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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 ..... INDEX (A) General Criteria Liaison Office / Branch Office 2(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 Police Annex 4 Annual Activity Certificate Appendix List of Notifications/Circulars consolidated in this Master Circular Establishment of Liaison/Branch/Project Offices in India by Foreign Entities (A) GENERAL CRITERIA LIAISON OFFICE / BRANCH OFFICE A body corporate incorporated outside India (including a firm or other association of individuals), desirous of opening a Liaison Office (LO) / Branch Office (BO) in India have to obtain permission from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibility 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) from the Income Tax Authorities on setting up the offices in India. (B) LIAISON OFFICE b.1 Permissible Activities for a Liaison Office A Liaison Office (also known as Representative Office) can undertake only liaison activities, i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot earn any income in India. Expenses of such offices are to be met entirely through inward remittances of foreign exchange from the Head Office outside India. The role of such offices is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India: Export / Import of goods Rendering professional or consultancy services. Carrying out research work, in areas in which the parent company is engaged. Promoting technical or financial collaborations between Indian companies and parent or overseas group company. Representing the parent company in India and acting as buying / selling agent in India. Rendering services in information techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 new entities setting up LO/BO shall submit a report containing information, as per format provided in Annex 3 within five working days of the LO/BO becoming functional to the Director General of Police (DGP) of the state concerned in which LO/BO has established its office; if there is more than one office of such a foreign entity, in such cases to each of the DGP concerned of the state where it has established office in India; [ as amended vide AP (DIR) No.35 dated September 25, 2012 ] e.2. Branch Offices / Liaison Offices have to file Annual Activity Certificates (AAC) (Annex 4) from Chartered Accountants, at the end of March 31, along with the audited Balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r adequately provided for; and iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India. (c) No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s. (d) 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. (e) A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956 , in case of winding up of the Office in India. (f) Any other document/s, specified by the Reserve Bank while granting approval. The designated AD Category - I banks has to ensure that the BO / LOs had filed their respective Annual Activity Certificates with the Reserve Bank for the previous years, in respect of the existing Branch/Liaison Offices. Confirmation about the same can be obtained from the Central Office of the Reserve Bank in the case of BOs and from the Regional Office concerned in the case of LOs. Closure of such BO / LO has to be reported by the designated AD Category - I bank to the Reserve Bank (the Regional Office concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 responsibility of ensuring that only the approved debits and credits are allowed in the Foreign Currency Account shall rest solely with the branch concerned of the AD. Further, the Accounts shall be subject to 100 per cent scrutiny by the Concurrent Auditor of the respective AD banks. The Foreign Currency accounts have to be closed at the completion of the Project. g.3 Intermittent Remittances by Project Offices in India (i) AD Category I bank can permit intermittent remittances by Project Offices pending winding up / completion of the project provided they are satisfied with the bonafides of the transaction, subject to the following: The Project Office submits an Auditors' / Chartered Accountants Certificate to the effect that sufficient provisions have been made to meet the liabilities in India including Income Tax, etc. An undertaking from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roject Office has been audited and the activities undertaken are in conformity with the General / Specific permission given by the Reserve Bank. (iv) Additional Reporting Requirements : A copy of the report in Annex 4 shall be filed with the DGP concerned on annual basis along with a copy of the annual certificate, and also with the AD concerned. [as amended vide AP (DIR) No.35 dated September 25, 2012 ]] (H) Other General Conditions Applicable to Branch / Liaison / Project Offices of Foreign Entities in India (i) Without prior permission of the Reserve Bank, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China can establish in India, a Branch or a Liaison Office or a Project Office or any other place of business. (ii) Entities from Nepal are allowed to establish only Liaison Offices in India. (iii) Branch/Project Offices of a foreign entity are permitted to acquire immovable property by way of purchase for their own use and to carry out permitted/incidental activities. However, entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Bhutan or China are not allowed to acquire immovable property in India for a Branch / Proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fema.aspx Sr. No. Notification / Circular No. Date 1 Notification no. FEMA 22/2000-RB May 03, 2000 2 Notification No FEMA 13/2000-RB May 03, 2000 3 Notification No FEMA 21/2000-RB May 03, 2000 4 Notification no. FEMA 95/2003-RB July 02, 2003 5 Notification no. FEMA 102/2003-RB Oct. 03, 2003 6 Notification no. FEMA 134/2005-RB May 07, 2005 7 Notification no. FEMA 161/2005-RB Sept 18,2007 8 Notification no. FEMA 198/2009-RB Sept. 24, 2009 9 Notification no. FEMA 204/2009-RB April 05, 2010 10 A.P. (DIR series) Circular No. 3 July 06,2002 11 A.P. (DIR series) Circular No. 37 Nov. 15, 2003 12 A.P. (DIR series) Circular No. 58 Jan. 16, 2004 13 A.P. (DIR series) Circular No. 39 April 25, 2005 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) Circul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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