Foreign companies sometimes incorporate an entity in India to execute a specific project. However, as soon as an entity gets incorporated, a series of legal compliances begin. Therefore, in order to facilitate such foreign companies to easily enter and exit India, the concept of a project office was introduced. What is a project office and how can a foreign company register a project office in India? Let’s find out!

What is a Project Office?

Foreign companies seeking to establish a presence in India for specific projects can do so through Project Office Registration. A project office simply means a place of business for a foreign company in India executing a specific project. But it excludes the liaison office. The project office is an ideal choice for companies looking to expand in the Indian market. Usually, foreign companies engaged in installations or turnkey projects set up project offices in India.

How to Set up a Project Office in India?

It is important to get your project office registered with the Reserve Bank of India (RBI) and the Registrar of Companies (ROC). It represents the interest of the foreign company that is undertaking projects in India and therefore, the project offices can undertake commercial activities, unlike liaison offices. For project Office Registration in India you need the best business consulting firm to fulfil the following eligibility criteria:

  1. The project shall be funded directly by inward remittances from abroad or
  2. The project has obtained clearances from the appropriate authorities or
  3. The project is funded by a bilateral or multilateral international financing agency or
  4. The company or the entity in India that is awarding the contract has been granted a term loan for the project by a bank or a Public Financial Institution in India

If the above conditions are satisfied, then the RBI may provide general permission for the project office registration in India. However, in certain situations, certain additional conditions shall be satisfied for establishing the project office. This includes prior approval of RBI if:

  1. The applicant is a citizen or is registered or incorporated in Pakistan or
  2. The applicant is a resident or registered or incorporated in Sri Lanka, Bangladesh, Iran, Afghanistan, Hong Kong, China or Macau and the application is filed for opening the project office in North Eastern Region, Jammu and Kashmir or Andaman and Nicobar Island or
  3. The applicant is engaged in the principal business of Defence, Private Security, Telecom or Information and Broadcasting

However, if the foreign company has obtained Government approval or permission/license from the concerned regulator or ministry, then no separate approval from RBI shall be required. Further, in case of the opening of the project office for a proposal in the defence sector, particular reference or approval of the Government of India shall not be required if the said non-resident is awarded a contract or has entered into an agreement with the Ministry of Defence or Defence Public Sector Undertakings or Service Headquarters.

Further, the following companies shall not be required to obtain any approval under these regulations:

  1. A banking company that is resident outside India if such company has obtained the necessary approvals under the provisions of the Banking Regulation Act, 1949
  2. An insurance company that is resident outside India if such company has obtained approval from the Insurance Regulatory and Development Authority of India (IRDAI) 

ROC Filing after Opening the Project Office

The company shall file Form FC-1 with the Registrar of Companies (ROC) along with the following documents within 30 days after the Project Office Registration in India:

  1. Attested copy of the approval from the Reserve Bank of India and other regulators, if required or a declaration from the authorised representative of the foreign company that no such approval is required for Project Office Registration in India.
  2. Certified copy of the charter, statutes, memorandum and articles of association of the company that defines the constitution of the company
  3. Board resolution or power of attorney in favour of the authorised representative
  4. List of all the directors and secretaries of the foreign company

In case any alteration is made or it occurs after delivering the documents to the registrar for registration. The foreign company shall file Form FC-2 with the registrar within 30 days of which the alteration being made.

Other Compliances

If the person opening the project office is from Sri Lanka, Bangladesh, China, Iran, Afghanistan, Macau and Hong Kong, then he shall register with the concerned State Police Authorities. Further, the copy of the approval letter for persons from these countries shall be marked by the AD Category-I bank to the Internal Security Division-I of the Ministry of Home Affairs.

Further, an Annual Activity Certificate (AAC) shall also be obtained from a Chartered Accountant disclosing the project status and certifying that the accounts of the project office have been audited. Further, it shall also state that the activities undertaken in the project are in conformance with the specific or general permission given by the RBI. Such a certificate should be submitted to the Authorised Dealer Category-I bank.

Documents Required For Project Office Registration in India

Following documents shall be required while filing the application for Project Office Registration in India:

  1. Name and address of the applicant
  2. Latest audited financial statements
  3. Registration and contact details
  4. Details regarding the activities undertaken by the applicant
  5. Details of the bankers in the home country of the applicant
  6. Value of the goods imported into or exported from India
  7. Details of the project include but are not limited to awarding authority, date of award, nature of the project, tenure, address of the project etc.
  8. Constitution documents of the company including certificate of incorporation or registration, memorandum of association, and articles of association notarized by the Notary Public in the country of registration
  9. Banker’s report from the applicant’s bank in the host country disclosing the number of years of the relationship between the applicant and the bank
  10. Power of attorney in favour of the signatory of Form FNC in case the signatory is different from the Head of the overseas entity
  11. Any other document and information as may be required

Following were the requirements for setting up a project office in India. Therefore, if you are a foreign company looking for Project Office Registration in India, then feel free to consult the ASC Group.

Read More Article -  How to Set up a Branch Office in India

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