Approval to establish project office in india

A foreign company may open project office/s in India provided it has secured from an Indian company, a contract to execute a project in India, and

1. the project is funded directly by inward remittance from abroad; or
2. the project is funded by a bilateral or multilateral International Financing Agency; or
3. the project has been cleared by an appropriate authority; or
4. a company or entity in India awarding the contract has been granted term loan by a Public Financial Institution or a bank in India for the Project.

Explanation:

For the purpose of this Regulation,

1. ‘a bilateral or multilateral International Financing Agency’ means the World Bank or the International Monetary Fund or similar other body.
2. “Public Financial Institution” is a public financial institution as defined in Section 4A of the Companies Act, 1956.

A person from any country other than Pakistan who has been awarded a contract for a project by a government authority/ Public Sector Undertaking may open a bank account with an Authorised Dealer Category-I bank without any prior approval from the Reserve Bank.

‘Foreign company’ means a body corporate incorporated outside India and includes a firm or other association of individuals.

Application to AD category-I Bank for opening of Project Office

1. A person resident outside India desiring to establish a branch office or a liaison office or a project office or any other place of business in India shall submit an application in Form FNC to an Authorised Dealer Category-I bank
2. Bank may, subject to the provisions of Regulation 5, grant approval as per the directions and/or guidelines issued by the Reserve Bank in this regard.
3. In case no office is opened by the person resident outside India within six months from the date of approval letter, the approval for establishing the office in India shall be cancelled.
4. In cases where the person resident outside India is not able to open the office within the stipulated time frame due to reasons beyond their control, the Authorised Dealer Category-I bank may consider granting extension of time for setting up the office by a further period of six months.
5. Any further extension of time shall require the prior approval of the Reserve Bank in this regard.

Information and Documents required along with application

• Name and address of applicant along with registration and contact details
• Details of capital and free reserves as per last audited balance sheet
• Description of the activities of the applicant
• Value of goods imported or exported form/to India
• Details of bankers in home country
• For Project-Date of award, Awarding authority, amount of contract, Tenure of project office, Nature of project, Address of project office.
• Copy of the Certificate of Incorporation / Registration; Memorandum of Association and Articles of Association attested by the Notary Public in the country of registration. [If the original Certificate is in a language other than in English, the same may be translated into English and notarized as above and cross verified/attested by the Indian Embassy/ Consulate in the home country]
• Bankers’ Report from the applicant’s banker in the host country / country of registration showing the number of years the applicant has had banking relations with that bank.
• Power of Attorney in favour of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC.

Additional information and documents also required if application falls under regulation 5

Prior approval of RBI required in below cases (Regulation 5)

1. the applicant is a citizen of or is registered/incorporated in Pakistan;
2. the applicant is a citizen of or is registered/incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a liaison, branch or project office in Jammu and Kashmir, North East region and Andaman and Nicobar Islands;
3. the principal business of the applicant falls in the four sectors namely Defence, Telecom, Private Security and Information and Broadcasting:

Provided that approval of the Reserve Bank of India is not required in case where Government approval or license/permission by the concerned Ministry/ Regulator has already been granted. Further, in the case of proposal for opening a project office relating to defence sector, no separate reference or approval of Government of India shall be required if the said non-resident applicant has been awarded a contract by/entered into an agreement with the Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings.

Who can open Project office without approval of Reserve bank of India?

1. A banking company resident outside India shall not require any approval under these Regulations for establishing any office in India if such company has obtained necessary approval under the provisions of the Banking Regulation Act, 1949.
2. An insurance company resident outside India shall not require any approval under these Regulations for establishing any office in India if such company has obtained approval from the Insurance Regulatory and Development Authority established under section 3 of the Insurance Regulatory and Development Authority Act, 1999.

ROC filing after opening of Project office

Every foreign company shall, within 30 days of establishment of its project office in India submit the following documents along with Form-FC-1:

1. Attested copy of approval from the Reserve Bank of India under Foreign Exchange Management Act or Regulations, and also from other regulators, if any, approval is required by such foreign company to establish a place of business in India or a declaration from the authorised representative of such foreign company that no such approval is required.
2. Certified copy of the charter, statutes, or memorandum and articles of the company or other instrument constituting or defining the constitution of the company.
3. List of directors and secretary of the foreign company.
4. Power of attorney or board resolution in favor of the authorized representative(s).

Where any alteration is made or occurs in the document delivered to the Registrar for registration the foreign company shall file with the Registrar, a return in Form FC-2 within a period of thirty days from the date on which the alteration was made or occurred.

Registration with State Police Authorities

A person from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau opening a branch office or a liaison office or a project office or any other place of business in India shall have to register with the concerned State Police Authorities. Copy of approval letter for ‘persons’ from these countries shall be marked by the AD Category-I bank to the Ministry of Home Affairs, Internal Security Division-I, Government of India, New Delhi.

Remittance of profit or surplus

Authorised Dealer Category – I bank may permit intermittent remittances by project offices pending winding up / completion of the project subject to submission of the following:

1. certified copy of the final audited project accounts;
2. the statutory auditor’s certificate showing the manner of arriving at the remittable surplus and confirming that sufficient provisions have been made to meet the liabilities in India including Income Tax, etc.; and
3. An undertaking from the project office that the remittance will not, in any way, affect the completion of the project in India and that any shortfall of funds for meeting any liability in India will be met by inward remittance from abroad.

Annual Activity Certificate (AAC)

AAC from a Chartered Accountant showing the project status and certifying that the accounts of the project office have been audited and the activities undertaken are in conformity with the general/ specific permission given by the Reserve Bank may be submitted by the project office to the designated Authorised Dealer Category-I bank.