TMI BlogEstablishment of Branch Office (BO)/Liaison Office (LO) in India by Foreign Entities - Eligibility Criteria and Procedural GuidelinesX X X X Extracts X X X X X X X X Extracts X X X X ..... under two routes: Reserve Bank Route — Principal business of the foreign entity falls under sectors where 100 per cent foreign direct investment (FDI) is permissible under the automatic route. Government Route — Principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category and Non - Government Organisations / Non - Profit Organisations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Government of India, Ministry of Finance. 3. With the objective of achieving greater transparency, it has been decided to place the eligibility criteria and the procedural guidelines for establishment of BO and LO in India, in the public domain. Accordingly, the broad criteria regarding eligibility for opening of BO / LOs, documentation, etc., are given in Annex A and the scope of activities permitted and other procedural guidelines regarding functioning of the BO / LO in India are given in Annex B. 4. The application for establishing BO / LO in India may be forwarded by the foreign entity in Form FNC (Annex C) through a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same in the Annual Activity Certificate. 9. AD Category - I banks may bring the contents of this circular to the notice of their constituents/customers concerned. 10. Necessary amendments to the Foreign Exchange Management (Remittance of Assets) Regulations, 2000 notified vide Notification No.FEMA.13/2000-RB dated May 3, 2000 and the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000 notified vide Notification No.FEMA.22/2000-RB dated May 3, 2000 are being issued separately. 11. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (D. Mishra) Chief General Manager Annex A [Annex to A. P. (DIR Series) Circular No.23 dated December 30, 2009] Eligibility Criteria for Establishment of Branch / Liaison Office in India (i) Eligibility Criteria An application from a foreign entity to establish Branch / Liaison Office in India is considered on the basis of two criteria viz: basic and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parent company is engaged. Promoting technical or financial collaborations between Indian companies and parent or overseas group company. Representing the parent company in India and acting as buying/ selling agent in India. Rendering services in Information Technology and development of software in India. Rendering technical support to the products supplied by parent/group companies. Foreign airline/shipping company. Normally, the Branch Office should be engaged in the activity in which the parent company is engaged. Liaison Office Representing the parent company / group companies in India. Promoting export / import from / to India. Promoting technical/ financial collaborations between parent / group companies and companies in India. Acting as a communication channel between the parent company and Indian companies. (ii) Applications for additional offices or undertaking additional activities. Requests for establishing additional BO / LOs may be submitted to the Reserve Bank in the same manner, as indicated in Annex A. Fresh FNC form, duly signed by the authorized signatory of the foreign entity in the home country should be submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LO. b. Auditor's certificate : 1. indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets; 2. confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc. of the Office have been either fully met or adequately provided for; 3. confirming that no income accruing from sources outside India (including proceeds of exports) has remained unrepatriated to India. c. No-objection or Tax Clearance Certificate from the Income-Tax authority for the remittance. d. Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending against the BO/ LO and there is no legal impediment to the remittance. e. A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the BO /LO in India. Designated AD Category-I bank should ensure submission of all the above mentioned documents by the BO / LO bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d other countries by the applicant organization. (ii) Expected level of funding for operations in India. (iii) Copies of the bye-laws, Articles of Association of the organisation. DECLARATION We hereby declare that: i) The particulars given above are true and correct to the best of our knowledge and belief. ii) Our activities in India would be confined to the activities indicated in column 4(iii) (a) above. iii) If we shift the office to another place within the city, we shall intimate the designated AD Category - I bank and the Reserve Bank. In the event of shifting the Office to any other city in India, prior approval of the Reserve Bank will be obtained. iv) We will abide by the terms and conditions that may be stipulated by the Government of India / Reserve Bank / designated AD Category - I bank from time to time. v) We, hereby commit that we are agreeable to a report / opinion sought from our bankers abroad by the Government of India /Reserve Bank. vi) We understand that the approval, if granted, is from FEMA angle only. Any other approvals / clearances, statutory or otherwise, required from any other Government Authority/ Department/ Minis ..... 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