TMI BlogForeign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016X X X X Extracts X X X X X X X X Extracts X X X X ..... ent (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016. b. They shall come into force from the date of their publication in the Official Gazette. 2. Definitions In these regulations, unless the context otherwise requires a. 'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999) . b. Authorised Dealer means a person authorised as an authorised dealer under sub-section (1) of Section 10 of the Act . c. 'Foreign company' means a body corporate incorporated outside India and includes a firm or other association of individuals. d. 'Branch Office' in relation to a company, means any establishment described as such by the company. e. 'Liaison Office' means a place of business to act as a channel of communication between the principal place of business or Head Office or by whatever name called and entities in India but which does not undertake any commercial /trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel. f. 'Project Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liaison office in India provided it meets the following criterion: i. For Branch Office - a profit making track record during the immediately preceding five financial years in the home country and net worth of not less than USD 100,000 or its equivalent. ii. For Liaison Office - a profit making track record during the immediately preceding three financial years in the home country and net worth of not less than USD 50,000 or its equivalent. Provided that a person resident outside India that is not financially sound and are subsidiaries of other companies may submit a Letter of Comfort (Annex A) from their parent company subject to the condition that the parent company satisfies the prescribed criterion for net worth and profit. b. Permissible activities A person resident outside India permitted by the Reserve Bank under these Regulations to establish a branch or liaison office in India may undertake or carry on any activity specified in Schedule I or II (Annex B), as the case may be, but shall not undertake or carry on any other activity unless otherwise specifically permitted by the Reserve Bank. c. Application form A person resident outside India desirin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enture / Wholly Owned Subsidiary in conformity with the extant Foreign Direct Investment policy. e. Additional offices A person resident outside India desiring to establish additional branch office or liaison office may submit to the Authorised Dealer Category-I bank a fresh FNC Form along with the justification for the need for additional office/s. f. Project office I. 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 i. the project is funded directly by inward remittance from abroad; or ii. the project is funded by a bilateral or multilateral International Financing Agency; or iii. the project has been cleared by an appropriate authority; or iv. 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, i. 'a bilateral or multilateral International Financing Agency' means the World Bank or the International Monetary Fund or similar other body. ii. Public Financial Institution is a public financial in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any liability in India will be met by inward remittance from abroad. j. Acquisition of property Acquisition of property by branch office/project office shall be governed by the guidelines issued under Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations. k. Transfer of assets A person resident outside India permitted under these Regulations to establish a branch office or liaison office or project office may apply to the concerned Authorised Dealer Category-I bank for transfer of its assets to a Joint Venture/Wholly Owned Subsidiary or any other entity in India. Authorised Dealer Category-I bank shall be guided by the instructions laid down by Reserve Bank in this regard. l. Annual Activity Certificate (AAC) The branch office/liaison office may submit the Annual Activity Certificate (Annex D) as at the end of March 31 along with the audited financial statements including receipt and payment account on or before September 30 of that year. In case the annual accounts of the office are finalized with reference to a date other than March 31, the AAC along with the audited financial statements may be submitted wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject office or any other place of business in India shall require prior approval of Reserve Bank in the following cases where a. the applicant is a citizen of or is registered/incorporated in Pakistan; b. 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; c. the principal business of the applicant falls in the four sectors namely Defence, Telecom, Private Security and Information and Broadcasting: Provided that 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. d. The applicant is a Non-Government Organisation, Non-Profit Organisation, Body/ Agency/ Department of a foreign Government. Such applications shall be forwarded to the Reserve Bank, Foreign Exchange D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. Promoting technical/ financial collaborations between parent / group companies and companies in India. iv. Acting as a communication channel between the parent company and Indian companies. Annex C Form FNC [See Regulation 4 (c)] [This application form shall be completed and submitted to the AD Category-I bank designated by the applicant along with the documents mentioned in item (viii) of the Declaration.] Part I No. Details Particulars 1. i. Full name and address of the applicant ii. Date and Place of incorporation / registration iii. Telephone Number(s) iv. Fax Number(s) v. E-mail ID 2 i. Details of capital ii. Paid-up capital iii. Free Reserves/Retained earnings as per last audited Balance Sheet/Financial Statement iv. Intangible assets, if any 3 Brief description of the activities of the applicant 4 i. Value of goods imported from and / or expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr.No. Full name of Board of Directors and Key Executives (wherever applicable) Present position held with date (since when) Date of Birth Parentage Present and permanent address Nationality Passport Nos. and issue date Contact address and telephone number III. Details of shareholders of applicant company (all firms/companies/entities/individuals having shareholding more than 10 % ) Sr. No. Full Name Parentage Father/ Mother Date of Birth Permanent Address Present Address Present position held Nationality (if holding dual nationality, both must be clearly mentioned) % of shares held in the company IV. Details of criminal cases, if any, against the company / Director (s) for which security clearance is sought a. Name, address and registration number of the company : b. Name and address of owners, promoters and directors of the company : 1. ____________________________ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not insist on auditing of accounts, an Account Statement certified by a Certified Public Accountant (CPA) or any Registered Accounts Practitioner by any name, clearly showing the net worth may be submitted ] c. 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. d. Power of Attorney in favour of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC. (Signature of Authorised Official of the Applicant Company) Name: Designation: Place: Date: Annex D Annual Activity Certificate (See Regulation 4(l)] To whomsoever it may concern This is to certify and confirm that during the period from ___________to _________, the branch office/liaison office/ project office/s with PAN No. ------------- (wherever applicable) of M/s__________ , UIN-_______ (wherever applicable) has/ have undertaken only those activities that have been specifically permitted by the Reserve Bank/ Authorised Dealer Category-I bank vide its approval letter/s No/s. ___________________dated ___________and has/have compl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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