Business - Chintan Law Associates

Property Acquisition in Nepal – Is it complicated?

by Lawchintan | Aug 11, 2024 | Business, Legal

Property Acquisition in Nepal – Is it complicated?

1. Applicable Laws:
• Constitution of Nepal
• National Civil Code, 2017
Acts
• Land Concerning Act, 2021
• Land Acquisition Act, 2034
• Survey and Measurement Act, 2019
• Land Revenue (Malpot) Act, 2034
Regulations
• Land Revenue (Malpot) Regulation, 2036
• Survey and Measurement Regulation, 2058
• Land Acquisition Rule, 2026
Orders • Orders relating to exemption of Land Ceiling, 2078 (2021)

2. Property:
Property is defined as anything that a person or business has its legal title. It includes any cash, goods, or work if such cash, goods, or work can be used or transacted in or the title of that can be transferred by the purchase, sale or otherwise or any benefit can be derived. In other words, it also refers to owned things.
There are mainly two types of property. They are:

Fig1: Property, its types & examples

3. Property Acquisition:
Property Acquisition refers to the process of gaining ownership or right over the property. It is acquired if a person sells, donates, gifts, or otherwise transfers a property in which s/he has right and ownership to another person.
Different other matters like partition of property registration of deed etc comes when we deals with the issues related to the property acquisition.

There are different laws that provisions about Property Acquisition. They are as follows:
A. Constitution of Nepal:
Article 25 of the Constitution of Nepal mentions that every citizen has the right to acquire, own, sell, dispose, acquire business profits from, and otherwise deal with property.

B. The National Civil Code, 2017:
Partition of property [Sec 216]
• At the time of partition of a common property, a deed of partition in writing is executed between coparceners.
• Equal partition of property as well as equal partition of debt is done.

Matters to be included in the deed of Partition [Sec 217]
• Name, Surname, Age, Address of every coparcener and three generation details of them
• Property that is to be received by the coparceners
• If any debts, money receivable then amount of such thing
• Details relating to if any Coparcener live with another coparcener at the time of partition of property
• Details relating to that no coparcener has hidden or concealed any property that is related to the partition
• Details relating to that if any property are to devolve on a coparcener only after the death of father, mother, husband or wife.
• Details relating to that if the partition share of any coparcener are to be entrusted to anyone.
• Other necessary matters.

Property to be inviolable [Sec 277]
Other’s property shall not be encroached or trespass by anyone by way of overlapping, pressing or otherwise.

Conditions on which property may be transferred [Sec 414]
• If a person has right and ownership to one or more than one person jointly or severally and is competent to perform a contract, then can transfer property.
• The competency or incompetency of the person is determined on the basis that whether s/he was competent or not at the time of transfer of the property.
• A person may transfer a property in which s/he has rights and ownership to another person with immediate or testamentary effect.
• While transferring property, a deed shall be executed in fulfillment of the legal requirements.
However, there is no need to draw up a legal deed in the following conditions:
 To donate or gift any movable property or cash amounting up to One hundred Thousand rupees.
 The sale or otherwise transfer of a movable property is made as per the existing laws.
• A transferee has ownership over the property if s/he transfers his or her property to another person.
• The transferee has ownership in property only after the death of the transferor if a person transfers the right in his or her property to be effective with testament.
• If two or more persons acquire the same property, then entitlement to such property in proportion to their respective portion.
• If a deed doesn’t indicate the portion to which a person is entitled on the acquisition of a property, all the persons acquiring the property must acquire it equally.
• A person may transfer his/her private property to anyone without anyone’s consent.

Consent is required to transfer common property [Sec 419]
• Written consent of all the coparceners is required to transfer the common property.
• If in case of transfer of common property of joint family and if a coparcener is a witness of a deed of transfer, then it is considered as consent is taken from that coparcener too.

Common property can be sold for household purpose [Sec 420]
Head of the family for household purpose can sell:
In case of a movable property Whole property in common without the consent of others.
In case of immovable property Half of such property in common without the consent of others.

Issues that arises if someone transfers the property in which they don’t have right and ownership [Sec 421]
• One can only transfer those property to another person in which s/he has right and ownership.
• If anyone transfers a property in which they don’t have right and ownership, then such deed of transaction is considered as void.
• If the real owner of the property makes claim in the property which is transferred by the person who doesn’t have ownership, then the transferee of such property must return it to the concerned owner.
• The owner of the lost property can claim for such property along with evidence that shows his or her ownership in the property within 3 years after the date on which the property was lost or stolen.
• The finder of the property must return it to the real owner if claims for the property by collecting the amount of expenses if any that are required for its maintenance.

Prohibition of transferring property in duplication [Sec 422]
A property that is already transferred to another person shall not be re-transferring to another.
If the property is re-transferred to another then:
– In case of movable property:
In the name of the person who acquires the property in the earlier date.
– In case of immovable property:
In the name of the person on whose name the deed of transfer is registered first.

Compensation to the purchaser in event of deprivation of enjoyment of property [Sec 424]
• If the purchaser buys any property and if s/he is deprived of enjoying the property wholly or partly by way of invalid transfer of such property, then the purchaser is entitled to get:
– amount paid by him/her for that property.
– interest of 10% of the amount (yearly)
– Registration Fee or other amount is has paid for the transfer of that property as if it were an unsecured bond (Kapali).
However, if the property is acquired in the following ways, then the amount is not recovered to the purchaser:
– If purchaser knows that it was other’s property or stolen property
– If purchaser already knows that it was already transferred too other.
• If the purchaser has made any structure in that property in which they cannot enjoy the property rights, then can demolish that structure, and can take that structure within 6 months.

Conditions for Attorney to transfer the property [Sec 425]
A person who is competent to be an attorney can transfer and sell the property.

