Equity Law and CO/ Merger and Acquisition
September 17, 2026
Equity Law & Co.

Mergers & Acquisitions in Nepal

You've probably read the headlines: two banks "merging," a company "acquiring" a smaller rival, or a group of struggling financial institutions being nudged together by the regulator. M&A sounds like something that happens in boardrooms far removed from ordinary life, but the process itself is surprisingly procedural once you break it down. This post walks through how a merger or acquisition actually gets done in Nepal, legally speaking no finance degree required.

Mergers & Acquisitions in Nepal

First, What Do We Actually Mean by "Merger" and "Acquisition"?

The two words get used interchangeably, but they describe different things.

A merger is when two or more companies combine to form one entity  either a brand-new company, or one company absorbing the other so only one survives. An acquisition is different: one company simply buys a controlling stake in another, usually by purchasing its shares or its assets. The target company might keep operating under its old name, or it might eventually be folded into the buyer.

Both are legal transactions in Nepal, not just business decisions, which means both are governed by specific laws  and both need government sign-off before they're final.

The Laws That Govern the Process

If you're going through this (or advising someone who is), these are the main pieces of legislation you'll keep running into:

  • Companies Act, 2063 (2006) - the general law for all companies, covering shareholder approval, asset transfer, and registration.
  • Merger Bylaws, 2068 (2011) - detailed procedural rules, originally built with the banking sector in mind.
  • Acquisition Bylaws, 2068 (2011) - the equivalent rulebook for acquisitions.
  • Merger and Acquisition Bylaws, 2073 (2017) - a later, more comprehensive update.
  • Bank and Financial Institutions Act, 2073 (2017) and the Nepal Rastra Bank Act, 2002 - for banks and financial institutions specifically, where Nepal Rastra Bank (NRB) is the primary regulator.

For a normal private or public company, the Office of the Company Registrar (OCR) is the main gatekeeper. For banks, finance companies, and other BFIs, NRB takes the lead, and its approval matters more than anyone else's.

The Step-by-Step Process for a Public Company

Step 1: The Special Resolution

It starts at a general meeting. Shareholders of the company (or companies) involved must pass a special resolution approving the merger, this typically needs a higher-than-usual majority, not just a simple show of hands. Nothing legally moves before this happens.

Step 2: Application to the Office of the Company Registrar

Within thirty days of that resolution, the company must file a formal application with the OCR. This isn't a one-page form, it comes with a stack of supporting documents (more on that below), and the OCR can refuse the merger outright if it looks like it would create a monopoly, restrict fair trade, or otherwise work against the public interest.

Step 3: Review by the Regulator

Once the application lands, the OCR studies it and is expected to make a decision within roughly three months. For banks and financial institutions, this is where NRB's own review process runs in parallel and in practice, NRB's approval is the one that really determines whether a bank merger goes ahead, since the sector is treated as too sensitive to leave to general company law alone.

Step 4: Approval , and the Legal Transfer

If approved, everything the merging company owned or owed  its assets, its liabilities, its contracts transfers automatically to the merged entity by operation of law. No individual contract needs to be separately reassigned. One important protection built into the law: shareholders who didn't vote in favour of the merger still have the right to have their shares independently valued and to be paid out proportionately, rather than being forced to simply go along with the outcome.

What You Need to Have Ready

Before any of this can be filed, the companies typically need to pull together:

  • The shareholders' resolution (or the relevant clause from the constitutional documents, for private companies)
  • The most recent audited balance sheet and auditor's report
  • Written consent from creditors of both companies
  • A proper valuation of movable and immovable assets, alongside a full list of liabilities
  • Decisions on what happens to existing employees and staff
  • A scheme of arrangement  essentially the blueprint for how the merger will actually work in practice

Asset and liability valuation isn't a rubber-stamp exercise either. It typically means going through both companies' balance sheets, income statements, and cash flow statements, and forecasting what the assets are realistically worth going forward not just what they're booked at.

Why Banks Play by Slightly Different Rules

If you've noticed that most Nepali M&A headlines involve banks and financial institutions, that's not a coincidence. NRB has, at various points, actively encouraged and at times effectively required weaker BFIs to merge with stronger ones, particularly after raising minimum capital requirements for banks in 2015. The idea was straightforward: fewer, larger, better-capitalised institutions are easier to supervise and less likely to collapse and hurt depositors.

For a bank merger, both institutions must jointly submit an application to NRB after their respective AGMs approve the move, along with the same broad category of documents, audited financials, creditor consent, and so on. NRB's involvement doesn't end at approval, either; it continues to supervise the merged entity through the post-merger integration period.

Foreign Buyers: One Extra Layer

If a foreign company or investor is the one doing the acquiring, there's an additional approval to think about under the Foreign Investment and Technology Transfer Act. Depending on the size and sector of the investment, that approval comes from either the Department of Industry or the Investment Board of Nepal. Certain sectors  manufacturing, IT, tourism, energy, and a few others allow full foreign ownership, but the approval step itself is never skipped, regardless of sector.

After the Ink Dries: Post-Merger Reality

Getting the approval isn't the finish line. What follows is usually a due diligence and compliance phase confirming that everything transferred correctly, that regulatory conditions are being met, and that nothing was missed in the paperwork. Only after that does the harder, less legal part begin: actually combining two workforces, two systems, and two cultures into one functioning organisation. That part isn't governed by statute, but it's often the difference between a merger that works on paper and one that works in practice.

The Practical Takeaway

If you're a business owner, an employee at a company going through this, or just someone trying to make sense of the news, the core idea is this: in Nepal, no merger or acquisition is final until a regulator says so  the OCR for most companies, NRB for banks and financial institutions, and sometimes an investment authority too, if foreign money is involved. Everything else  resolutions, valuations, creditor consents  exists to get the transaction to that approval stage cleanly and defensibly.

The rules exist for a reason: they protect minority shareholders who don't consent, creditors who are owed money, employees whose jobs are on the line, and   in the case of banks depositors who have no say in the boardroom decision but everything at stake in the outcome.