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Legal Update on Amendments to the Privatization Act

Wednesday - Jan 22, 2025 (Updated: Apr 20, 2025)
Business Law
The Federal Parliament of Nepal is currently not in the session. Consequently, the Government of Nepal has promulgated four Ordinances, which have been approved by the President and published in the Nepal Gazette on Poush 29, 2081 (13 January 2025)
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Understanding the New Amendments to Nepal's Privatization Act

In a significant development for Nepal's economic policy, the Government of Nepal has introduced several amendments to the Privatization Act through the Privatization (First Amendment) Ordinance, 2081. These changes come at a time when the Federal Parliament is not in session, leading to the promulgation of ordinances by the President, approved on Poush 29, 2081 (13 January 2025).

One of the key amendments is the renaming of the "Privatization Act, 2050" to the "Public Enterprise (Government Investment) Management Act, 2050." This change reflects a shift towards a more nuanced management of public investments rather than straightforward privatization. The ordinance introduces an Executive Committee to work alongside the existing Privatization Committee. This new body is tasked with executing decisions, monitoring enterprises, managing public investments, and even registering revenue taxes linked to these enterprises.

Further, the ordinance establishes a Management Unit to support both the Privatization and Executive Committees. This unit will include experts on a contractual basis from various governmental departments, enhancing the technical capabilities for implementing these reforms.

The amendment also revises how management contracts and leases are handled, ensuring that any involvement of the private sector requires thorough evaluation and approval processes, aiming to increase transparency and accountability.

Penalties for non-compliance with the new regulations have also been stiffened. Where previously violators could face up to two months imprisonment or a fine of NPR 5,000, the fine has now been raised to NPR 100,000, highlighting the government's commitment to stringent enforcement.

These amendments are designed to foster a more transparent, efficient, and accountable system for managing public enterprises, potentially enhancing Nepal's investment climate by encouraging more private sector participation.

Contributors

  • Profile Image of Narayan Chaulagain

    Narayan Chaulagain
    Managing Partner

  • Profile Image of Alangkrita Upadhayay

    Alangkrita Upadhayay
    Associate

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Business Law

Infinity & Partners offers comprehensive corporate governance support in Nepal, focusing on corporate compliance, education law, employment law, foreign investment, infrastructure, information technology, intellectual property, private equity, and taxation. Our services include regulatory compliance, legal advisory for educational institutions, foreign investment facilitation, tax dispute management, and guidance for infrastructure projects and private equity ventures.
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Dispute Resolution

Infinity & Partners provides comprehensive dispute resolution services in Nepal, specializing in both litigation and arbitration across various legal areas, including corporate and constitutional matters. The firm offers expert representation, document preparation, and strategic advocacy for complex disputes in both domestic and international contexts.
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Legal Reform

Infinity & Partners offers expert legal reform advisory in Nepal, specializing in commercial law, law drafting, policy development, and regulatory alignment with global best practices for government and local authorities.
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Civil Law

Infinity & Partners offers comprehensive legal services in Nepal, specializing in civil law, family law, and real estate law under the Muluki Civil Code, 2018. Our expertise includes contract disputes, marriage registration, property division, and land acquisition, ensuring clients navigate the legal landscape effectively.
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