Chapter-3 Approval and Repatriation of Foreign Investment

Chapter-3 Approval and Repatriation of Foreign Investment

  1. Application to be made for approval to make foreign investment: (1) A foreign investor wishing to make foreign investment shall have make an application, setting out the details, accompanied by a time schedule for bringing foreign investment into Nepal and action plan on investment in the industry, to the Foreign Investment Approving Body for approval, to make foreign investment, in such a form and setting out such details as prescribed.

(2)        If, in examining an application received pursuant to sub-section (1), it appears that such documents as prescribed have been completed, the Foreign Investment Approving Body shall give approval for foreign investment in such a form as prescribed within period of seven days of the date of receipt of the application.

(3)        An industry which has obtained approval pursuant to sub-section (2) wishes to make investment from the eared profits in the same industry or in any industry other than that referred to the Schedule, it is not necessary for it to re-obtain approval on foreign investment.

Provided that the natter requiring license or permission under the prevailing law for the purpose of registration of an industry or company or tax or any other business shall be governed accordingly.

(4)        If any industry is established or the structure of ownership of any industry is changed because of foreign investment, in accordance with sub-section (3), such an industry shall give information thereof to the Department and the Nepal Rastra Bank. On receipt of such information, the Department shall maintain records thereof.

(5)        If, in examining the application pursuant to sub-section (2), it appears that approval cannot be given, the Foreign Investment Approving Body shall give information thereof in writing, setting out the ground and reason therefor, to the applicant within a period of seven days.

(6)        If, upon receipt of information in accordance with sub-section (5), the concerned investor is not satisfied with the decision made by the Department, such an investor may make an application to the Ministry for the review of the decision.

(7)        The Ministry shall, upon making necessary examination of the application received pursuant to sub-section (6), make a decision thereon within a period of thirty days.

  1. To give information to the Nepal Rastra Bank: (1) Upon obtaining the approval for foreign investment in accordance with Section 15, the foreign investor shall give information in writing, along with the self-declaration to the effect that the amount of such investment has been earned from any legitimate source, to the Nepal Rastra Bank. After giving such information, the foreign investor may bring the amount of such investment into Nepal.

(2)        A foreign investor shall bring the amount to be invested in convertible foreign currency through the banking system upon completion of such procedures as determined by the Nepal Rastra Bank.

Provided that an Indian investor may also make investment of such amount in Indian currency through the banking channel.

(3)        Notwithstanding anything contained in sub-section (3), lease investment referred to in Section 6 and loan investment made by issuing securities referred to in Section 11 shall be as prescribed.

  1. Foreign Investment Approving Body: (1) The Department shall approve the foreign investment not exceeding six billion Rupees.

(2)        The Investment Board under the Investment Board Act, 2011 (2068) shall  approve the foreign investment exceeding six billion Rupees.

  1. Period within which investment has to be made: (1) A foreign investor shall have to make investment of the amount in relation to which approval has been obtained for foreign investment pursuant to sub-section (2) of Section 15 within such period as prescribed.

(2)        A foreign investor which has already obtained approval for making foreign investment in accordance with the prevailing law, at the time of the commencement of this Act, shall also make investment of the prescribed minimum amount with the period prescribed pursuant to sub-section (1).

(3)        The approval giving body may revoke the investment approval given to an industry that fails to make investment within the period referred to in sub-section (1) or (2) or Section 43, except in case of reasonable grounds.

  1. To give information on sale of or transfer of title to shares: (1) In the case of sale of, or transfer of title to, or otherwise change in the ownership or vested ownership of, the property, assets or shares or any other kind of financial equipment generated in Nepal from foreign investment, whether effected within or outside Nepal, the concerned company shall, not later than thirty days of the effect of transaction, give information thereof, along with the relevant documentary evidence, to the body giving approval for making such investment and have the same recorded as prescribed.

(2)        In the case of change in the ownership of the industry subject to foreign investment in Nepal as a result of the transfer of title to any property, assets, shares or any other financial equipment of any holding company, the concerned branch industry or unit of the industry shall have the liability to give information referred to in sub-section (1).

