Penang and Nepal
Kedah for the establishment of a company trading post on the island of Penang. Captain Francis Light, a trader familiar with the East Indies, negotiated an agreement in which the sultan, who was surrounded by powerful adversaries, received a share of the trade profits and a defensive military alliance in exchange for Penang. Captain Light made representations to the sultan that the company had agreed to these terms, and occupied the island in August 1786. Cornwallis, concerned that the military aspects of the agreement might draw the company into conflicts with the sultan's adversaries or the Dutch, withheld approval of the agreement and requested the company's directors to decide the issue. When the company refused the military alliance, the sultan began blockading the island, renamed Prince of Wales Island by Light, and started in 1790 to accumulate troops with the view toward forcibly evicting the British. Cornwallis's brother William, then with the Royal Navy in the area, sailed from Penang to pick up troops in India for its defence. Captain Light, however, routed the sultan's forces in April 1791 before those reinforcements arrived. An agreement was then signed in which the company paid the sultan an annual stipend for the use of Penang. The fort that Captain Light constructed to protect Penang's principal town, George Town, became known as Fort Cornwallis in the earl's honour.
In 1792, King Rana Bahadur Shah of Nepal, with whom the company had established trade relations, requested military assistance. Shah had been expanding his territory militarily by taking over smaller adjacent principalities, but a 1791 invasion of Tibet was met with a stiff Chinese response. Cornwallis declined the king's request, sending instead Colonel William Kirkpatrick to mediate the dispute. Kirkpatrick was the first Englishman to see Nepal; by the time he reached Kathmandu in 1793, the parties had already resolved their dispute
A commercial treaty was signed with Britain in 1792 and again in 1816 after more than a year of hostilities with the British East India Company.