Documents Required:
• Authorized Attorney as per law stating the reason that s/he is not able to appear in the concerned office for transfer and sell of his or her immovable property and can transfer and sell the property through that attorney.
Conditions on which other person on one’s behalf can purchase or obtain the property [Sec 427]
A person who wants to purchase or obtain the property if gives the following document to the other person then that other person on behalf of that person can purchase or obtain the property:
– Power of Attorney stating the reason
– His or Her citizenship to the attorney

Procedures for a corporate body while purchasing or transferring property [Sec 426]
– Decision of Board of directors of the corporate body to any member of the Board of Directors or employee to transfer the property that is in the name of that corporate body and same is the procedures for the purchase or obtain of the property in the name of the corporate body.

Restriction on transfer of immovable property to foreigner [Sec 432]
• Without the prior permission of the Government of Nepal, one cannot transfer their immovable property to a foreigner.
• If anyone transfers it, then the deed of such transaction is considered as void.

Foreigner to transfer partition share or inheritance, if any obtained [Sec 433]
• Except permitted by Government of Nepal, a foreigner shall not be eligible to be transferred to or registered in his or her name nor shall s/he be entitled to enjoy the income of that property.
This provision is not applied to Non-resident Nepali.

Conditions on which property is considered as mortgaged [Sec 435]
• A debtor having a right, ownership, or possession in an immovable property if, gives the whole or any portion of it to the creditor to possess that property with the effect from the date of execution of deed or after a certain period in consideration for a loan.
• If the deed mentions the condition that the creditor is entitled to possess the mortgaged property with immediate effect at the time of lending or after a certain period then it is considered as mortgage with possession (Bhogbandhaki).
• If the deed mentions the condition that the creditor is entitled to possess the property in the event of the debtor’s default or repayment of the loan within the deadline set by the creditor then it is considered as mortgage without possession (Drishibandhaki).

Validity period for enjoyment of property in mortgage with possession [Sec 442]
• Property in mortgage with possession is possessed and enjoyed for the period of not exceeding ten years except otherwise mentioned in the deed.
• The deed of mortgage with possession is equivalent to an unsecured bond if that mortgage is not redeemed within the timeframe.

Validity period for enjoyment of property in mortgage without possession [Sec 443]
• Validity period of a mortgage without possession of a property is upto 5 years.
• After the expiry of 5 years, the property may be again possessed for a period not exceeding 10 years.
• The deed is considered as unsecured bond if that property given in mortgage without possession is not redeemed within the period of 10 years.

Conditions for Remortgaged (Lakhbandaki) of the property in mortgage [Sec 445]
• A person who has obtained the property in mortgage.
• For some consideration for an amount which is equal to, or lesser than the amount that is mentioned in the deed of mortgage.
Time Period of remortgaged of the property is less than the period of possession and enjoyment under the mortgage.

Prohibition for foreigner to mortgage the property [Sec 451]
• Without the prior approval of the Government of Nepal, A foreigner other than a person having the non-resident Nepali Citizenship is prohibited to mortgage an immovable property.

C. Other Laws:
1. Land Acquisition Act, 2076 (2019)
Power of Government of Nepal to Acquire Lands for Public Purpose [Sec 3]
• Government of Nepal for any public purpose may acquire land by giving compensation.

Power to acquire land for institution [Sec 4]
• If any institution requests Government of Nepal for the acquisition of any land for the following mentioned purpose, then after paying the payment, the Government of Nepal may decide to acquire the land for such institution:
– To construct residential quarters for the staff, workers, or labor of the institution or for their welfare or to undertake any function in the interest of the public.
– To operate a project that relates to an institution fully owned by Government of Nepal, or to construct a godown for the storage of any materials connected with that institution or manufactured by any such institution.

2. Land Revenue Act, 2034 (1977) and Land Revenue Regulation, 2036 (1979)
Registration of Land [Sec 6] [Rule 3]
– Land Revenue office registers each land within the district as per the schedule 1 of the Regulation.
– At the time of maintaining the registration book if the land is already surveyed then landowner registration record is prepared as per the survey and measurement and if the land is not measured and surveyed then according to the records maintained in the Land Revenue Office or the records received from the Land Reform office or other offices.
– While maintain the land registration book the Land Revenue office may ask the concerned landowner about the prescribed details and the landowner must give those details to the concerned Land Revenue Office.

3. Land Act, 2021 (1964)
Sec 7: Upper Ceiling of Land
The upper Ceiling of land that is allowed to be owned by the landowner is mentioned below:
S.N. Region Upper Ceiling
1. All the terai region including inner terai 10 Bigha
2. Kathmandu Valley 25 Ropani
3. All hilly regions except Kathmandu Valley 70 Ropani

For House and Premises
S.N. Region Upper Ceiling
1. All the terai region including inner terai 1 Bigha
2. Kathmandu Valley 5 Ropani
3. All hilly regions except Kathmandu Valley 5 Ropani

But, one can keep more than the ceiling if the land is acquired by the way of partition or succession. [Sec 10 (1) – Land Act, 2021 (1964)]

Rule 3: Jagga Hadbandi chhut dine sambandhi Aadesh, 2078
And, also the industry, academy, company, project, education or health organization, firm related to agriculture, institution and other public institution if there is a need of more land than mentioned in the upper ceiling then can give application to the department for approval along with the following documents:
a) Place, area, type of land and other details related to the land
b) Recommendation letter from ministry related to the industry, academy, company, project or organization.
c) Incorporation certificate of Industry, academy, or company and if scale of the industry, academy, or company need to be show then such details,
d) Copy of decision of BOD of the company about the land acquisition and power of attorney,
e) Recommendation from the local level where the land is situated
f) Copy of Memorandum of Association and Article of Association
g) copy of Incorporation certificate of Permanent Account Number and Copy of Tax Clearance Certificate
h) Copy of Approval Letter of project in case of industry, academy, company or organization whose project need approval
i) Recommendation Letter from Investment Board in case of project which needs approval from the investment board
j) If founder and Directors are Nepali then Copy of citizenship and copy of passport in case of foreign citizen
k) Copy of document mentioning about the name, address, domicile of the founder and Directors or if the Directors are changed then copy of document mentioning that
l) Work Detail of the Industry, academy, company or organization which is in operation
m) Foreign Investment Approval Letter in case of industry, academy, and project having foreign investment
n) Landownership Registration Certificate of the land that is in the name of industry, academy, company or organization and copy of Receipt of the land stating that the land revenue has been paid
o) Audit Report of the last fiscal year in case of industry, academy, company or organization that is in operation.

