Who Can Buy Nepali Securities: Foreign, NRN and Institutional Access

The question in the title has a short answer that disappoints most people who ask it. If you are a foreign individual or an offshore fund with no presence in Nepal, you cannot open a brokerage account and buy shares on NEPSE. There is no portfolio investment channel of the kind that exists in Colombo, Dhaka or Mumbai. Understanding why requires reading two statutes against each other, because the securities law and the foreign investment law approach the same problem from opposite ends and meet in a provision that has never been fully switched on.

Where the barrier comes from

The Securities Act 2063 (2007) does not distinguish between Nepali and foreign investors. It regulates issuers, intermediaries and conduct. Nothing in it admits a foreign buyer and nothing in it excludes one.

The exclusion comes from elsewhere. Holding a Nepali listed security requires a beneficial owner account at CDS and Clearing Ltd, opened through a depository participant under a signed agreement, and dealing requires a licensed broker. Both of those sit behind Nepal’s exchange control regime, which treats any inbound investment as foreign investment requiring authorisation. The gate is the Foreign Investment and Technology Transfer Act 2075 (2019) and Nepal Rastra Bank’s rules underneath it, not the Securities Act.

FITTA sections 9 and 10

FITTA defines foreign investment as investment by a foreign investor in an enterprise or company in nine listed forms. Two of them matter here: investment in a capital investment fund under section 9, and investment in listed securities through the secondary market under section 10.

Section 9 permits an institutional foreign investor, for the purpose of making equity investment in an industry, to incorporate a company under prevailing Nepali law and, with the approval of the Securities Board, to establish a venture capital fund. Investment from that fund into an industry requires approval through the ordinary process. The company must report the fund’s particulars to the Department of Industry every six months.

Section 10 is the secondary market provision, and its first subsection decides the whole question. It provides that an institutional foreign investor that has established a venture capital fund under section 9 must register with the Securities Board for securities transactions. An investor so registered may then trade in the secondary market in the securities of industries in which it may invest under the Act.

Three constraints follow directly from that drafting.

The investor must be institutional. A foreign individual is outside section 10 entirely.

The investor must already have gone through section 9. Secondary market access is a privilege attached to having set up a Nepali venture capital fund company, not a standalone permission. An offshore asset manager that simply wants to buy listed Nepali banks has no route.

The tradable universe is limited to industries in which the investor could invest directly under FITTA. Sectors on the negative list are excluded from the secondary market as they are from direct investment.

Section 10(3) then leaves to be prescribed the minimum number of securities that must be purchased, investment limits, the minimum period for which securities must be held after purchase, the foreign currency reserve fund that must be maintained, and other arrangements.

That is the switch. On the sources we could read, no such prescription has been published. A registered investor would not know how many shares it must buy, what its exposure limit is, how long it must hold, or how large a reserve fund it must maintain in foreign currency. Without those, the section describes a permission that cannot be exercised.

Nepal Rastra Bank’s rules

NRB’s Foreign Investment and Foreign Loan Management Bylaw is more accommodating than section 10 in one respect and silent in another.

Its definition of foreign investment expressly includes investment made in listed securities through the secondary market, and investment made in a venture capital fund. The central bank has therefore built the plumbing for both.

Prior NRB approval is required for foreign investment involving a change of share ownership, with an express exemption for investment in listed companies. The inflow must be recorded with NRB within six months, and the decision comes within seven working days. Repatriation has its own clause: sale proceeds and dividends may be taken out on application, NRB must decide within fifteen working days, approval is conditional on the recommendation of the foreign investment approving body, and the money must generally go back to the same investor and the same country it came from, with a different destination possible on justification.

Fifteen working days for a repatriation decision is a real number and a reasonable one. What it does not do is create an entitlement to invest in the first place.

The bylaw does not address foreign investment in mutual funds or specialised investment funds. Venture capital funds under section 9 are named. Other collective vehicles are not.

Non-resident Nepalis

NRNs occupy a distinct position that we can describe only partially.

NRB’s bylaw treats a non-resident Nepali as an eligible foreign lender and investor, permits the opening of a convertible foreign currency account, and provides a documentary concession. A passport copy is not required for investment made in Nepal by an investment company established jointly by the Government of Nepal and non-resident Nepalis, where a list of investors is supplied. Repatriation follows the standard route with no special restriction stated.

The Specialised Investment Fund Regulation 2075 lists non-resident Nepalis among the categories that may hold units in a Nepali private fund, alongside Nepali citizens, domestic institutions, foreign persons and entities, and bilateral and multilateral institutions.

Separately, public issues carry a ten percent reservation for Nepalis employed abroad, applied for through remittance accounts. From 1 Shrawan 2082 (17 July 2025) the application window for that tranche was cut from fifteen days to a minimum of four working days.

The Non-Resident Nepali Act 2064 (2008) confers further rights on NRNs, including in relation to investment and property. We could not obtain its text from any official source and therefore state none of its provisions here. Anyone relying on NRN status for a Nepali investment should get the Act itself rather than a summary.

Routes that work

Setting aside section 10, three channels are operational for capital that originates outside Nepal.

Direct foreign investment in an unlisted company under FITTA, with an approval from the Department of Industry or the Investment Board depending on size, and recording with NRB. This is the mainstream route and it produces an unlisted holding.

