The emerging economy of Nepal presents an opportunity for foreign investors to explore<a href="https://www.biznestbazaar.com/buy-a-franchise"> various sectors for investment</a> using convertible foreign currency. Suppose you are interested in investing in Nepal, but are unsure about the process of bringing Foreign Direct Investment (FDI) into the country. In that case, this blog will serve as a guide for bringing FDI to Nepal. The blog aims to provide comprehensive information and insights to help foreign investors navigate the process of investing in Nepal.&nbsp;&nbsp;To know the meaning of foreign direct investment and the area for FDI, and Incorporate a company through FDI in Nepal, then read the blog&nbsp;<a href="https://www.biznestbazaar.com/blog/process-of-foreign-direct-investment-fdi-in-nepal">Process of Foreign Direct Investment (FDI) in Nepal.&nbsp;</a>&nbsp;It also guides you through the process of FDI by establishing the industry and establishing branches. However, this blog will guide you through the process of FDI in Nepal through the&nbsp;Purchase of Shares.&nbsp;&nbsp;<h2>Governing Authority&nbsp;</h2>&nbsp;Department of Industry:&nbsp; Foreign Investment not exceeding Six Billion Rupees. (NRP 6 Arba)&nbsp;Investment Board:&nbsp;Foreign Investment exceeding Six Billion Rupees. (NRP more than 6 Arba)&nbsp;&nbsp;Nepal Rastra Bank (Foreign Exchange Management Department)&nbsp;&nbsp;<h2>Governing Laws</h2>&nbsp;The Foreign Investment and Technology Transfer Act, 2075 (2019)&nbsp;&nbsp;Foreign Investment and Technology Transfer Regulation, 2077&nbsp;&nbsp;Public Private Partnership and Investment Act, 2019&nbsp;Nepal Rastra Bank Foreign Investment and Loan Management by Laws 2078&nbsp;Industrial Enterprise Act, 2076&nbsp;&nbsp;Also Read:&nbsp;<a href="https://www.biznestbazaar.com/blog/industry-registration-process-in-nepal">Industry Registration Process in Nepal</a>&nbsp;<h2>Process of Foreign Direct Investment&nbsp;</h2>&nbsp;<figure class="table"><table class="ck-table-resized"><colgroup><col style="width:50%;"><col style="width:50%;"></colgroup><tbody><tr><td>Stepwise Process&nbsp;</td><td>Regulatory Authority&nbsp;</td></tr><tr><td>Register User in IMIS</td><td>DOI Website&nbsp;</td></tr><tr><td>Fill in the details and Upload the Document&nbsp;</td><td>DOI website&nbsp;</td></tr><tr><td>FDI approval</td><td>DOI or IBN</td></tr><tr><td>FDI Approval&nbsp;</td><td>NRB</td></tr><tr><td>Prior notification for bringing in FDI</td><td>NRB</td></tr><tr><td>Open Bank Account&nbsp;</td><td>A Grade Nepali Commercial Bank</td></tr><tr><td>Recording of FDI after investment</td><td>NRB (Foreign Exchange Management Department)</td></tr><tr><td>Recording of Transaction after transfer of share</td><td>DOI or IBN</td></tr></tbody></table></figure>&nbsp;&nbsp;<h2>Step 1: Register the Username in IMIS</h2>&nbsp;To create a new username, visit the DOI website or visit this link&nbsp;<a href="https://imis.doind.gov.np/#/auth/register">https://imis.doind.gov.np/#/auth/register</a> to register the user’s name. Once you click the link you will view the following page:&nbsp;<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXchTeGo1u1jsp5_7tn5gVR83Qg0zUNvw9r1Q2qdIQwJZtOmSWGIjcH2NFGbrq4rqdXGWYBHN5xHQ8g4YokfwOCNXmq0FzxAhJs0wFAkYHGy8J6buH05w7rHuYEOIgNg6coeyaP4u_MdmEx3G1UF3ktU54Yb6Vsgev8A67xtmn5KM79ZmyLyzwk?key=YdTCg7jKPHNePHIadMCodQ">&nbsp;&nbsp;Make sure you use your phone number and email address. Once you enter all the information, an email will be sent to your email. You need to follow the instructions of the email and change the password. Once you change your password, you need to log in.