Procedures:
• Application to the department
• Department give application to the concerned office to do in-site inspection of the land and send the details relating to the physical condition of the land and other details relating to the land to the Department.
• Examination of the physical condition of the land, type of land, condition of ownership and on the basis of the map of survey and send the details about such to the Department.
• Department after receiving the information from the office gives opinion to the Ministry for giving approval or not.
• Additional examination by department if found necessary before giving opinion to the Ministry
• Examination of the information and document given by Department and if found valid then as per the nature of the industry, academy, company, project or organization give the approval to keep the land as per the ceiling mentioned in the schedule 1.
• If any industry, academy, company, project or organization who has got the approval to keep the land more than ceiling then they have to follow the rules mentioned in the schedule 2.
• Except the industry, academy, company mentioned in the schedule 1 , if wants to obtain more than ceiling mentioned in 1 then as per the decision of the Government of Nepal and Council of Ministers.

Rule 5
• If the company, academy, industry or organization got the approval then within 2 years they have to buy that land.

Upper Ceiling after taking approval
1. Production based Industry
A. Cement Factory
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – 300 500
2. All the terai region including inner terai (Bigha) – 25 –
3. Kathmandu Valley (Ropani) – – 50

B. Sugar Factory
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – – –
2. All the terai region including inner terai (Bigha) – 30 –
3. Kathmandu Valley (Ropani) – – 50

C. Chemical …. Factory
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – – 200
2. All the terai region including inner terai (Bigha) – – –
3. Kathmandu Valley (Ropani) – – 20

D. Every types of Mines Industry
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) As mentioned in the detailed project report
2. All the terai region including inner terai (Bigha)
3. Kathmandu Valley (Ropani)

2. Energy based Industry:
S.N. Type of Industry Ceiling
1. Hydropower As mentioned in the detailed project report
2. Solar Energy As mentioned in the detailed project report
3. Excavation of Natural Gas, Petrol As mentioned in the detailed project report

3. Agriculture and Animal Industry
a. Fruit Farming
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) 500 1000 1500
2. All the terai region including inner terai (Bigha) 50 100 –
3. Kathmandu Valley (Ropani) – – 150

b. Fish Farming
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – 100 150
2. All the terai region including inner terai (Bigha) – 30
3. Kathmandu Valley (Ropani) – – 50

c. Cardamom or Coffee Farming
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) 500 1000 1500
2. All the terai region including inner terai (Bigha) – – –
3. Kathmandu Valley (Ropani) – – –

d. Tea Farming
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) 200 500 1000
2. All the terai region including inner terai (Bigha) 20 50 –
3. Kathmandu Valley (Ropani) – – 150

e. Medical Herb Farming and Processing
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) 100 500 1000
2. All the terai region including inner terai (Bigha) – 20 –
3. Kathmandu Valley (Ropani) – – 50

f. Rubber Farming
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – – –
2. All the terai region including inner terai (Bigha) – 50 –
3. Kathmandu Valley (Ropani) – – 100

g. Flower and Vegetables Nursery
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) 100 150 200
2. All the terai region including inner terai (Bigha) 15 20 –
3. Kathmandu Valley (Ropani) – – 25 100

h. Animal Husbandry, grazing and grass production
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) 100 500 1000
2. All the terai region including inner terai (Bigha) 20 30 –
3. Kathmandu Valley (Ropani) – – 50 100

i. Birds Husbandry
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) 80 100 200
2. All the terai region including inner terai (Bigha) 20 30 –
3. Kathmandu Valley (Ropani) – – 50

j. Sugarcane Farming
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – – –
2. All the terai region including inner terai (Bigha) – 150 –
3. Kathmandu Valley (Ropani) – – 300

4. Tourism Industry
a. Hotel (4 Star or more than that)
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – – 200
2. All the terai region including inner terai (Bigha) – – –
3. Kathmandu Valley (Ropani) – – 15 150

b. Jungle Resort
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – 200 1000
2. All the terai region including inner terai (Bigha) – 15 –
3. Kathmandu Valley (Ropani) – – 25 –

c. Gulf Course or Elephant or Horse polo or Ashawo Aarohan
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – – 200
2. All the Terai region including inner terai (Bigha) – – –
3. Kathmandu Valley (Ropani) – – 25 100

d. Waste Management
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – 150 300
2. All the terai region including inner terai (Bigha) – 15 –
3. Kathmandu Valley (Ropani) – – 30

e. IT Park
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – 100 200
2. All the terai region including inner terai (Bigha) – – –
3. Kathmandu Valley (Ropani) – – 20 –

f. Community Park
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – 100 200
2. All the terai region including inner terai (Bigha) – 15 –
3. Kathmandu Valley (Ropani) – – 20 75

5. Service Industry
a. Films Industry
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – 300 500
2. All the terai region including inner terai (Bigha) – 30 –
3. Kathmandu Valley (Ropani) – – 50 –

b. Hospital (more than 100)
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – 100 200
2. All the terai region including inner terai (Bigha) – 15 –
3. Kathmandu Valley (Ropani) – – 20 100

c. Teaching Hospital
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – – 300
2. All the terai region including inner terai (Bigha) – – –
3. Kathmandu Valley (Ropani) – – 30 150

d. School or University
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) – – 300
2. All the terai region including inner terai (Bigha) – – –
3. Kathmandu Valley (Ropani) – – 30 150

