TMI BlogMaster Circular on Establishment of Liaison / Branch / Project Offices in India by Foreign EntitiesX X X X Extracts X X X X X X X X Extracts X X X X ..... The Authorised Persons and the Authorised Dealer Category I banks may refer to respective circulars/ notifications for detailed information, if so needed. Yours faithfully, (A.K. Pandey) Chief General Manager INDEX (A) General Criteria Liaison Office / Branch Office (B) Liaison Office (C) Branch Offices (D) Application for Undertaking Additional Activities or Additional Branch / Liaison Offices (E) Reporting by Branch/Liaison Offices (F) Closure of Branch/Liaison Offices (G) Project Office (H) Other General Conditions Applicable to Branch / Liaison/ Project Offices of Foreign Entities in India Annex 1 FNC Annex 2 Format of the Letter of Comfort Annex 3 Format of report to DG of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, 6, Parliament Street, New Delhi-110 001, India, along with the prescribed documents including English version of the Certificate of Incorporation / Registration or Memorandum Articles of Association attested by Indian Embassy / Notary Public in the Country of Registration. Latest Audited Balance Sheet of the applicant entity. Applicants who do not satisfy the eligibility criteria and are subsidiaries of other companies can submit a Letter of Comfort from their parent company as per Annex -2, subject to the condition that the parent company satisfies the eligibility criteria as prescribed above. The designated AD Category - I bank should exercise due diligence in respect of the applicant s background, antecedents of the promoter, nature and location of activity, sources of funds, etc. and also ensure compliance with the KYC norms before forwarding the application together with their comments/ recommendations to the Reserve Bank. The Branch / Liaison offices established with the Reserve Bank's approval will be allotted a Unique Identification Number (UIN) ( www.rbi.org.in/scripts/Fema.aspx ). The BOs / LOs shall also obtain Permanent Account Number (PAN) fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quest under intimation to the Regional Office concerned of the Reserve Bank and to the General Manager, Foreign Exchange Department, Central Office Cell, Reserve Bank of India, New Delhi Regional Office, 6, Parliament Street, New Delhi-110 001, India, quoting the reference number of the original approval letter and the UIN. The application for extension of the validity period of the LOs of banks and entities engaged in insurance business has to be directly submitted to the Department of Banking Regulations, Reserve Bank and Insurance Regulatory and Development Authority (IRDA), respectively as stipulated by them, as hitherto. Further, no extension would be considered for LOs of entities which are NBFCs and those engaged in construction and development sectors (excluding infrastructure development companies). Upon expiry of the validity period, these entities have to either close down or be converted into a Joint Venture (JV) / Wholly Owned Subsidiary (WOS), in conformity with the extant Foreign Direct Investment policy. (C) BRANCH OFFICES c.1 Permissible Activities a). Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Activities or Additional Branch / Liaison Offices Requests for undertaking activities in addition to what has been permitted initially by the Reserve Bank may be submitted through the designated AD Category -I bank to the General Manager, Foreign Exchange Department, Central Office Cell, Reserve Bank of India, New Delhi Regional Office, 6, Parliament Street, New Delhi-110 001, India, justifying the need with comments of the designated AD Category - I bank. Requests for establishing additional BO / LOs may be submitted through fresh FNC form (Annex 1), duly signed by the authorized signatory of the foreign entity in the home country to the Reserve Bank of India as explained above. However, the documents mentioned in form FNC need not be resubmitted, if there are no changes to the documents already submitted earlier. If the number of Offices exceeds 4 (i.e. one BO / LO in each zone viz; East, West, North and South), the applicant has to justify the need for additional office/s. The applicant may identify one of its Offices in India as the Nodal Office, which will coordinate the activities of all Offices in India. (E) Reporting by Branch/Liaison Offices e.1. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Branch/Liaison Offices At the time of winding up of Branch/Liaison offices the company has to approach the designated AD Category - I bank with the following documents: Copy of the Reserve Bank's permission/ approval from the sectoral regulator(s) for establishing the BO / LO. Auditor s certificate- i) 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; ii) 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; and iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India. Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance. A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 2013, in case of winding up of the Office in India. Any other document/s, specified by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, such entities are required to apply to the Reserve Bank for prior permission to establish an office in India, whether Project Office or otherwise. [as amended vide AP (DIR) No.31 dated September 17, 2012] g.2 Opening of Foreign Currency Account AD Category I banks can open non-interest bearing Foreign Currency Account for Project Offices in India subject to the following: The Project Office has been established in India, with the general / specific permission of Reserve Bank, having the requisite approval from the concerned Project Sanctioning Authority concerned. The contract, under which the project has been sanctioned, specifically