Units in a specialised investment fund. The fund regulation admits foreign persons and entities and non-resident Nepalis as unitholders, subject to a minimum commitment per unitholder and a ceiling of 200 unitholders. The fund is Nepali, licensed by SEBON, and the foreign investor’s exposure is to units rather than to listed shares. The mechanics from the manager’s side are set out in Specialised Investment Funds.

A venture capital fund established under FITTA section 9. Available only to an institutional foreign investor willing to incorporate a Nepali company and obtain SEBON’s approval. This is the route that, on the face of the statute, also opens section 10.

What is actually operational

The distinction readers most need is between what has been said and what can be done.

Operational as at 26 August 2026: direct foreign investment into unlisted Nepali companies; foreign and NRN subscription for specialised investment fund units; the section 9 venture capital fund company; NRN participation in the foreign-employment tranche of public issues; and repatriation of dividends and sale proceeds through NRB’s fifteen-working-day process.

Not operational, on the published evidence: general foreign portfolio investment in NEPSE-listed securities. Section 10 exists in the statute. Its operative terms are left to be prescribed and we could find no published prescription. We could identify no record of any foreign investor registered with SEBON under section 10(1). Announcements about opening the secondary market to foreign investors have recurred over several years without a rule change that would let a foreign investor act on them.

Anyone told that Nepal has opened its stock market to foreign portfolio investors should ask a single question in reply: under which instrument, and has it been published in the Nepal Gazette? If the answer is a policy statement, a budget speech or a press briefing, nothing has changed.

Tax treatment of any gain, including the final-tax regime applied to listed share disposals at settlement, is dealt with in Capital Gains Tax and should be checked before a structure is chosen rather than after.

Sources

1. विदेशी लगानी तथा प्रविधि हस्तान्तरण ऐन, २०७५ (Foreign Investment and Technology Transfer Act 2075)

   Department of Industry, Government of Nepal · 2075 (2019); consolidation published by the Department of Industry · Tier 1 — Primary legal instrument

   Supports: The nine forms of foreign investment in section 2, including investment in a capital investment fund under section 9 and investment in listed securities through the secondary market under section 10; the text of section 9 permitting an institutional foreign investor to incorporate a company and, with SEBON approval, establish a venture capital fund with six-monthly reporting to the Department; the text of section 10 requiring SEBON registration, confining trading to securities of industries open to the investor, and leaving minimum purchase, investment limits, minimum holding period and a foreign currency reserve fund to be prescribed; the government's power to set a minimum investment amount by gazette notice under section 3(3); and the repatriation heads in section 20.

   Accessed 26 August 2026

2. Foreign Investment and Foreign Loan Management Bylaw — English text

   Nepal Rastra Bank, Foreign Exchange Management Department · English consolidation published by NRB; fourth amendment dated 2082.03.04 and fifth amendment dated 29 December 2025 are published in Nepali only · Tier 1 — Primary legal instrument

   Supports: The definition of foreign investment including investment in listed securities through the secondary market under FITTA section 10 and in a venture capital fund under section 9; the requirement of prior NRB approval for foreign investment involving a change of share ownership with an exemption for listed company investment (bylaw 4); the six-month recording requirement and seven working day decision (bylaw 5); repatriation of share sale proceeds and dividends with a 15 working day decision and the same-investor, same-country rule (bylaw 6); and the treatment of non-resident Nepalis as eligible foreign investors including foreign currency account opening (bylaw 11(2)).

   Accessed 26 August 2026

3. विशिष्टीकृत लगानी कोष नियमावली, २०७५ (Specialised Investment Fund Regulation 2075), with first amendment

   Securities Board of Nepal · 2075 (2018/19), first amendment 2077 · Tier 1 — Primary legal instrument

   Supports: That eligible investors in a specialised investment fund include bilateral and multilateral international institutional investors, foreign persons and entities, Nepali citizens and non-resident Nepalis, with a minimum commitment per unitholder and a ceiling of 200 unitholders.

   Accessed 26 August 2026

4. Securities Act, 2063 (2007) — English text

   Securities Board of Nepal · Authenticated 14 January 2007 · Tier 1 — Primary legal instrument

   Supports: The prospectus exemption for issues to fifty or fewer persons (section 30(2)), and that the Act itself contains no separate regime admitting foreign investors to the securities market.

   Accessed 26 August 2026

5. Central Depository Service Regulation, 2067 — English text

   Securities Board of Nepal · 2067 (2010/11) · Tier 1 — Primary legal instrument

   Supports: That a foreign institutional investor is among the categories permitted to hold shares in a central depository company under regulation 14, and that a beneficial owner account opened through a depository participant is the only way to hold a Nepali listed security.

   Accessed 26 August 2026

6. वार्षिक प्रतिवेदन आ.व. २०८१/८२ (Annual Report FY 2081/82)

   Securities Board of Nepal · Published 31 December 2025 · Tier 2 — Official publication

   Supports: The amendment effective 1 Shrawan 2082 (17 July 2025) shortening the application window for shares reserved for Nepalis employed abroad from 15 days to a minimum of four working days.

   Accessed 26 August 2026