6. Construction Industry
a. Company who has got approval to do business of house/land in residential area
S.N. Region Upper Ceiling
Small Medium Large
1. All hilly regions except Kathmandu Valley (Ropani) 100
2. All the terai region including inner terai (Bigha) 20

3. Kathmandu Valley (Ropani) 20 50

A person who acquires the land or being a landowner in
his/her or another person’s name within Nepal has to submit an inventory having the total area of land that s/he owes to the Registering Authority. If that is not submitted then instrument of such transaction is not registered. (Sec 10(2) – Land Concerning Act, 2021)

[Likhat ( Registration) Parit sambandhi karyabidhi]
Rule 3: Documents Required:
• Joint application of both seller/buyer
• Original Landowner Certificate
• Receipt of revenue paid in the current fiscal year
• Lawful deed
– if from the same district then 2 copy
– if from different district and of guthi then 3 copy
– in case of partition of property then 2 copy
• Copy of citizenship of buyer and seller
• In case of deed of different district if there is no receipt of current fiscal year then the receipt of the last fiscal year and draft paid equal to the revenue of the current fiscal year in the name of the local level
• In case of land/house of urban area, release paper from the local level marinating about the valuation of the house.
• If minor is the seller of the land then Birth Registration Certificate and copy of citizenship of his/her father.
• In case of municipality (Nagar), Letter from local level about the way to land (ghar bato khuleyko).
• In case of value of property of the rural area, as per the amount evaluated by the local level.
• In case of foreign citizen transferring the right of the land, then certified recommendation letter along with photo from the local level of the country of domicile of that foreigner and also from the local level of the place where the land is situated.
• In case of registration of the mortgage deed of the Bank, Finance, company, organization then incorporation certificate of the organization, PAN card and if the company is not in operation then recommendation from the Inland revenue Office and the office where it is incorporated.

Information that needs to be reveal in the registration of the deed:
• Three generation details of the buyer and seller.
• Details of area of land as per the local measurement
• Details relating to the name, ward no, plot no., area of the district, metropolitan city, sub-metropolitan, municipality or village executive
• signature of the buyer/seller stating that they don’t have land more than the upper ceiling mentioned in the law
• If transfer is made of more than one plot number of the land then the amount of each plot separately and the total amount in the top should be compulsory written
• If many plots are transferred then area of such land should be written separately and in the last it should be summed up.
• place where the deed for registration is made and details of the transaction
• signature of the buyer/seller in the form for the registration of the deed
• It is the duty of the buyer, seller, witness and advocate to reveal the above mentioned details.
• Registration Form from the concerned land revenue office after paying the prescribed fee.
– 10 Rupees for each form

Property Acquisition in Nepal by Non-Resident Nepali
Who are Non-Resident Nepali Citizens:
1. Foreign citizen of Nepali origin
2. Nepali citizen residing abroad.
Non-Resident Nepali Act, 2064 & Non-Resident Nepali Rules, 2066 talks about Property Acquisition in Nepal by Non-Resident Nepali.
Foreign Citizen of Nepalese Origin are those persons who him/herself or whose father, mother, grandfather, or grandmother was a citizen of Nepal at any time and has acquired the citizenship of any other foreign country other than a member of SAARC.

Nepali Citizen residing abroad are those Nepali citizens who have been residing in any foreign country for at least two years by doing any profession, occupation, business, and employment except a Nepalese citizen residing in a member country of SAARC or serving in a diplomatic mission or consulate situated in a foreign country under the assignment of the Government of Nepal and doing study in an academic institution situated in a foreign country.

Property Rights provided to the foreign citizen of Nepalese origin (Section 10, Rule 11)

The following are the property rights provided to the foreign citizen of Nepalese origin:
• Foreign Citizen of Nepalese origin may purchase the below mentioned land or other property in order to reside within Nepal for him/herself on his/her own family.
S.N. Region Ceiling
1. Kathmandu Valley Maximum 2 Ropani (10952 Sq. Ft.)
2. Municipalities of Terai District Maximum 8 Kattha
3. Other municipalities except in Kathmandu valley and municipalities of Terai District Maximum 4 Ropani
4. Village Executive of Terai District except municipalities of Terai Maximum 1 Bigaha
5. Other areas than mentioned above Maximum 10 Ropani
But this provision doesn’t apply if any foreign citizen of Nepali origin has received any immovable property in the status of a Nepali citizen.
• A foreign citizen of Nepalese origin may assign (transfer) the property purchased to anyone.
• The inheritance of the property of a foreign citizen of Nepalese Origin takes place due to his/her death and if s/he has any property in Nepal. The inheritance goes to his/her heir who is a foreign citizen of Nepalese origin having identity card and in the absence of such heir it shall be decided as provided by the prevailing law.

Procedures to acquire property in Nepal

 Application mentioning the location, area and the price that has been fixed for the purpose of purchase of the land which s/he intends to purchase in his/her own or his/her family’s name,
 Inquiry of the application
 If the application is found valid then permission by the Secretary to purchase the land and other immovable property within Nepal, in the name of the applicant or his/her own family
 After receiving the permission, the Officer responsible for the registration pass of the land shall make the registration of the land in the name of the foreign citizen of Nepali origin.
 Blue Colored Certificate while issuing Landowner Certificate by the Concerned Land Revenue Office

Documents required while giving application
• Application Form
• Original and one copy of Non-Resident Nepali Card
• Original and one copy of Certificate of Foreign Citizenship and Passport
• Original and one copy of Landownership Certificate
• Copy of Citizenship of the seller
• Copy of Trace Map
• Receipt of Tax Clearance in the current fiscal year
• Lawful Application for the Land Purchase
• Copy of Certificate of House Completion (Ghar Sampana)

No Application fee is given to the Ministry of Foreign Affairs while giving the application for the recommendation for the purchase of land.