&nbsp;&nbsp;<h2>Step 2: Fill in the details and Upload the Document</h2>&nbsp;<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe_RjmY_DO4oVScky4BrhaTw7EnabMLAOcWcaYCGcb4W1Wlm_WG9M0CFGguTb8zgwzZt5YyqXfoU8VUV3kyMAzKfE-4xdXYktQNDflR5-erOExdXAZdZB4EbORyaufXpfjNdDYzWaXfgjrC0I0KsAGmUROBnTz6cOIIXTXP49NZtqpSAF53cbk?key=YdTCg7jKPHNePHIadMCodQ">&nbsp;&nbsp;You need to click on the Sale and purchase agreement (शेयर खरिद सम्झौता), then click on the icon of New Share Purchase shown in the green icon on the right side of the screen and fill the detail.&nbsp;&nbsp;<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc9hECxekrW9uk4JnWP_l3xIPfKsfDmhGX9NDVfhawTSfJvXKibNzwz_o0_NUzyh4Au9iOHUOZH7C3KJlL2cmQz02YYNpT7a7bnRh3c5ohH-Y4m_jYz7m_hdGgFb2WtAWHh3uqygpNfwOZZNSTBdqcHvVD__VKWmBa8-QoYxE39PHo_znCXKQ?key=YdTCg7jKPHNePHIadMCodQ">&nbsp;&nbsp;&nbsp;You need to fill in the following details in IMIS:&nbsp;&nbsp;<ul><li>Basic Information &nbsp;</li><li>Contact Information&nbsp; &nbsp;</li><li>Shareholder Details&nbsp; &nbsp;</li><li>Industry Objective &nbsp;</li><li>Proposed Investment&nbsp; &nbsp;</li><li>Proposed Raw Materials Information &nbsp;</li></ul>Proposed Human Resource Information&nbsp; &nbsp;Proposed Electricity, Utilities, and Fuel Consumption Information &nbsp;<ul><li>Machinery Information &nbsp;</li><li>Annual Operating Cost&nbsp; &nbsp;</li><li>Industry Information&nbsp; &nbsp;</li><li>Current Shareholder Detail &nbsp;</li><li>Transfer Detail&nbsp; &nbsp;</li></ul>Along with the Shareholder Details, you must also upload the Shareholders' Citizenship, Passport size Photo, and Bio Data.&nbsp;&nbsp;You also need to upload other necessary documents, they are:&nbsp;&nbsp;<ul><li>Financial Audit Report of the Last 2 Years &nbsp;</li><li>Industry Registration certificate&nbsp; &nbsp;</li><li>Minutes of the meeting of the Board of Directors of Nepali Company&nbsp; &nbsp;</li><li>Shareholders’ Agreement &nbsp;</li><li>Tax Clearance certificate</li></ul>&nbsp;Also read: <a href="https://www.biznestbazaar.com/blog/partnership-firm-registration-process-trading-business">Partnership Firm Registration Process: Trading Business</a><h2>&nbsp;</h2><h2>Step 3: FDI Approval in DOI or IBN</h2>&nbsp;To get the FDI approval, you must apply along with the necessary documents in the DOI or IBN.&nbsp; &nbsp;<ul><li>Application form for Foreign Investment&nbsp; &nbsp;</li><li>Industry Registration Certificate&nbsp; &nbsp;</li><li>Consent Letter from the shareholder if the shareholder wants to sell his/her share.&nbsp; &nbsp;</li><li>In the case of an individual seller, the seller must personally appear at the department for identification. For individuals residing abroad, they must get their identification verified and certified by the Nepali Embassy abroad and then submit it. &nbsp;</li><li>Letter of Intent to Purchase Shares&nbsp; &nbsp;</li><li>Certified copy of the meeting of the Board of Directors/Annual General Meeting of companies engaging in share purchase and sale, and the power of attorney letter authorizing official signatures on the SPA (with specimen signatures included).&nbsp; &nbsp;</li><li>Share Purchase Agreement (SPA) &nbsp;</li><li>Financial Credibility Certificate issued by Foreign Investor Bank&nbsp; &nbsp;</li><li>Certified Share Certificate (Share Lagat) by Office of Company Registration (OCR), Description of Authorized Capital, and Issued Capital, objective of the Company as per Memorandum of Association. &nbsp;</li><li>Audit Report of Fiscal Year &nbsp;</li><li>Power of Attorney if given and Sample signature of the person who is appointed as Power of Attorney.&nbsp; &nbsp;</li><li>Due Diligence Audit/ Share valuation report&nbsp; &nbsp;</li><li>If the foreign investor wants to sell the shares,&nbsp;</li></ul>&nbsp;<h3>If the Foreign Investor is an Individual&nbsp;</h3>&nbsp;<ul><li>Copy of the Passport and Bio Data.