Overview

A foreign company is responsible for setting up a project office in India if a project is handed over to them by the government or private sector, provided the project is to be executed in India. The foreign company may open a project office on a temporary basis or a permanent basis. It is necessary to complete the registration process with RBI  & ROC before commencing business operations. Project office registration cannot be done until all the prerequisites are met.

An application is filed with the Category 1 AD bank for the purpose of registering the project office, the application is presented with a pre-requisite set of documents, which includes a copy of the project agreement and an undertaking stating It is believed that the project will be funded. Inward remittances from abroad or through an arrangement with a bilateral or multilateral international finance agency. Upon approval of the application from RBI, the next step is to apply for Project Office registration with the ROC and the local police.

The Reserve Bank of India has the right to approve the project office of a foreign company in India. But before setting up a project office in India, it is necessary for the foreign company to obtain a secure contract with an Indian company. The RBI guidelines and the Companies Act, 2013 make it mandatory for a foreign company to obtain a certificate of registration if the foreign company wishes to set up a project office in India. The project is to follow all procedural formalities during the office registration process.

Investment Route in India

• Reserve Bank Route

  Where the primary business of a foreign company falls under the criteria where 100 percent foreign direct investment (FDI) is allowed.

• Government Route

  Where the foreign entity's primary business falls under the criteria where 100 percent FDI is not permitted. Applications of foreign non-governmental organizations / non-profit organizations / government bodies / companies falling under the category are reviewed by the Reserve Bank of India as well as the Ministry of Finance, Government of India.

Requirement

• Project Formal Contact

  It is necessary for the foreign company to have a secured project in India and come under a formal and legal agreement which will help in the financial statement related to the project.

• Project Approval

  Ensure that the project is approved by the appropriate and accredited authorities.

• Foreign Funding

  Ensure that the project is financially supported by inward remittances from a foreign country; Otherwise an international financing agency would have to return the project.

• Indian Funding

  In case of zero foreign funding, it becomes the responsibility of the Indian entity to get a term loan from a public financial institution or from a bank in India.

Registration Process

• Legalization of documents

  All documents of foreign company are required to be filed with RBI. The list of documents includes certificate of incorporation, MOA of foreign company and AOA, board resolution. Ensure all the documents of the authorized signatory of the foreign embassy either through the Indian Embassy or through the Hague Convention as inspired.

• Filing of application with RBI through advertisement bank

  The original office application for the foreign company has been filed at FNC. The advertisement is filed through the AD Bank (Authorized Dealer) to the Reserve Bank of India. Since all the RBI's communications have been routed through them, the AD bank has an important role.

• Verification of KYC from the banker of the parent company

  A request pertaining to the scrutiny of documents is sent to the foreign company’s banker. This process of sending request for verification purpose is also called SWIFT based verification. After the documents are confirmed with the foreign banker, the application is made for the purpose of approval. RBI / AD can also ask for 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

  After receiving approval from the Reserve Bank of India for the establishment of a project office in India, an application is filed for project office registration of a foreign company within 30 days of such approval. A DIN is required in the case of an Indian director and a digital signature of an authorized signatory is required for the purpose of e-filing statutory forms with the ROC.

• PAN card, tax deduction number and opening of bank account is

  The Income Tax Department of India issues a unique 10 digit number, known as PAN number. After receipt of PAN number, the branch office is eligible to open its bank account. And it is necessary for all taxpayers to obtain a tax deduction account number to follow all TDS norms.

• Other registrations and licenses

  After the project office is in active state, there are various compliance-related activities that depend on the style of business and state-specific laws that apply to all entities involved in commercial activities. For example Goods and Services Tax (GST), Professional Tax Act, Provident Fund Act, Employees State Insurance Act (ESIC).

Required Documents

Document submitted to RBI

• Certificate of Incorporation
• Memorandum of Association & Registration
• Article of the Union by the Indian Embassy / Notary Public in the country
• 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.
• Charter issued by the parent company regarding the local representative
• Full details of the activities conducted in the project office in India
• Residence proof of authorized personnel
• Copy of passport of authorized personnel
• A letter stating that the company will open a bank account in India

Documents submitted to ROC

• Permission from RBI to set up project office in India
• MOA and AO of foreign company
• Notary copy of COI
• A notarized copy of the Power of Attorney for mentioning the name of a person residing in India and making it responsible for accepting any notice or document on behalf of the company
• Full details of directors of the company
• Full KYC of shareholders holding more than 10% of the equity in the applicant company