Information of the applicant:
• Name. Surname
• Date of Birth
• Nationality
• Details of the Foreign Citizenship
• Details of Passport
• Name and Address of recent country of domicile
• Name and Full Address of the family members of Non-Resident Nepali who is in Nepal and their relationship
• Details of Parents of Non-Resident Nepali
• Details of Non-Resident Nepali Identity Card
• Details of the land if any members have before this

Details of the Seller
• Name, Surname of the Landowner
• Citizenship Number and Address
• Details of the Land
• Details of the House

FDI Rules in Nepal- Executive Summary of Foreign Investment and Technology Transfer Regulation – Exclusive 7 Mins Read

by Chintan Law Associates | Jan 19, 2022 | Business, Legal

FDI Rules in Nepal – Executive Summary of Foreign Investment and Technology Transfer Regulation – Exclusive 7 Mins Read

Foreign Investment and Technology Transfer Regulations or FDI Rules was effectively enforced in 2021 by the Government of Nepal while exercising the rights granted by Section 51 of the Foreign Investment and Technology Transfer Act, 2019 (2075). This article provides an Executive Summary of the FDI Rules by highlighting the major provisions.

Who are eligible to make foreign investments (FDI) in Nepal? Any foreign individual, firm, company, Non-resident Nepali or foreign government or international agency or other corporate body of similar nature.
What are the types of Foreign Investment (FDI)?
– Share investment in foreign currency
– Re-investment in an industry of dividends derived from foreign currency or shares
– Lease investment
– Investment made in venture capital fund
– Investment made in listed securities through secondary securities market
– Investment made by purchasing shares or assets of a company incorporated in Nepal
– Investment received through the banking channel after issuing securities in a foreign capital market by an – Industry or company incorporated in Nepal
– Investment made through technology transfer
– Investment maintained by establishing and expanding an industry in Nepal.
How to make Foreign Investment (FDI)in Nepal? The Foreign Investor may make foreign investments (FDI) by purchasing assets or 100 percent shares of the industry established in Nepal. However foreigners can’t make investment in the industry restricted by the Government of Nepal. The Foreign Investor may make lease investment in the aircraft, ship, machinery, appliances, construction equipment or other similar.

What are the industries or businesses restricted for foreign investments (FDI)?

Industries Restricted for Foreign Investment
S.N.	Types of Industry
1	Poultry farming, fisheries, bee-keeping, fruits, vegetables, oil seeds, pulse seeds, milk industry and other sectors of primary agro-production
2	Cottage and small industries
3	Personal service business (hair cutting, tailoring, driving etc.)
4	Industries manufacturing arms, ammunition, bullets and shell, gunpowder or explosives, and nuclear, biological and chemical (N.B.C.) weapons; industries producing atomic energy and radio-active materials
5	Real estate business (excluding construction industries), retail business, internal courier service, local catering service, moneychanger, remittance service
6	Travel agency, guide involved in tourism, trekking and mountaineering guide, rural tourism including home stay
7	Business of mass communication media (newspaper, radio, television and online news) and motion picture of national language
8	Management, account, engineering, legal consultancy service and language training, music training, computer training
9	Consultancy services having foreign investment of more than fifty-one percent

Royalty Amount: The royalty amount or other fees related to the technology transfer for the preparation of the industry’s operation shall be based upon the agreement entered in between two parties.
How to establish a Branch Industry? If any industry established in a foreign country is willing to establish or expand its branch industry in Nepal, then it has to be approved as a foreign investment and it shall be registered or extended as a branch industry by incorporating an industry.
How to make an application for FDI? Any foreign investor willing to invest in any industry shall submit an application before the authority approving the foreign investment. Electronic submission may be made.
What are the documents required for FDI? The following details and the documents are required:

S.N.	Documents	Copies
1	Project Proposal including Action Plan of the investment	2 copies
2	In case of more than one investor, a joint investment agreement between them	2 copies
3	Where the foreign investor is a natural person, a copy of passport and personal details (Biodata) of that person	1 copy
4	Where the foreign investor is a company, a certificate of registration of incorporation that company in the related country, Memorandum of Association, Articles of Association, documents that reflects Director and Shareholders, company’s profile and the decision of the Board of Directors of the company regarding the investment in Nepal	1 copy
5	Where the foreign investor is a firm, then the certificate of registration of incorporation of that firm and in the case of partnership, the document reflecting partnership details and the decision of the partners regarding the investment in Nepal and profile of the firm	1 copy
6	Where the foreign investor is a foreign citizen of Nepali Origin or Nepali citizen residing in a foreign country, the document proving the same.	1 copy
7	Where the foreign investor is an international organization, a constitution of the organization, document revealing the identity of the directors, profile of the organization and an organizational decision regarding the investment in Nepal	1 copy
8	If the foreign investor is not able to attend, a copy of power of attorney given by them and the document revealing the identity of an Attorney	1 copy
9	Financial Creditability Certificate of a foreign investor issued by the related foreign bank.	1 copy
10	Any other details and documents requested pursuant to a decision by the authority approving the foreign investment	1 copy

What is the required time-limit? Within 7 days. If rejected, rejection notice shall be given no later than 7 days after the date of decision.
Time schedule for Foreign Investment: The foreign investor getting an approval for the foreign investment has to bring in the following foreign investment within one year after the date of such approval:

Category of Foreign Investor	Investment Amount	Percentage of Investment
Foreign investor	Minimum Amount (USD)	At least 25% amount
Ordinary Foreign Investor	above the minimum required amount and up to 250,000,000 rupees	At least 15% amount
Distinguished Foreign Investor	above 250,000,000 rupees and up to 1,000,000,000	At least 10% amount
Highly Distinguished Foreign Investor	above 1,000,000,000	At least 5% amount

The foreign investor shall bring in at least 70% of the approved investment before the commencement of an industrial production or operation of the industry or enterprise of their investment.
The remaining 30% shall be invested within 2 years after the commencement of an industrial production or operation of such industry or enterprise.
Any foreign investor making an investment by purchasing the shares of any industry in operation shall bring in such foreign investments within a year of the approval of the foreign investment.
The industry with an approval of a foreign investment and which is in operation during the enactment of this regulation if unable to bring in investment, shall get an approval and bring in foreign investment within six months.

