Law Governing INGOs in Nepal
9 April 2020
This questionnaire outlines law governing the INGOs (International Non-Governmental Organizations) in Nepal. Further it explains the procedure related to approval/registration and operation of the INGOs in Nepal.
1. What are the laws governing the INGOs in Nepal?
a) The main laws governing INGOs in Nepal are:
- Social Welfare Act, 1992 and
- Social Welfare Council Rules, 1992
b) Besides the Act and the Rules, the Social Welfare Council has adopted various guidelines to regulate INGOs and these guidelines are updated periodically. Guidelines for General Agreement, Service and Facilitation, Guidelines for Project Agreement Appraisal and Guidelines for Monitoring/ Evaluation are the major guidelines regulating INGOs in Nepal.
2. What is the main regulating authority which governs INGOs in Nepal?
Social Welfare Council (“SWC”) is the main regulating body responsible for regulating the INGOs in Nepal.
3. Is it necessary to obtain the approval from SWC for the operation of INGOs?
It is compulsory to take approval from SWC to operate the INGOs. Along with the approval General Agreement and Project Agreement has to be executed with SWC before conducting development, social or welfare activities in Nepal.
4. What are the major agreements required for the operation of INGOs?
The major agreements required for the operation of INGOs are:
i. General Agreement (“GA”)
ii. Project Agreement (“PA”)
5. What is a General Agreement?
a) GA is the main agreement that provides the basis for the operation of INGOs in Nepal which is executed between INGOs and SWC. It is entered only for a certain period of a time and must be renewed after the expiry of the time period.
b) GA incorporates information such as (a) area where the INGO wants to supports in Nepal, (b) amount of fund per annum that will be used to implement projects, (c) date of submission of project proposal for Project Agreement, (e) submission of progress report and other compliance requirement that INGOs need to submit before SWC.
6. What is a Project Agreement?
a) PA is the agreement which is executed between INGO, SWC and the local partners for the implementation of projects in Nepal.
b) It incorporates (a) background, (b) objectives, (c) implementation process/ methodology, (d) monitoring plan, (e) budget estimate etc. of the projects that INGOs intent to operate.
(Please note: PA should be prepared after consultation with local level stakeholders which includes Municipality, District Development Committee and line agencies at central and district level and local stakeholders who will be benefited from the project.)
7. When should INGOs submit the application of Project Agreement?
The application of the PA needs to be submitted within 3 months from the date of the signing of the General Agreement before SWC. If INGOs are not able to do so within the time mentioned, the SWC will provide additional 3 months for submission of the application. Fine will be charged if submission is not made within extended period.
8. How many Project Agreement can be concluded under one General Agreement?
INGOs can conclude more than one PA under a GA.
9. Is there any minimum amount that need to be donated by INGOs?
INGOs are required to donate at least USD 2,00,000 per annum. The source of fund for INGOs should be injected from outside of Nepal.
10. Is there any compulsion to appoint the local NGO for operation of Project of INGOs?
a) INGOs cannot implement the project thorough itself. Project are implemented through local partners. These local partners include (a) Non-Governmental Organization (“NGO”) or (b) Profit Not Distribution Company or (c) any registered entity established with the objective not to distribute profit.
b) Local partner should have minimum work experience of two years. Provided that if eligible partner is not available in the concerned project district, zonal based partner, regional based and central based partner will be prioritized respectively. In such case, local partner should be selected as sub partner. Such local partner should be capacitated within one year of timeline of project startup date.
11. Is it necessary to set up the local office by INGOs in Nepal?
Yes, INGOs needs to set up a local office for its operation in Nepal.
12. What would be the status of local office set up by INGOs?
a) The local office will not have independent legal status or corporate personality separate from the INGOs existing under the laws of a foreign jurisdiction. The local office remains as part of INGOs in terms of authority and its function.
b) The local office of the INGOs will also have to be registered with the tax authority of Nepal and obtain a Permanent Account Number (PAN).
13. What are the documents required for the approval of general agreement?
a) Along with the application following documents has to be submitted by INGOs:
- Certificate of Registration of the home country,
- By-Laws (Approved Constitutions),
- If by-Laws do not explain the objective clearly and authentic document to state its objectives is required in addition,
- Financial Commitment (minimum USD 2,00,000 per annum),
- Concept paper/ project proposal, and
- Draft General Agreement (in the prescribed format)
- Letter of Authorization to deal with the business of agreement,
- A Copy of Citizenship, Passport and Bio data of the authorized person,
- Covering Letter,
- Reliable Funding Sources.
b) The SWC shall grant approval within 3 months period from the date of receiving of the application.
14. Can INGOs invest in the profit-oriented business activities in Nepal?
INGOs are restricted to make any share investment in any profit motive institution with the intention of carry business in Nepal.
15. Is there any restriction for INGOs while allocating its budget?
INGOs cannot spend more 20% of total funding in administrative cost.
16. Can INGOs provide financial assistance to local partners without obtaining approval form SWC?
It is not necessary to obtain approval to provide the financial assistance to local partners. However local partner should get approval from SWC before receiving the financial assistances form INGOs.
Imperial Law Associates consist of well experienced lawyer advising on the legal issues of INGOs in Nepal.
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