Start-up Enterprise or Business in Nepal

The Ministry of Law, Justice and Parliamentary Affairs of the Government of Nepal has introduced Ordinance No. 01 of the year 2081 (2024) (“Ordinance”) amending the Acts related to investment facilitation. One of the key amendments introduced by the Ordinance is new provisions for “startup enterprise or business” in Industrial Enterprise Act, 2020 (“Industrial Enterprise Act”).

This article provides the general overview of the relevant provisions of start-up enterprise or business introduced through the Ordinance.

Eligibility for Startup Registration

Section 2(p1) of the Industrial Enterprise Act defines “startup enterprise or business” based on the criteria outlined in Section 4A.

To be registered as a startup in Nepal, enterprise or business must be commercially operated by a firm or company by undertaking innovative research and creative thinking in development, production, operation and distribution of goods or services and process. The eligibility criteria for registration are set out below:

  1. Registered as a new company, private firm or partnership firm;
  2. Uses innovative ideas and technology in the production of goods or services;
  3. Has the potential for rapid upgrading;
  4. Date of registration does not exceed 10 years; and
  5. Annual turnover of any fiscal year after registration does not exceed NPR 150 million.

Business Incubation Centre

The Government of Nepal, provincial government or local level can establish and operate a Business Incubation Centre in order to promote the startup enterprises or businesses pursuant to Section 4A of the Industrial Enterprise Act.

Regulation and Recordkeeping

The registration body for such startup enterprise or business will be responsible for its regulation pursuant to Section 4A of the Industrial Enterprise Act. This body will also prepare and keep related details in a separate record.

Issuance of Related Procedures

The Government of Nepal can issue directives, procedures, and criteria related to startup registration, regulation, and the establishment and management of Business Incubation Centers pursuant to Sections 68(1) (E1) and 68(1) (E2) of the Industrial Enterprise Act.

Conclusion

The introduction of these startup-centric provisions signifies a positive and progressive step towards nurturing innovation and entrepreneurship in Nepal. By streamlining registration processes, facilitating access to resources through incubation centers, the amendment aims to cultivate a more supportive environment where startups can thrive.

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