What happens in case of Share Sale or Transfer of Title to Share? If the property, assets or share or any other financial equipment accumulated out of foreign investments by any company in Nepal, is for sale, transfer of title or change in the ownership or vested ownership of the structure, then in order to maintain record of the details at the authority approving the foreign investment, such company shall submit within 30 days after the date of operation an application along with the following details and documents:-

A copy of an agreement relating to the company’s property or asset or Share Sale and Purchase Agreement and a certified document that reveals the transaction of the above,
A document certified by an Auditor that reveals the share value of the company and a copy of Audit Report,
In the case of repatriation out of Share Sale and Purchase or Transfer of title of the company, any work schedule,
Any evidence showing that the company has paid-up tax and liability to the Government of Nepal as per the prevailing law of Nepal,
Updated Share Log Book of such company situated in Nepal.

Repatriation: Any foreign investor has to submit an application to repatriate their foreign investment (FDI) with the following documents:-

S.N.	Documents
1	The decision of the General Meeting and Board of Directors of the Company relating to the repatriation of the investment by the foreign investors or earnings out of such investments
2	Share Log Book and Directors’ Log Book verified by the Office of the Company Registrar
3	Company’s previous fiscal year Audit Report and Certificate of Tax Clearance
4	Proof showing the foreign investment by the concerned investor
5	In case of the amount received out of Share Sale of the foreign investment, a copy of the approval letter of the Share Sale and a copy of approved Share Sale and Purchase Agreement
6	Profit from the foreign investment or dividend amount, a decision of the General Meeting of the Company regarding such distribution, a proof of distribution of bonus as per the prevailing law and the Audit Report of that fiscal year
7	In the case of payment of the Lease Investment pursuant to the Lease Agreement, the related documents
8	In the case of payment of damage or compensation amount pursuant to final decision regarding the case filed in Nepal, Arbitration or any other legal proceedings, the related documents
9	In the case of royalty amount, the related documents
10	Proof of the record of the detail of sale of earned property in Nepal or transfer of title
11	Any other essential documents required by the authority approving the foreign investment.

How can you get a Visa Facility by FDI?

Types of Visa

Eligibility

Documents Required

Business Visa

The foreign investor or his/her authorized representative and the family members or his/her authorized representative of such investor

· If the foreign investor having an approval up to or above 100,000,000 rupees has already brought in 25% of the approved investment

1) A copy of foreign investment approval letter/ Industry Registration Certificate,

2) A copy of the passport of the person requesting for visa,

3) In case of an authorized representative, a letter authorizing representation for the foreign investor,

4) In case of a family member of the foreign investor, a certificate of relationship with the dependents issued by an authorized entity of related country, the Embassy of Nepal or diplomatic mission in such country,

5) In case of Non-tourist visa, a copy of the executive committee and Labor approval as per the prevailing law.

6) Power of Attorney, Identity Card, Contact Number of a person with an authority or an authorized person.

Can you acquire land above the land ceiling? Yes. The energy, manufacturing, infrastructure, and minerals based industries with a foreign investment approval can submit an application for the coordination and facilitation to purchase land or any land above the land ceiling. The following details and documents are required:-

A copy of foreign investment approval letter,
A copy of Industry Registration Certificate,
Approved Project Proposal of the industry,
Areas and Location of the land required for the industry,
In case if approval is required, an approval letter from any other authority,
Commitment letter endorsing all the necessary expenses for land acquisition,
Reasons for the industry being unable to purchase or acquire land.

Validity Period of Foreign Investment Approval: The validity period of the foreign investment approval shall remain in effect except in situations where the foreign investment approval becomes ipso facto ineffective or the foreign investment becomes void.

Investment out of Earned Profit: The industry with the foreign investment may make re-investments in the same industry or in any other industry opened for foreign investment, out of earned profits. In the same industry, the investment shall not be less than 10% of the minimum required investment, and in the case of other industries, it shall not be less than the minimum required investment.

Limitation on Repatriation of Royalty Amount or other Fee

A. Limitation on Royalty Amount or other Fee for all kinds of technology transfer of industry.

Royalty	In relation to Quantity Sold within Nepal	In relation to Quantity of Foreign Export
If Lump sum Amount or total sale amount	Up to 5% of the total sale amount excluding tax	Up to 10% of the total sale amount excluding tax
If Royalty out of net profit	Up to 15% of net profit	Up to 20% of net profit

B. Limitation on Royalty Amount or other fee for the use of trademark

In relation to Quantity Sold within Nepal	In relation to Quantity of Foreign Export
In case of industry relating to the alcohol and tobacco, up to 2% of the total sale amount excluding tax.	In case of industry relating to the alcohol and tobacco, up to 5% of the total sale amount excluding tax.
In case of other industry, up to 3% of the total sale amount excluding tax.	In case of other industry, up to 6% of the total sale amount excluding tax.

Read about how to register a FDI company in Nepal by clicking the link below:

Foreign Direct Investment in Nepal / Registration of Company by Foreigners in Nepal – Exclusive 3 Mins Read – Chintan Law Associates (lawchintan.com)

To gain more details on FDI or Foreign Investment in Nepal – Get in touch with us at info@lawchintan.com or call us at +977 9851133809.

Disclaimer: The information published on this website is for general information purposes only, and shall not be construed as a solicitation or an offer for an attorney-client relationship. No one should act or rely upon any information or response to a request for information automatically generated as a result of electronic searches on this website. Chintan Law Associates assumes no liability for such use or interpretation of the subject-matter.

