Legal Aspects of Starting a Tech Startup in Nepal: What You Need to Know

A tech startup is a new business that offers a technology-based product or service that solves a problem or meets a need in the market. Tech startups are usually innovative, scalable, and growth-oriented, and they often operate in emerging or disruptive sectors, such as e-commerce, fintech, edtech, healthtech, etc.

Starting a tech startup in Nepal can be an exciting and rewarding venture, but it also involves various legal aspects that need to be considered and complied with. These include:

•  Choosing the right legal structure: The legal structure of a tech startup determines its ownership, management, liability, taxation, and compliance requirements. In Nepal, there are different types of legal structures for businesses, such as sole proprietorship, partnership, private limited company, public limited company, cooperative, etc. Each of these has its own advantages and disadvantages, depending on the nature and size of the business. For tech startups, the most common and suitable legal structure is the private limited company, which is a separate legal entity that can have up to 50 shareholders, limited liability for its members, and flexible management and governance. To register a private limited company in Nepal, one needs to follow the procedures and requirements of the Office of the Company Registrar (OCR), which include submitting the memorandum and articles of association, obtaining the permanent account number (PAN), paying the registration fees, etc.

•  Obtaining the necessary licenses and permits: Depending on the type and scope of the tech startup's product or service, it may need to obtain various licenses and permits from different government agencies and authorities. For example, if the tech startup is involved in e-commerce, it may need to obtain an e-commerce license from the Department of Commerce (DOC), which regulates online transactions and consumer protection. If the tech startup is involved in fintech, it may need to obtain a payment service provider (PSP) or payment system operator (PSO) license from Nepal Rastra Bank (NRB), which regulates digital payments and financial services. If the tech startup is involved in healthtech, it may need to obtain a health service provider (HSP) license from the Department of Health Services (DHS), which regulates healthcare delivery and quality. These licenses and permits may have different eligibility criteria, application procedures, fees, validity periods, etc., that need to be followed by the tech startup.

•  Protecting intellectual property rights: Intellectual property rights (IPR) are the legal rights that protect the creations and innovations of the tech startup, such as its name, logo, slogan, domain name, software code, design, invention, etc. IPR can give the tech startup a competitive edge in the market and prevent others from copying or misusing its product or service. In Nepal, there are different types of IPR that can be registered and protected by different laws and agencies. For example:

•  Trademark: A trademark is a sign or symbol that distinguishes the goods or services of one business from those of others. A trademark can be registered under the Trademark Act 2059 (2002) at the Department of Industry (DOI), which grants exclusive rights to use and enforce the trademark for 10 years (renewable).

•  Patent: A patent is a right that protects an invention that is new, useful, and non-obvious. A patent can be registered under the Patent Design and Trademark Act 2022 (1965) at DOI, which grants exclusive rights to make, use, sell, or license the invention for 20 years (non-renewable).

•  Copyright: A copyright is a right that protects an original work of authorship that is expressed in a tangible form. A copyright can be registered under the Copyright Act 2059 (2002) at DOI or at Nepal Copyright Registrar's Office (NCRO), which grants exclusive rights to reproduce,

distribute, display, perform, or adapt the work for 50 years after the death of the author.

• Design: A design is a right that protects the shape, configuration, pattern, or ornamentation of a product. A design can be registered under the Patent Design and Trademark Act 2022 (1965) at DOI, which grants exclusive rights to use and enforce the design for 5 years (renewable up to 15 years).

•  Domain name: A domain name is a unique address that identifies a website on the internet. A domain name can be registered under the .np domain name registration policy at Mercantile Communications Pvt. Ltd., which is authorized by Nepal Telecommunications Authority (NTA) to register and administer .np domain names. A domain name can be registered for free for one year (renewable).

•  Complying with the relevant laws and regulations: As a tech startup, it is important to comply with the relevant laws and regulations that govern its product or service, as well as its general business operations. These may include:

•  Tax laws: A tech startup needs to comply with the tax laws of Nepal, such as the Income Tax Act 2058 (2002), the Value Added Tax Act 2052 (1996), the Excise Duty Act 2058 (2002), etc. These laws require the tech startup to file and pay various taxes, such as income tax, value-added tax, excise duty, etc., according to its income, turnover, expenses, etc. The tech startup also needs to obtain a tax clearance certificate from the Inland Revenue Department (IRD) every year.

•  Labor laws: A tech startup needs to comply with the labor laws of Nepal, such as the Labor Act 2074 (2017), the Social Security Act 2074 (2017), the Trade Union Act 2074 (2017), etc. These laws regulate the employment relationship between the tech startup and its employees, such as their rights, duties, benefits, welfare, etc. The tech startup also needs to register and contribute to the Social Security Fund (SSF) for its employees' social security benefits.

•  Consumer protection laws: A tech startup needs to comply with the consumer protection laws of Nepal, such as the Consumer Protection Act 2075 (2018), the Electronic Transactions Act 2063 (2008), etc. These laws protect the rights and interests of the consumers who use the tech startup's product or service, such as their right to information, choice, quality, safety, redressal, etc. The tech startup also needs to follow the standards and guidelines issued by the Nepal Bureau of Standards and Metrology (NBSM) for its product or service quality and safety.

•  Data protection and privacy laws: A tech startup needs to comply with the data protection and privacy laws of Nepal, such as the Right to Information Act 2064 (2007), the Privacy Act 2075 (2018), etc. These laws protect the personal data and privacy of the individuals who provide or receive the tech startup's product or service, such as their name, address, phone number, email, bank account, biometric data, etc. The tech startup also needs to obtain consent from the individuals before collecting, processing, storing, or sharing their personal data.

By following these legal aspects of starting a tech startup in Nepal, one can ensure a smooth and successful launch and operation of their business. However, it is advisable to consult a legal expert or a lawyer before starting a tech startup in Nepal, as they can provide more specific and detailed guidance and assistance on legal matters.