provides for payment in foreign currency. Each Project Office can open two Foreign Currency Accounts, usually one denominated in USD and other in home currency, provided both are maintained with the same AD category I bank. The permissible debits to the account shall be payment of project related expenditure and credits shall be foreign currency receipts from the Project Sanctioning Authority, and remittances from parent/group company abroad or bilateral / multilateral international financing agency. The responsibili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress / telephone number / fax number of the Project Office, Tenure of Project Office, Brief details of the Project undertaken, AD branch with whom the account has been opened and the foreign currency in which the account is opened, An undertaking to the effect that the Project Office is eligible to avail of the General Permission under Regulation 5(ii) to RBI Notification No.22/2000 RB dated May 3, 2000 read with Notification No. FEMA 95 dated July 2, 2003 showing the reason thereof. This Report shall be forwarded through the AD branch to the Regional Office concerned of the Reserve Bank of India within 2 months of establishment of the Project Office. (iii) The Project Office shall also submit to the AD branch on an annual basis , a Certificate from a Chartered Accountant showing the Project Status and certifying that the accounts of the Project Office has been audited and the activities undertaken are in conformity with the General / Specific permission given by the Reserve Bank. Additional Reporting Requirements: A copy of the report in Annex 3 shall be filed with the DGP concerned on annual basis along with a copy of the annual certificate, and also wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , depreciation till date, present book value or WDV value and sale consideration to be obtained. Statutory Auditor should also confirm that the assets were not re-valued after their initial acquisition. The sale consideration should not be more than the book value in each case. The assets should have been acquired by the LO/BO/PO from inward remittances and no intangible assets such as good will, pre-operative expenses should be included. No revenue expenses such as lease hold improvements incurred by LO/BOs can be capitalised and transferred to JV/WOS. AD bank to ensure payment of all applicable taxes while permitting transfer of assets. Transfer of assets to be allowed by AD banks only when the foreign entity intends to close their LO/BO/PO operations in India. Credits to the bank accounts of LO/BO/PO on account of such transfer of assets will be treated as permissible credits. (vi) Branch Offices are permitted to remit outside India profit of the branch net of applicable Indian taxes, on production of the following documents to the satisfaction of the Authorised Dealer through whom the remittance is effected a. A Certified copy of the audited Balance Sheet an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef description of the activities of the applicant. 4. i) Value of goods imported from and / or exported to India by the applicant during each of the last three years: a) Imports from India b) Exports to India ii) Particulars of existing arrangements if any, for representing the company in India. iii) Particulars of the proposed Liaison/ Branch Office: a) Details of the activities/ services proposed to be undertaken/ rendered by the office. b) Place where the office will be located. c) Phone number d) E-mail ID e) Expected number of employees (with number of foreigners) 5. i) Name and address of the banker of the applicant in the home country ii) Telephone Fax Number iii) E-mail ID 6. Any other information which the applicant company wishes to furnish in support of this application. 7. For Non-profit / Non-Government Organisations: (i) Details of activities carried out in the host country and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnex 2 FORMAT OF THE LETTER OF COMFORT The General Manager, Foreign Exchange Department Central Office Cell Reserve Bank of India New Delhi Regional Office 6, Parliament Street New Delhi- 110 001. Dear Sir, Sub: Application for establishment of Branch / Liaison Office in India by our subsidiary / group company, M/s_________________________ You may kindly refer to the application made by our subsidiary / group company, M/s_____________________________to your office for establishing Branch / Liaison Office in India. 2. In this connection, we, ______________________(the parent company) undertake to provide the necessary financial support for our subsidiary / group company's operations as a Branch / Liaison Office in India. Any liability that may arise due to the functioning of the Branch/Liaison Office in India will be met by us (the parent company), in case of inability on part of the Branch/Liaison Office to do so. 3. We are also enclosing the financial background of our company in the form of our latest Audited Balance Sheet / Account Statement certified by a Certified Public Accountant. Yours faithfully, ( ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 A.P. (DIR series) Circular No. 44 May 17, 2005 15 A.P. (DIR series) Circular No. 02 July 31, 2008 16 A.P. (DIR series) Circular No. 23 December 30, 2009 17 A.P. (DIR series) Circular No. 24 December 30, 2009 18. A.P. (DIR series) Circular No. 06 August 09, 2010 19 A.P. (DIR series) Circular No. 02 July 15, 2011 20 A.P. (DIR series) Circular No. 76 February 9, 2012 21. A.P. (DIR series) Circular No. 88 March 1, 2012 22. A.P. (DIR series) Circular No. 31 September 17, 2012 23. A.P.(DIR series) Circular No. 35 September 25, 2012 24. A.P. (DIR series) Circular No. 55 November 26, 2012 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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