&nbsp;</li></ul>&nbsp;<h3>If the Foreign Investor is a Foreign Company</h3>&nbsp;<ul><li>Board Decision on buying shares and decision&nbsp; &nbsp;</li><li>Board decision on giving Power of Attorney &nbsp;</li><li>Memorandum of Association, Article of Association of the foreign company (English translation when required and Notary certified or notary seal) &nbsp;</li><li>Certificate of Incorporation (Notary certified or notary seal) &nbsp;</li><li>Profile of the foreign company&nbsp;</li></ul>&nbsp;<h2>Step 4: FDI approval from NRB&nbsp;</h2> To purchase the share, the foreign investor must get approval from the NRB before bringing investment in Nepal. You must apply in NRB with an application and necessary documents to get the approval to bring FDI to Nepal to purchase shares.&nbsp;&nbsp;&nbsp;To know the list of documents, that need to be submitted to NRB, click on the file shown below:&nbsp;&nbsp;However, there are certain criteria that you do not need to obtain prior approval from NRB to bring FDI in Nepal they are:&nbsp;&nbsp;<h3>Foreign investment does not reduce the shareholding ratio of total Nepali shareholders in existing Nepali industries.</h3>&nbsp;&nbsp;Foreign investment in companies listed on the stock market.&nbsp;&nbsp;Sick industries (रुगण उद्योग) as per the Industrial Enterprises Act, 2076 (2020).&nbsp;<h3>Sick industries (रुगण उद्योग)</h3>&nbsp;If an industry that has been in operation for a minimum of five years after the date of commencement of its commercial production or transaction, and in a capacity that is thirty percent or less of its installed capacity for the last three consecutive years because of a circumstance beyond control but not because of its intentional default or managerial weakness is being operated in the loss for the three consecutive years.&nbsp;&nbsp;<h2>Step 5: Prior notification to be given to Nepal Rastra Bank before bringing FDI in Nepal&nbsp;</h2>&nbsp;You need to notify NRB before bringing FDI. To notify you must submit the list of documents listed below:&nbsp;&nbsp;<ul><li>Application Form&nbsp; &nbsp;</li><li>Industry Registration Certificate or document showing that the amount being remitted in industry/company is the one established for foreign investment &nbsp;</li><li>Copy of approval to bring foreign investment from foreign investment</li></ul>&nbsp;<h3>Application Sample&nbsp;</h3>&nbsp;<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeKTl3tua34uDFZyKq6Ar0WuT1kd3p713Z7rZF6blSgJ_2XBWzu_UKQpsIVAzo7XLIjgjM2DBpFdMI3UXPmUWHabIandb10CoG08n8RvRlMTJlYsJ2lv0pKV-o8c-1Kq2BGuj6CpvFIJzNpOJT33XcpsK6Zh9yCuP8a81Ez1iaXm4ORfXOwwg?key=YdTCg7jKPHNePHIadMCodQ">&nbsp;<h2>Step 6: Open a bank account</h2>&nbsp;To bring FDI, you must open a bank account in A Grade Commercial Bank of Nepal. After you fulfil all the processes, you can bring Investment in an account opened in the A-Grade Commercial Bank of Nepal.&nbsp;&nbsp;<h2>Step 7: Recording of FDI in NRB after investment or bringing FDI in Nepal&nbsp;</h2>&nbsp;You must record FDI in NRB after investment or bringing FDI in Nepal.&nbsp;You must submit the application with the necessary document listed in the file mentioned below:&nbsp;<a href="https://drive.google.com/file/d/1PvEf7QQZe-HbZ1oYeEDQxn-66Q_MpYb2/view?usp=sharing">File listed document that needs to be submitted to NRB to record FDI if FDI is brought without prior approval of NRB.</a>&nbsp;<a href="https://drive.google.com/file/d/12_frqQ8b1upl8LXgjnucdwEDJox23dbR/view?usp=sharing">File listed document that needs to be submitted in NRB to record FDI if FDI is brought with prior approval of NRB.