Public Company Registration in Nepal – 3 Mins Exclusive Read

by Chintan Law Associates | Mar 14, 2021 | Business

Public Company Registration in Nepal

Incorporation of Public Company in Nepal

Public company is that company that raises the fund from the general public. “Limited” is used after the name of the public company.

Time required for the registration of the public company: Maximum 7 days from the date of application filed.

Number of promoters: At least 7 to unlimited. But if one public company incorporates the other public company then there is no need of seven promoters.

Number of Board of Directors: At least 3 to maximum 11, and if a woman is shareholder then at least 1 woman.

Number of shareholders: At least 7 to maximum unlimited.

Capital: Paid up capital of the public company must be at least 1 core except mentioned in Nepal Gazette or as per the Government of Nepal.

Government Revenue: The revenue is levied on the basis of the capital of the public company:

S.N.	Capital Authorized in NPR	Registration Fee
1.	Up to 10,000,000	15,000
2.	10,000,001 to 100,000,000	40,000
3.	100,000,001 to 200,000,000	70,000
4.	200,000,001 to 300,000,000	100,000
5.	300,000,001 to 400,000,000	130,000
6.	400,000,001 to 500,000,000	160,000
7.	Above 500,000,000	160,000 + 3,000 for each 10,000,000

Required Documents:

Application
Memorandum of Association
Articles of Association
Copy of Agreement if there is an agreement between the promoters
Notarized copy of citizenship if promoter is a Nepali Citizen
Prior approval or license if required
Power of Attorney.

Learn about foreign branch company registration in Nepal

https://lawchintan.com/register-branch-company-in-nepal/

Disclaimer: The information published on this website is for general information purposes only, and shall not be construed as a solicitation or an offer for an attorney-client relationship. No one should act or rely upon any information or response to a request for information automatically generated as a result of electronic searches on this website. Chintan Law Associates assumes no liability for such use or interpretation of the subject-matter.

Registration of Company Not Distributing Profit / Non-Profit Company

by Chintan Law Associates | Mar 7, 2021 | Business, Legal

Registration of Non-Profit Company

Registration of Company Not Distributing Profit

Foundation Registration in Nepal

Company not distributing profit is a company that are not entitled to distribute or pay to its members any dividends or any other moneys out of the profits earned or savings made for the attainment of any objectives.

Objectives of the establishment of company not distributing profit:

To develop and promote any profession or occupation.
To protect the collective rights and interests of the person engaged in any specific profession or occupation.
To carry on any enterprise for the attainment of any scientific, academic, social benevolent or public utility or welfare objective on the condition of not distributing dividends.

Q. Where we can file the application for the registration of this type of company?

A. We can file the application in the Office of Company Registrar.

Number of promoters needed to register this type of company: At least 5 members to unlimited members.

Time required for the registration: Maximum 7 days from the date of application filed.

Q. What if we need to change the objectives of the company?

A. To change the objectives of the company, the company has to obtain prior approval from the Office of Company Registrar.

Q. Can the company not distributing profit be merged with company distributing profit?

A. No, they cannot be merged.

Government Revenue for its registration: NPR 15,000/-

Other Essential Points:

No need to require share capital to incorporate this type of company.
Members of this type of the company are not liable for debts and liabilities of the company except they accept such liability in writing.
The dividends, bonus or other profit of the company are not distributed among their employees but that profits are used to increase the capital of the company or for the attainment of the objectives.

Document required for registration of the company:

Application
Memorandum of Association (Prabandha Patra)
Articles of Association (Niyamawali)
Notarized copy of citizenship certificates of all Promoters
Power of Attorney

Resource Person: Zubin Niroula Khatri, Attorney at Law (Contact Number: +977 9851133809)

Disclaimer: The information published on this website is for general information purposes only, and shall not be construed as a solicitation or an offer for an attorney-client relationship. No one should act or rely upon any information or response to a request for information automatically generated as a result of electronic searches on this site. Chintan Law Associates assumes no liability for such use or interpretation of the subject-matter.

Register Branch Company in Nepal Easily – 3 Exclusive Details

by Chintan Law Associates | Jul 12, 2020 | Business, Legal

Register Branch Company in Nepal | Set-up Branch Company in Nepal | Register Foreign Branch Company | Easy Foreign Branch Company Registration in Nepal – 3 Major Details

As per Section 154 (1) of the Nepalese Companies Act, 2006, no any foreign company can carry out its business transaction in Nepal without registration of its branch company in Nepal. Foreign branch company can only perform activities that are allowed in Nepal, similar to the objective of the foreign company.

Documents required to register branch company in Nepal:

Application in the prescribed format.
Permission obtained by the foreign company from the competent Nepalese authority to carry out its business in Nepal.
Notarized copy of the charter, certificate of incorporation, Memorandum and Articles of Association; including the Nepalese translation of these documents.
Certified copy of the Board resolution of foreign company to establish branch in Nepal.
Power of Attorney.
Notarized copy of passport of the directors of foreign company.
Passport or citizenship copy of local representative in Nepal.

Information required to be furnished at the time of application:

Full name, address of the registered office and principal place of the business, date of incorporation, description of the paid up capital and major objectives of the foreign company.
Name, address of directors, manage, company secretaries or main officers of the company and description of their citizenship.
Name and address of the person residing in the Nepal, who is authorized by the foreign company to receive, on its behalf, any summons, notice, etc., issued in Nepal.
Full address of the branch company in Nepal.
Where the company is to carry on any transaction or business in the state of Nepal, details of the proposed investment and transaction.
Commencement date of transaction by branch company in Nepal.
A declaration made by a director of the company or his/her representative, on the behalf of the company, that the matters contained in the returns submitted by the foreign company are true and correct.

