The legal systems of Nepal is a mixture of Common Law and the Hindu Legal
concept. The uniqueness is the resulted of many influences, first of all, Nepal was not
colonised by a Western state, and the Hindu legal tradition therefore dominated all
areas of law until the middle of the 20th century. Since the 1950s there has been a
strong influence of Indian common law. It is probably for this reason that comparative
classifications that include Nepal see the legal system as a mixture of common law and
customary of Hindi concept. However, other mixtures mark the Nepali legal tradition.
French law inspired the ruler in the 19th century, and that influence can still be found in
the formal law. In addition, the plurality of Nepalese society made it necessary to
provide space for different customary regimes to coexist with the formal Hindu law.
When it comes to innovations within the legal system, including international law, the
different ingredients interact. The highest court inNepal is its supreme court which have
the power to regulates new law.
Under the most updated Law of Nepal, the Interim Constitution of Nepal (2007),
in aspect of doing business, there are two important Acts that investor should pay
attention in. The first commercial and company related act is Nepal Company Act, 1991,
including the preliminary, definitions, regulations, processes of establishment of
company, legal action and also the penalties. The Nepal Company Act, 1991, serve as
the definitions and a guide to register to do business in the country and also provides
laws and regulations to do so. The second act is the Nepal Industrial Enterprises Act,
1992, whereas, for the overall economic development of the country it is expedient for
industrial enterprises in a captivate manner through the increment in the productivity
the purpose of this act is to make industrial investment more congenial, straightforward
and encouraging, the act give more detailed and specific definitions in legal term of
enterprise and more regulations to control the growing industrialization.