</a>&nbsp;<h3>Application Sample</h3>&nbsp;Application to be submitted in NRB to record FDI if FDI is brought with prior approval of NRB.&nbsp;<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe7xq3KUXLOEWQPnTU_XdBWBGQrmVb6uCmGRx8b1pzczsr0jMpuhGJlNGQ_YseTQ8vO3ExsmSAWQJF0oKjMNX7UQx3T6oZ2SAFXcQsNxNxY481tffWIR-xlslknZKZ7abRNtQnd9NuE2mnmFIve7xDg4JWa9T5ZRjbt8qjLhUy4M-s_a834C2s?key=YdTCg7jKPHNePHIadMCodQ">&nbsp;Application to be submitted in NRB to record FDI if FDI is brought without prior approval of NRB.&nbsp;<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdmxiXkIK_NhhwOJqaA2n-scvVwUB6GPEH0jQqibkkA8xMX6lsOXTQrKwdsqOKVQkHTYmDQIkN5D-dQSjGVbrWx953iprdxLyZjrlcx23Cx3HaQuT0cxxTLh2fkWC7u7Twee-G839-Krg77W_10OsKBKjAFdokZ15STZS8_8M5aqdeur0mF5Q?key=YdTCg7jKPHNePHIadMCodQ">&nbsp;<h2>Step 8: Recording of Transaction in DOI/ IBN after transfer of share</h2>&nbsp;You need to submit the application along with the document in DOI/ IBN where you get the approval to bring FDI. The list of documents is as follows:&nbsp;&nbsp;<ul><li>Share Purchase Agreement (SPA) and certified documents showing the transactions conducted accordingly. &nbsp;</li><li>Document showing the company's per-share value certified by the auditor and a copy of the audit report. &nbsp;</li><li>If the investment obtained from the purchase, sale, or transfer of company shares is to be taken abroad, the schedule. &nbsp;</li><li>Proof that the company has paid the tax payable to the Government of Nepal as per the prevailing laws. &nbsp;</li><li>Share Lagat of the Company located in Nepal.&nbsp;</li></ul>&nbsp;&nbsp;<h2>Frequently Asked Question</h2>&nbsp;<ol><li>What is a Sale Purchase Agreement (SPA)?&nbsp;</li></ol>&nbsp;SPA is a legally binding agreement between the buyer and seller relating to selling and purchasing company shares. It outlined the terms and conditions related to the sale and purchase of shares in a company. It is essential to transfer ownership of shares. It ensures that both parties are clear of their rights and obligations during the transaction.&nbsp;&nbsp;<ol><li>What is the time limit for Recording FDI in NRB after investment or bringing FDI in Nepal?&nbsp; &nbsp;</li></ol>You must record your FDI in NRB within 6 months of investment or bringing FDI in Nepal.&nbsp;&nbsp;<ol><li>Is there any time limit to Recording Transactions in DOI/ IBN after the share transfer? &nbsp;</li></ol>Yes, you must record transactions in DOI/ IBN within 30 days of the share transaction.&nbsp;&nbsp;<ol><li>What are the benefits of bringing FDI into Nepal?</li></ol>FDI brings several benefits, including capital inflow, advanced technology, managerial expertise, job creation, and enhancement of the country's overall economic growth.&nbsp;<ol><li>What is the role of Nepal Rastra Bank (NRB) in FDI? &nbsp;</li></ol>The NRB oversees foreign exchange, supervises foreign investment registration, and ensures that money enters and leaves the country per Nepalese laws and regulations.&nbsp;<ol><li>Do I need to physically submit a document in NRB after investment or bringing FDI in Nepal?&nbsp; &nbsp;</li></ol>No, the document can be submitted electronically to the following email:&nbsp;<a href="mailto:fxmd_ossc@nrb.gov.np">fxmd_ossc@nrb.gov.np</a>.&nbsp; Disclaimer: The information provided here is for informational purposes only and should not be considered as legal advice. Please consult with a qualified legal expert for professional legal opinions. You can also consult with our&nbsp;<a href="https://www.biznestbazaar.com/hire-professional">professionals</a> for further assistance.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

How to bring FDI in Nepal Through the Purchase of Share

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