The Foreign Investment and Technology Transfer Act, 2019

THE FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER ACT 2019 (2075)

Technology Transfer means any transfer of technology to be made under an agreement between an industry and a foreign investor on the following matters:

  1. Patent, design, trademark, goodwill, technological specificity, formula, process.
  2. User’s license, technological know-how sharing or use of technological knowledge (franchise).
  3. Provision of foreign technical adviser, management and marketing service or other technological skill or knowledge.

How can a foreign investor make an investment in industry established in Nepal through technology transfer?

  1. Technology transfer agreement (TTA) between the concerned industry and the foreign investor. This agreement may not provide for the repatriation of royalty in excess of the prescribed ceiling.
  2. The TTA has to be approved by the Department of Industries (if the foreign investment does not exceed six billion rupees) or Investment Board (if the foreign investment exceeds 6 billion rupees)

Foreign investment means the following investment made by a foreign investor in an industry or company:

  1. Share investment in foreign currency,
  2. Re-investment in an industry of dividends derived from foreign currency or shares
  3. Lease finance
  4. Investment made by establishing venture capital fund and obtaining approval of the Securities Board
  5. Investment made in listed securities through secondary securities market
  6. Investment made by purchasing shares or assets of a company incorporated in Nepal
  7. Investment received through the banking channel after issuing securities in a foreign capital market by an industry or company incorporated in Nepal
  8. Investment made through technology transfer
  9. Investment maintained by establishing or expanding its branch industry in Nepal

Foreign Investor includes any foreign individual, firm, company, Non-resident Nepali or foreign government or international agency or other corporate body of similar nature that makes foreign investment, and also includes, in the case of a foreign investor that is an institutional foreign investor, the ultimate beneficiary of such an institution. (Institutional Foreign Investor means a foreign company, corporate body or international institution that makes foreign investment.)

Power of Attorney in Foreign Investment?

  • A person willing to make foreign investment can give a power of attorney to another person to perform any, some or all of the acts required to be performed.
  • Such power of attorney shall be notarized and submit to the foreign investment approving body.
  • A person who is authorized may not delegate the authority conferred on him or her to another person.

List of Industries or Businesses restricted for Foreign Investment

  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 like 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 homestay;
  7. Business of mass communication media such as 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; and
  9. Consultancy services having foreign investment of more than fifty-one (51%) per cent.

 

Disclaimer: This writing is prepared to share general information only and for legal purposes, advice of legal professionals is must. 

RELATED PROFESSIONALS: 

  • ADVOCATE AJAYA SHRESTHA
  • ADVOCATE PRABIN SHRESTHA

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