Process of registration:

Agreement/approval to carry out business in Nepal – Foreign company willing to register a branch company in Nepal must have an agreement with a government entity or authority to get involve in certain projects. Having an agreement with the Nepal Government makes it easier for branch company to repatriate income and profits to the main company.
Application to the OCR – After gathering all the documents, application is filed at the Office of the Company Registrar. Firstly, application and required documents are submitted online via OCR online portal and afterwards a physical submission of documents is required.
Investigation by the OCR – OCR checks the documents, and approves the foreign company to set-up branch company in Nepal.
Certificate of registration within 30 days after the evaluation of the documents – OCR issues a registration certificate if the registration is approved.
If can’t be registered, then information within 30 days – If in case the branch cannot be registered, OCR must notify the applicant with the reasons within 30 days of the submission of application.

Branch company registration revenue: Government revenue depends upon the capital of the foreign company. The more the Authorized capital, the more shall be the government fees. In the table below, tentative government fee for the given capital slab is indicated.

Foreign company having capital	Fee in USD (approximately)
Up to USD 84,000.00	$125.00
Up to USD 800,000.00	$340.00
Up to USD 1.6 million	$585.00
Up to USD 2.5 million	$835.00
Up to USD 3.3 million	$1085.00
If investment is not shown or no capital	$835.00

For more information on branch company registration please contact us via email at info@lawchintan.com or by phone at +977 9851133809. Branch company is popular among the Indian citizens doing business in Nepal. Branch company is regulated by the Companies Act, 2006, therefore, it must follow statutory compliance and obligations set out by the Act.

Looking for setting up a new company in Nepal instead? Learn more about Foreign Direct Investment in Nepal.

Foreign Direct Investment in Nepal / Registration of Company by Foreigners in Nepal

Want to learn more about branch company? Get in touch with us, today!

Contact Us

Insolvency Laws in Nepal – Exclusive 4 Mins Read

by Chintan Law Associates | Jun 6, 2020 | Business, Legal

Insolvency Laws in Nepal

WHAT IS INSOLVENCY?

Insolvency is the state of being unable to pay the money owed to a Creditor by a person or company.
The person or company who are in the state of insolvency are referred as insolvent.
As per the Insolvency Act, 2006 ‘Being Insolvent’ is a state of being unable, or appearing to be unable, to pay any or all of the debts due and payable to or payable in the future to creditors or a situation where the amount of liabilities of a company exceeds the value of the assets.

INSOLVENCY, LIQUIDATION AND BANKRUPTCY

Insolvency

Liquidation

Bankruptcy

It is the financial state of a person (Individual or Corporate body) in which they are unable to repay debt owed to their creditors, in time, or at all.

It is the legal ending of the company. The assets are discharged and are sold to repay the creditors and the business is closed and its name is removed from the Company Registrar’s Office.

It is the legal declaration and final way out in Insolvency.

It is the legal process that happens when debtor declares when they can no longer pay debts off to creditor.

WHO CAN FILE APPLICATION FOR INSOLVENCY? (Insolvency laws in Nepal)

A company itself that has become insolvent.
Ten percent of the total creditors who has lent money to a company.
Shareholders who have subscribed at least five percent of the total shares.
Debenture holder who have subscribed at least five percent of the total debentures.
A liquidator who is appointed to liquidate a company.
In the case of a company carrying on any specific type of business, like Bank and Financial Institution, Insurance company has to obtain prior approval of its regulatory authority.

IMPORTANCE OF INSOLVENCY LAW IN THE POST COVID-19 NEPALESE ECONOMY

It provides the insolvent sometime to repay the debt.
It also provides the creditors a way to get back their money from the insolvent debtors.
It also allows debtors to obtain a fresh start by relieving them from their debt [Bankruptcy]

WHEN CAN A COMPANY CLAIM TO BE INSOLVENT?

If the General Meeting of shareholders adopts special resolution or a meeting of the Board of Directors decides that the company has become insolvent.
If there is a court order to repay debt within 35 days and if the debt is not paid off within that time.
If a company fails to pay the debt within 35 days after receiving the notice the creditor or if the debtor does not file application to dismiss the notice in the court.
If it is proved that the liability of the company exceeds the value of its assets or the company itself admits that it has become insolvent.

DOCUMENTS / EVIDENCES REQUIRED TO FILE APPLICATION

In case company itself files for Insolvency:

Document certified by the Board of Directors declaring that the company has become insolvent.
A special resolution adopted by the Board of Directors of the company to initiate the insolvency proceedings.
Certified copies of the Balance-sheet and Auditor’s report of the company available at the time of filing application for insolvency proceedings.

In case the creditor of the company files for Insolvency:

A statement of the Principal and Interest of the debt, which the creditor claims to be due and payable by the company.
The date on which the company borrowed the debt claimed by the creditor stating the reason to take on the debt.
Detail of the due amount and stating that that amount is payable immediately.
Reason or ground on which creditor believes that the company has become insolvent.

When the liquidator makes the application:

Evidence proving that a person is appointed as the liquidator by a company for the purpose of Insolvency proceedings.
Opinion of the liquidator regarding the insolvency of a company filing application.

In case of shareholders and debenture-holders filing Insolvency application, an approval of the court to initiate the process is required and the conditions mentioned in the court approval letter must be complied.

INFORMATION REQUIRED TO FILE APPLICATION (Insolvency Laws in Nepal)

Name and address of the company
Reason to file
Financial standing
Document evidencing the company being insolvent
Other supporting documents
Name of the Applicants
Signature & Date

OUTCOME OF INSOLVENCY PROCEEDING

Depending upon the report submitted by the Liquidator, resolution adopted by the Creditor’s Assembly and the restructuring plan submitted by the company, the court gives following order within 7 days of the adopted resolution:

To immediately liquidate the company.
To implement the restructuring the program of the company.
To wait for some time & see if there’s probability for the progress of the company.
To extend the period of insolvency proceedings to get further report.
To dismiss the Insolvency proceeding.

For more information on Insolvency laws in Nepal and Bankruptcy law, please email us at info@lawchintan.com.

Or simply fill out the contact us form by clicking the link below and we will contact you.

Contact Us

« Older Entries