/book/?ref=25046
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 notice has been published by Department of Industry (“DOI”) dated 2079/03/14 (28th June 2022) for providing online services through the implementation of the Industry Management Information System (“IMIS”) commencing from 2079/03/15 (29th June 2022). The notice provides that the DOI will provide online services relating to (a) Industry Registration, (b) Foreign Investment Approval, (c) Grant on Exports, (d) Visa Approval, (e) Recommendation for Repatriation, (f) Recommendation on Business Visa/ Work Visa and all other services of DOI.
In addition to that for the use of software the notice referred to the User Manual published on the website www.doind.gov.np. The notice provided following contact details of Help Desk for additional assistance; 01-5361112, 01-5359855.
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 Office of Company Register (“OCR”) has published the notice on waiver of fines on renewal of private firm and update of company in reference to the decision made on 2079/02/25 pursuant to Section 24 of Fiscal Act, 2079. The major highlight of the notice is that any firm which has not renewed and any company which fails to submit its annual compliance related documents up to financial year 2076/077 can renew a firm and update a company by paying 5% out of the total occurred fine.
The final deadline to submit the documents for renewal of the firm and company update is end of Poush, 2079 (14th January 2022). By the issuance of the notice, now the OCR can formally implement a waiver provision introduce by Section 24 of the Finance Act, 2022. Also, this notice waives 95% of the total fine due to historical non compliances of any private firm and a company.
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.