Opening of Project Office by Foreign Company

Any foreign company that has obtained a contract from the private or government sector is liable to establish a project office in India. It is essential that the project must be done in India. Any foreign company can open a project office permanently or temporarily, depending upon the project. However, it is essential to complete the registration with ROC and RBI. Project office registration is only obtainable if all the conditions are met.

1) A photocopy of a certificate of incorporation.

2) Current audited balance sheet of the contender entity.

3) Memorandum of association and AOA attested by the public notary of India.

4) Photocopy of purpose from the board of the overseas company that states the goals of Project office registration in India.

5) Evidence that displays that any multi-lateral international monetary institution backs the project office; if the Indian entity has obtained term loan, then they have to show documental proof from the financial institution from bank of India.

6) A copy of banker's report that states the company's term with bank.

7) Letter of officials from the parent company in regard to local representatives.

8) All the details of the activities to be conducted from the project office in India.

9) Proof of residence of the authorized personnel.

10) Copy of passport.

11) A report that states that the company will open a bank account in India.

Reserve Bank route-If the main business of a foreign entity falls under the criteria, where 100% Foreign Direct Investment is possible, then the company has to seek reserve bank route

Government route- If the main business of the company falls under the criteria where 100% Foreign Direct investment is not possible, then the company has to seek the Foreign government route. In such cases, the application is reviewed by RBI along with the government of India.

1) Consent from RBI to set up a project office.

2) Memorandum of association and AOA of the overseas company.

3) A certified copy of certificate of insurance.

4) Authenticated copy of power of attorney that states the name of an individual residing in India should also state that the person is responsible for accepting any notice on company's behalf.

5) Specifics about all the directors of the company.

6) KYC details of the stakeholders holding more than 10% equity in the applicant entity.

There are usually various steps involved. However, the crucial steps are

1) Legalization of the documents submitted by the applicant.

2) Filing the application with the reserve bank of India along with the AD bank.

3) KYC authentication with banker of the applicant company.

4) Obtaining Approval from the RBI for the project office registration.

5) Registration of the applicant company with registrar of companies.

6) Obtaining other registration and licenses. 

Any foreign country that wants to set up a project office in India must have:

1) A contract of the project from any Indian Company.

2) Project clearance.

3) Overseas funding.

4) Indian Funding.

Yes, it is possible to Upgrade a LO into BO. But the bank account must be re-designed as a BO account. 

No, it is not necessary to report to the police authorities. If in case a LO/BO needs to open more than one bank account, they are liable to acquire authorization from the Reserve Bank of India through AD-1 bank. The entity should also provide an explanation of opening an additional account.

All the credits made to the account must represent that the funds are from the head office through proper banking channels. The amount that credits must meet all the expenses of the project office. As per the contract, no extra amount should credit to the account without prior permission of RBI. Similarly, all the debits in the accounts can only be done when the company meets the local expenses of the offices. It also includes intermittent, remittances that are pending for the completion of the project. 

Furthermore, all the intermittent, remittances or the AD must match the documentary evidence of the transactions. The following are the documents required:

a certificate by an auditor or chartered accountant that states that sufficient provisions are made to meet all the liabilities of India, including the Income Tax.

An undertaking from the project office that clearly states that the remittances that are pending will not affect the completion of the project in India; if there are any remittances found for meeting any requirements, then that would meet by inward remittance from overseas. 

The BO/PO of any foreign entity registered as a project office can acquire a property in India. However, they must use property for their own use. They cannot use the property for leasing or renting. But if there any overseas entities from countries like Pakistan, Bangladesh, Srilanka, Iran, Afghanistan, Macau, China, and Hong Kong, they must seek the Approval of the reserve bank of India along with the Indian government. All the BO/PO/LO has general permissions to carry out activities permitted by the government. 

If any designated AD category-1 bank finds any adverse reporting by the auditor, they will immediately report it to India's reserve bank.

Yes, the AD bank can approve the transfer of assets of PO to any third party resident.