A foreign company is liable to set up a project office in India if a project has been assigned to them by the government or a private sector, provided that the project has to be executed in India only. The foreign company can open a project office either on a temporary basis or permanent basis. It is necessary to complete the registration process with RBI & ROC before commencing the operations of business. Project office registration cannot be done until all the requisite conditions are met.
For the purpose of registering a project office an application is filed with the Category 1 AD Bank, application is submitted with the prerequisite set of documents which includes the copy of the project agreement and an undertaking stating that the project shall be funded with inward remittance from abroad or via an arrangement with the bilateral or multilateral international finance agency. On receiving the application approval from RBI, the next step is to apply for project office registration with the ROC and the local police.
Reserve Bank of India has the authority to approve the project office of a foreign company in India. But before establishing project office in India, it is essential for the foreign company to get into a secured contract with an Indian company. RBI guidelines and Companies Act, 2013 has made it mandatory for a foreign company to acquire the certificate of registration with the Registrar of Companies (ROC) if the foreign company wants to establish a project office in India. It has to adhere to all the procedural formalities during the project office registration process.
Investment Entry Routes in India
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1
Reserve Bank Route
Where the primary business of foreign company falls under the criteria where 100 percent Foreign Direct Investment (FDI) is allowed.
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2
Government Route
Where the primary business of foreign entity falls under the criteria where 100 percent Foreign Direct Investment is not allowed. Applications from companies which comes under the category of Foreign Non-Government Organizations/Non-Profit Organizations/Government Bodies/Department are reviewed by the Reserve Bank of India along with the Ministry of Finance, Government of India.
Requirement for Project Office Registration in India
Formal Contact Of The Project
It is necessary for the foreign company to have a secured project in India and to come under a formal and legal agreement that will help in the financial statement related to the project.
Clearance Of Project
Make sure that the project has been approved by the appropriate and recognized authorities.
Foreign Funding
Make sure that the project is financially supported out of the inward remittance from the foreign country; else an International Financing Agency must back the project.
Indian Funding
In the case of zero foreign funding, it becomes the responsibility of the Indian entity to obtain the term loan from a Public Financial Institution or from a bank in India.
Documents Required for Project Office Registration in India
Documents Submitted To The RBI
- Certificate of Incorporation
- Memorandum of Association & Article of Association attested by Indian Embassy/Notary Public in the country of Registration
- Current Audited Balance sheet of the applicant company.
- A resolution by the foreign company’s Board stating the intention behind establishing the project office in India.
- Documentary proof that the Project Office is financially backed by the bilateral or multilateral International Financing Agencies OR the Indian Company has obtained term loan for the Project Office by the Financing Institution or Bank in India
- Banker’s report submitted by the company’s banker stating the company’s relationship with the bank.
- A letter of authority issued by the parent company in regard of the local representative
- Complete details of activities conducted in the project office in India
- Residence Proof of the authorized personnel
- Copy of passport of the authorized personnel
- A letter saying that the company will open a bank account in India
Documents Submitted To The ROC
- A permission from RBI to set up a project office in India
- MOA and AOA of the Foreign Company
- Notarized copy of COI
- A notarized copy of the power of attorney mentioning the name of the person residing in India and making him responsible to accept any notice or document on the behalf of the company
- A complete details of Directors of the Company
- Complete KYC of the shareholders holding more than 10% of Equity in the Applicant Company
Project Office Registration Procedure
Legalisation Of Documents
It is necessary to file all the documents of the foreign company with the RBI. List of documents include certificate of incorporation, MOA and AOA of the foreign company, board resolutions. Make sure to legalise all the documents of the authorized signatory of the foreign entity either via Indian Embassy or via apostilled as per Hague Convention.
Filing Of Application With RBI Through AD Bank
Parent office application for a foreign company is filed in FNC. The application is filed to the Reserve Bank of India via AD Bank (Authorised Dealer). The AD bank has an important role since all the communication to the RBI is dispelled through them.
Verification Of KYC From The Banker Of Parent Company
A request pertaining to the scrutiny of documents is sent to the foreign company’s banker. This process of sending request for the purpose of verification is also called swift based verification. Once the documents are confirmed from the foreign banker the application is preceded for the approval purpose. The RBI/AD can also ask for the additional documents as the case may be.
Approval Of RBI For Project Office Registration In India
Once the company is incorporated the next step is to open the company’s bank account, wherein foreign direct investment should reach within 180 days of forming the company with advance intimation to Banker.
Registration Of Project Office Of Foreign Company With The ROC
Once the approval is received from RBI for the establishment of Project Office in India, an application is filed for project office registration of the foreign company within 30 days of such approval. DIN is required in case of any Indian director and the digital signature is needed of the authorised signatory for the purpose of e-filing statutory forms with the ROC.
PAN Card, Tax Deduction Number And Bank Account Opening
Income Tax department of India issues a unique 10 digit number, known as PAN number. Once the PAN number is obtained, the branch office is eligible to open its bank account. And it is necessary for every taxpayer to obtain Tax Deduction Account Number to obey all the TDS norms.
Other Registration And Licenses
Once the Project Office comes in active state, there are different activities related to compliance which rely on the genre of the business and the state-specific laws which is applicable to all the entities indulging in the commercial activities. For example Goods and Services Tax (GST), Professional Tax Act, Provident Funds Act, Employee State Insurance Act (ESIC).