Recordal of IP License Agreements for Repatriation of Royalties
How recording an IP licence at the Department of Industry connects to paying royalties abroad — the recordal procedure, the NRB/banking layer, and structuring the agreement to survive both.
A licence agreement does two jobs in Nepal: it authorises use of the IP, and — through the banking layer — it is the basis on which royalties can actually leave the country. The first job is contract; the second runs through recordal at the Department of Industry and Nepal Rastra Bank's foreign-exchange rules.
Licensors and licensees who separate the two jobs lose time and money. This guide connects them.
In short
An IP licence in Nepal is recorded at the Department of Industry under Section 21D (fee NPR 2,000 per mark for trademarks; NPR 5,000 patents, NPR 3,000 designs), on the agreement plus corporate documents and POA. Recordal evidences the licence publicly, supports enforcement and non-use defence (licensee use accrues to the proprietor), and — combined with approval under the Foreign Exchange (Regulation) Act framework and Nepal Rastra Bank processes — forms part of the documentation chain banks require for royalty remittance abroad. Structure the agreement with defined scope, royalty basis and terms compliant with FERA/NRB practice, record it, and align both registers before the first remittance.
Two registers, one agreement
The licence passes through two gates. The IP register: Section 21D provides for recording licences of registered IP at the Department of Industry — the recordal that makes the licensee's use attributable to the proprietor, visible to third parties, and usable in enforcement. The exchange-control layer: remitting royalties abroad is a foreign-exchange transaction governed by the Foreign Exchange (Regulation) Act and administered through Nepal Rastra Bank and the banking system — where the licence agreement, its approval trail and the underlying IP registration are what the bank examines.
The recordal is not the remittance licence by itself — but it is the document that ties the payments to a registered right and a real licensee, which is the substance the exchange-control layer wants to see.
- IP register: Section 21D recordal at the DOI — NPR 2,000 per mark (TM)
- Exchange layer: FERA/NRB process through the banks
- Recordal ties royalties to a registered right — the substance remittance needs
Legal references
- Patent, Design and Trade Mark Act, 2022 (1965) — English translation (PDF) — WIPO Lex
- Department of Industry — Industrial Property Section — Government of Nepal
The recordal procedure
The filing set is compact: the licence agreement (defining the marks/rights, scope, territory, term and royalty basis), the registration certificate(s), both parties' corporate documents, and a POA where an agent files. The Department records the licence against the register entry — the endorsement that makes the licence publicly visible.
Drafting choices that prevent friction later: identify the IP by registration number and class; define the royalty basis concretely (percentage of net sales, per-unit, lump sum); align the term with the registration's renewal calendar; and address quality control — the supervision right that keeps the licence a genuine trademark licence rather than a naked one.
- Agreement + certificates + corporate papers + POA
- Identify rights by number and class; royalty basis concrete
- Quality control: the clause that keeps the licence real
The remittance layer
Royalty payments abroad run through the licensee's bank under NRB's foreign-exchange procedures: the bank reviews the licence agreement, the recordal and related approvals, and processes the remittance within the applicable limits and tax treatment. Three practical alignments make the chain smooth. The agreement's royalty clause should read like a payment schedule, not a negotiation — banks process concrete formulas. The withholding-tax position on royalties should be confirmed with tax advisers before the first payment. And the IP registration underlying the licence must be current — a lapsed registration undermines both the licence and the remittance trail.
For franchise and technology-transfer arrangements, the same chain runs alongside FITTA's technology-transfer framework — the investment-side approval and the IP-side recordal interlock, and the sequence covered in our FDI guide applies.
- Bank chain: agreement + recordal + approvals → remittance
- Concrete royalty formulas; confirm withholding tax early
- Current registrations are the foundation — renew before they lapse
Legal references
- Department of Industry — Industrial Property Section — Government of Nepal
What recordal buys beyond remittance
Even where royalties never cross a border, recordal earns its NPR 2,000: licensee use accrues to the proprietor — decisive under Section 18C's one-year use rule for registrations the proprietor does not personally use; standing and credibility in enforcement, where the recorded licence shows the market is legitimately served; and transaction clarity in diligence, where recorded licences are assets and unrecorded ones are questions.
The unrecorded licence, by contrast, is invisible where it matters most: to the Department, to a court assessing use, and to an acquirer valuing the brand. Recording is cheap; being unrecorded is expensive.
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This article is general information, not legal advice.