The
branch office is defined as per Regulation of
Notification No. FEMA 22 /2000-RB dated 3rd May 2000 clause 2(c) as ―'Branch' shall have the meaning assigned to it in sub-section (9) of Section 2 of the
Companies Act, 1956 (1 of 1956), and as per the companies Act, 1956 ―branch office‖ in relation
to a company means—
any establishment
described as a branch by the
company; or
any
establishment carrying
on either the same or substantially the
same
activity as tha carried
on by the head office
of the company; or
any establishment engaged
in any production, processing or manufacture
As
per Sub-section (6) of Section 6 of the Foreign Exchange Management Act,
1999 the Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in India of a branch, office or
other place of business by a person resident outside India, for carrying on any activity relating to such branch,
office or other place of business.
The Branch office is governed by following regulation framed by Reserve Bank of India ―Foreign
Exchange Management (Establishment in India of branch or
office or
other place of business) Regulations,
2000 framed by way of Notification No.
FEMA 22 /2000-RB dated 3rd May 2000‖.
As per the notification mentioned above no person resident outside India shall, without prior
approval of the Reserve
Bank of India, establish in India a branch office or a project office or any
other place of business by whatever
name called.
An
application is required to be made to the Reserve Bank of
India in Form FNC. The application form shall be completed and submitted to the AD Category –
I bank
designated by the applicant for onward transmission to
the Chief General Manager-in -Charge,
Reserve Bank, Foreign
Exchange
Department, Foreign Investment
Division, Central Office, Fort, Mumbai – 400001.
The information required to be given
in form
1.
Full name and address of the applicant company/firm [State whether the applicant is a proprietary concern or partnership firm or limited company or public sector undertaking or any other organisation
2. Date
and Place of incorporation
/ registration
of the applicant company.
3. Details
of capital
of the applicant company
4. Brief
description of the activities of
the applicant company
5.
Value of goods imported
from and / or exported to India by
the applicant during each
of the last three years:
6. Particulars of existing
arrangements if any,
for representing the company
in India.
7. Particulars of the
proposed Branch/ Liaison
Office like activities
to be undertaken
and place
of establishment
Following Documents are required to be submitted along with
the Form:
1. Copy of the Certificate of Incorporation / Registration attested by the Notary Public in the
country of registration [If the original
Certificate is in a language
other than
in English, the
same may
be translated into English
and
notarized as above
and
cross
verified/attested by the
Indian Embassy/
Consulate
in the home country].
2. Latest
Audited
Balance sheet of the applicant
company.[If
the
applicants’
home country laws/regulations do not insist on auditing of accounts,
an
Account Statement certified
by a Certified Public
Accountant (CPA)
or any Registered Accounts
Practitioner by any name, clearly showing the net worth may
be submitted]
3. Bankers' Report from the applicant‘s banker in the host country
/ country of registration
showing the number of years the
applicant has had banking relations with
that
bank.
Permitted
activities
for
a branch in India of a person
resident
outside
India
As per Schedule I of Notification No. FEMA 22 /2000-RB dated 3rd May 2000 the following are the activities which
can be performed by
the Branch office in
India:
v Export/Import
of goods
v Rendering professional or consultancy
services.
v Carrying
out research work, in which the parent company is engaged.
v Promoting
technical
or
financial
collaborations
between
Indian
companies
and parent
or overseas group company.
v Representing the parent company in India and acting as buying/selling agent in
India.
v Rendering services in Information
Technology
and development of software
in
India.
v Rendering technical
support to
the products supplied by parent/group companies.
Restricted Activities
v The Branch office is prohibited
from expanding its activities or
undertake any new trading, commercial or industrial activity other
than that expressly approved by RBI.
v It is restricted
from accepting deposits in India
v Retail trading activities of any nature is not allowed
for a Branch Office in
India.
Acquisition of Immovable property
in
India
As per Foreign Exchange
Management (Acquisition and transfer of
immovable property in India)
Regulations, 2000 FEMA
21/2000-RB, dated
3-5-2000, the regulations to
provide for provision for acquisition and transfer of immovable property
in India a branch, office in India of a foreign.
company established with requisite approvals
wherever necessary, is eligible to
acquire immovable
property in India which is necessary for or incidental
to carrying on such
activity provided that all
applicable laws ,rules, regulations or
directions in force are duly complied with.
The
entity/concerned person is required to file a declaration
in Form IPI with the Reserve Bank, within
ninety days from the date of such acquisition.
Remittance of Profits
The Regulation Foreign Exchange Management (Remittance of Assets)
Regulations, 2000 provides
for
remittance of assets outside India. Regulation
6 of
the said notification deals with the branch office.It provides
that in case of
remittance of winding up proceeds of a branch/office in India of a person resident outside India, the application is
required to be made to the RBI
together with following documents namely:
(A) Copy of the Reserve Bank's permission for
establishing
the branch/office in India; (B)
Auditor's certificate:
(i) indicating
the manner
in which
the remittable
amount
has been arrived and
supported by a statement of assets and liabilities of the applicant, and indicating the
manner of disposal
of assets;
(ii) confirming that all liabilities in India including arrears of gratuity and other benefits
to employees etc. of the Liaison office have been either fully met or adequately provided for;
(iii) confirming that no income accruing from sources outside India (including proceeds
of exports) has remained unrepatriated
to India;
(C) No-objection
or Tax clearance
certificate from Income-Tax
authority for the remittance; and
(D) Confirmation from the applicant that no legal proceedings in any Court in India are pending and
there is no legal impediment to the remittance.