(3)        In the case of a transaction in accordance with sub-section (1), it shall not be recorded pursuant to sub-section (1) until tax is paid by the concerned industry, upon setting out the amount of transaction, in accordance with the prevailing law.

(4)        Other provisions relating to the sale of and transfer of title to shares shall be as prescribed.

  1. Repatriation of investment and earnings: (1) A foreign investor may, if it so wishes, repatriate its investment from Nepal by selling wholly or partly of the shares or industry having its investment in accordance with the prevailing Nepal law, after paying all such taxes as may be leviable in accordance with the prevailing Nepal law.

(2)        A foreign investor may repatriate the following amount in the same foreign currency in which the investment has been made or other convertible foreign currency with the approval of the Nepal Rastra Bank, after paying the tax related liabilities under the prevailing law:

(a)        Amount received from the sale of shares with foreign investment,

(b)        Amount of profit or dividend received from foreign investment,

(c)        In the case of liquidation or winding up of the industry or company, amount remaining after paying all liabilities following the liquidation or winding up,

(d)       Amount of royalty received under the technology transfer agreement,

Provided, however, that in the case of the royalty or fee for the use of a trademark under the transfer of technology in a liquor industry other that a liquor industry exporting cent percent of liquor, the amount of such royalty shall not exceed five percent of the total selling price, as prescribed, excluding the prevailing tax.

(e)        Amount of lease rent under the lease investment,

(f)        Amount received as damages or compensation, if any, received from the final settlement of a law suit, arbitration or any other legal process in Nepal,

(g)        Amount that can be repatriated in accordance with the prevailing law.

(3)        In repatriating amount in a convertible foreign currency in accordance with sub-section (1) or (2), it shall be repatriated by making conversion at the prevailing exchange rate.

(4)        Where any foreign investor has lent a loan to any industry or company against the pledge or mortgage of a movable or immovable property situated in Nepal and the movable or immovable property pledged or mortgaged required to be auctioned or forfeited because of nonrepayment of the principal or interest of such a loan, the institution lending such a loan may repatriate the principal and interest of the loan by auction of such property as if it were a bank or financial institution of Nepal.

(5)         In the case of termination of a lease agreement because of non-payment in accordance with the lease agreement or breach of its terms, the foreign investor may repatriate its investment and the property invested in the lease.

(6)        A foreign investor who wishes to repatriate the foreign investment or amount earned therefrom in accordance with this Section shall make an application, in the form as prescribed, to the foreign investment approving body for approval to that effect.

Provided, that such an application shall be made to the Single Stop Service Centre, if the Government of Nepal, by a notification in the Nepal Gazette grants to the Single Stop Service Centre, the power to the body to give approval relating to repatriation of foreign investment or amount earned therefrom.

(7)        If, in examining an application received pursuant to sub-section (6), it appears that the foreign investor has fulfilled the terms and liabilities referred to in this Act, prevailing law and the agreement made in relation to foreign investment, the foreign investment approving body shall give approval to repatriate the foreign investment or amount earned therefrom not later than fifteen days of the date of receipt of the application.

(8)        After obtaining the approval pursuant to sub-section (7), the foreign investor may make an application to the Nepal Rastra Bank for the foreign currency exchange facility.

(9)        The Nepal Rastra Bank shall, upon receipt of an application in accordance with sub-section (8), provide the exchange facility to the foreign investor for the repatriation of foreign investment.

(10)      Where the amount of investment is to repatriated by selling wholly or partly any industry with foreign investment or upon revocation of the registration of the industry or company for any reason, repatriation of the remaining amount may be made only after the payment or settlement of all liabilities including the tax payable by such an industry.

(11)      Notwithstanding anything contained elsewhere in this Section, a foreign investor may, in repatriating foreign investment made in any industry in accordance with this Act or profit earned therefrom, repatriate such investment or profit only to the extent of the ratio of the portion of its investment in the concerned company.

(12)      If any foreign investor is not satisfied with a decision made by the body giving such approval in the course of repatriation of the amount of its investment, the investor may make an application to the Ministry. The Ministry shall make a decision on such an application within thirty working days.