BRANCH OFFICE /LIAISON OFFICE/PROJECT OFFICE
As we know that now India is growing at a faster rate. The foreign Entities all over the world keen interested to establish their business or operation in India. There are many ways of establishment of offices of Foreign Entity in India like Branch office or Liaison office or Project office. There is a slight difference among them. Here, we will study the meaning and the other conditions required for the establishment of these offices in India by the Foreign Entity outside India.
Branch Office: Branch office engaged in the activities in which Parent Company is engaged.
Liaison Office: Liaison office represents its parent company or its group Companies in India and coordinate between parent Company and Indian Company.
Project office: Project office is established only for the specific project and it needs to be closed after the completion of that project.
ELIGIBILITY CRITERIA FOR APPROVAL OF BO/LO/PO
AD Category-I Bank approval:
Any Body corporate incorporated outside India.
- Registered in Pakistan;
- Registered in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau for opening a BO/LO/ PO in Jammu & Kashmir, North East region and Andaman and Nicobar Islands;
- Deals in business of Defence, Telecom, Private Security and Information and Broadcasting.
Exception: RBI approval is not required if permission from Government or concerned Regulator has been received;
Financially sound Track record:
PERMITTED ACTIVITIES FOR LO/BO/PO IN INDIA
|Branch Office||Liaison Office|
PROCEDURE FOR SETTING UP LO/BO/PO
- Application to be submitted in Form FNC (Annex B) to designated AD Category-I bank.
- The AD Category-I bank shall after due diligence satisfying itself and grant approval.
- The AD Category-I bank before issuing the approval letter shall forward a copy of the Form FNC along with the details to the General Manager, RBI for allotment of Unique Identification Number (UIN) to a Branch office or Liaison Office.
- Application of Foreign Bank and Insurance Companies directly examined by DBR, RBI, and IRDA. UIN for such representative offices is not required from RBI.
- The date of setting up of BO/LO/PO shall inform the designated AD Category-I bank.
EXTENSION OF VALIDITY:
- Liaison Office – Further 3 years
- No further extension for Non-Banking Finance Companies and entities engaged in construction and development sectors.
OPENING OF BANK ACCOUNT BY BO/LO/PO
- LO shall open the bank account to receive remittance from its Head Office Outside India;
- LO shall not maintain more than one bank account without prior approval of RBI;
- BO shall open the bank account for its operations in India;
- A foreign Entity from Pakistan need prior approval of RBI to open a bank account for project office in India;
- AD Category – I banks can open non-interest bearing foreign currency account for POs in India subject to the conditions.
ANNUAL ACTIVITY CERTIFICATE BY BO/LO/PO
AAC shall be submitted by BO/LO/PO each year at the end of 31st March alongwith required documents to the designated AD Category -I bank.
SALIENT FEATURES OF BO/LO/PO
- A BO/LO/PO is required to register with (ROCs) after establishes a place of business in India;
- The BOs/LOs shall obtain PAN on setting up of their office in India and report in the AACs;
- BO/LO/PO can change their existing AD Category-I bank;
- BOs/LOs/POs have general permission to carry out permitted activities from leased property subject to lease period not exceeding five years;
- Change in the name of the existing LO/BO may be permitted by the AD Category-I bank subject to certain conditions;
- Change in the Top Management of the BO/LO should be intimated to AD Category-I bank;
- No Foreign Law firm shall be permitted to open any LO in India.