The regulatory framework for FDI approval in Nepal operates through a tiered system based on investment magnitude:

1. Department of Industry (DOI) - Exercises jurisdictional authority over investments up to NPR 6 billion
2. Investment Board of Nepal (IBN) - Holds exclusive jurisdiction over:
   
   • Investments exceeding NPR 6 billion
   • Hydropower projects with capacity exceeding 200 MW
3. Nepal Rastra Bank (NRB) - Provides final monetary approval for foreign currency remittance and maintains oversight of investment recording

The regulatory architecture governing FDI in Nepal comprises several key legislative instruments:

1. Foreign Investment and Technology Transfer Act, 2019 (FITTA) - The primary legislation establishing the fundamental framework for foreign investment
2. Foreign Investment and Technology Transfer Regulations, 2021 - Supplementary regulations implementing FITTA provisions
3. Industrial Enterprises Act, 2020 - Governing industrial operations and investment incentives
4. Companies Act, 2006 - Regulating corporate establishment and operations
5. Public Private Partnership and Investment Act, 2019 - Facilitating infrastructure and service sector investments
6. Foreign Exchange Regulation Act, 1962 - Governing foreign currency transactions

Per FITTA 2019, foreign investment is expressly prohibited in:

• Primary agricultural production including poultry, fisheries, and bee-keeping
• Cottage and small industries
• Personal service businesses
• Arms, ammunition, and explosive manufacturing
• Real estate (excluding construction)
• Tourism services including travel agencies and guides
• Mass communication media and national language motion pictures
• Professional services including management, accounting, and legal consultancy (with foreign investment exceeding 51%)
• Educational services including language and computer training

The procedural framework for obtaining FDI approval encompasses:

1. Initial foreign investment approval from DOI/IBN
2. Company registration with the Office of the Company Registrar
3. Tax registration with the Inland Revenue Office
4. Local business registration with Ward Office
5. Industry registration with DOI
6. Procurement of non-blacklist certification from Credit Information Bureau
7. NRB approval for investment remittance
8. Investment infusion through banking channels
9. Investment recording with NRB

This entire process typically requires 3-5 months for completion, subject to compliance with all regulatory requirements and submission of requisite documentation.

Under Nepalese law, foreign investors can generally own 100% of local subsidiary companies, with notable sector-specific restrictions:

• Telecommunications: Maximum 80% foreign ownership permitted
• Banking and Financial Institutions: Foreign ownership range of 20-85%
• Insurance Companies: Maximum 80% foreign ownership
• Consultancy Business: Maximum 51% foreign ownership

Per FITTA 2019, foreign investors are legally entitled to repatriate:

1. Dividend earnings and share sale proceeds
2. Compensation and indemnity payments
3. Capital proceeds from share transfers
4. Liquidation proceeds
5. Technology transfer fees, royalties, and license fees
6. Lease financing rental payments

Prior to repatriation, investors must:

• Demonstrate compliance with all applicable laws
• Obtain necessary approvals from DOI/IBN and NRB
• Establish tax compliance
• Repatriation can be executed in the original investment currency or other convertible foreign currencies

Foreign investors in Nepal can apply for several types of visas, each tailored to different aspects of investment, business, and residency. The key visa types available for foreign investors include:

1. Investor Visa

This visa is specifically designed for foreign nationals who wish to invest in Nepal. The requirements include:

• A minimum investment of NPR 10 million (around USD 75,000) in a business or industrial enterprise in Nepal.
• The business must be in sectors approved by the government, such as manufacturing, tourism, and export-based industries.
• The investor is expected to create job opportunities for Nepali citizens and contribute to the economic development of the country.
• The visa is typically issued for a period of 5 years and can be extended.

2. Non-Tourist Visa (Business Visa)

Foreign nationals who plan to engage in business activities in Nepal, such as trade, consulting, or establishing a local business entity, can apply for a Business Visa. The requirements include:

• Proof of business registration or an invitation from a Nepali business.
• The duration of this visa is typically 1 year, renewable depending on the nature of business activity.

3. Permanent Residency (PR) Visa

Foreign nationals who make significant investments or contribute positively to Nepal's economy can apply for Permanent Residency. The prerequisites include:

• Investment in large-scale industries, or
• Contribution to high-priority sectors like tourism, agriculture, or technology.
• A valid investment period of at least 5 years is required.
• Holders of this visa may benefit from rights similar to Nepali citizens, except for the right to vote or run for office.

4. Entrepreneur Visa

Entrepreneurs seeking to establish a business in Nepal can apply for this visa, which is available to foreign nationals investing in innovative or high-impact ventures. The conditions include:

• A certain minimum investment threshold (NPR 5 million).
• A clear business plan demonstrating the potential for local job creation and sustainable growth.
• The visa is initially granted for a period of 1 to 5 years, renewable based on business performance.

5. Work Visa (for Investors’ Employees)

Investors who require foreign experts or skilled professionals to work in their business can sponsor them for a Work Visa. The process involves:

• Documentation of the business's need for foreign expertise.
• Proof of payment of salaries or other employment benefits to the foreign workers.

The following documents are mandatory for FDI approval:

1. Project Report containing:
   
   • Project background
   • Market analysis
   • Technical specifications
   • Financial projections
   • Fund details
2. Corporate Documentation:
   
   • Certificate of Registration
   • Memorandum and Articles of Association
   • Corporate Resolution authorizing Nepal investment
   • Company Profile/Investor Bio-Data
   • Latest audited financial statements
3. Financial Documentation:
   
   • Financial Credibility Certificate from a bank in investor's home country
   • Investment source documentation
   • Investment schedule
4. Personal Documentation:
   
   • Passport copies of foreign investor/directors
   • Power of Attorney for registration process
   • Non-repatriation commitment letter (one-year period)
   • Joint Venture Agreement (if applicable)

All foreign-language documents must be notarized and properly authenticated according to Nepalese legal requirements. The documentation requirements align with FITTA 2019 and associated regulations governing foreign investment in Nepal.

According to the regulatory framework, the comprehensive FDI approval process typically requires 3-5 months for completion. This timeline encompasses all procedural steps from initial application through final approval and investment recording. The Foreign Investment and Technology Transfer Act (FITTA) 2019 stipulates a phased investment injection schedule:

• Stage I (Within 1 year of approval):
  
  • 25% for minimum investments (NPR 20 Million)
  • 15% for investments between NPR 20-250 million
  • 10% for investments between NPR 250-1000 million
• Stage II (At production/commercial transaction start): Up to 70% of total investment
• Stage III (After 2 years of operation): Remaining 30%

FDI companies must maintain ongoing compliance with several regulatory obligations:

1. Submission of quarterly compliance documentation to the Office of Company Registrar
2. Investment recording with Nepal Rastra Bank
3. Annual compliance filings with OCR
4. Adherence to:
   
   • Companies Act provisions
   • Labor Act requirements
   • Tax regulations
   • Other applicable Nepalese laws