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.
Where the primary business of foreign company falls under the criteria where 100 percent Foreign Direct Investment (FDI) is allowed.
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.
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.
Make sure that the project has been approved by the appropriate and recognized authorities.
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.
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.
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.
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.
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.
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.
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.
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.
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).