FOREIGN EXCHANGE MANAGEMENT (ESTABLISHMENT IN INDIA OF BRANCH OR OFFICE
OR OTHER PLACE OF BUSINESS) REGULATIONS, 2000
Notification
No. 22 dated 3rd May 2000
G.S.R.408
(E), dated 3.5.2000- In exercise of the powers conferred by
sub-section (6) of section 6 of the Foreign Exchange Management Act, 1999 (42 of
1999), the Reserve Bank makes the following regulations to prohibit, restrict
and regulate establishment in India of a branch or office or other place of
business by a person resident outside India, namely:
i)
These Regulations may be called the Foreign Exchange Management
(Establishment in India of Branch or Office or other place of Business)
Regulations, 2000.
(ii)
They shall come into force on 1st day of June 2000.
In
these regulations, unless the context otherwise requires-
(a)
�Act� means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b)
�foreign company� means a body corporate incorporated outside India,
and includes a firm or other association of individuals;
(c)
�Branch� shall have the meaning assigned to it in sub-section (9) of
section 2 of the Companies Act, 1956 (1 of 1956);
(d)
�form� means a form annexed to these Regulations;
(e)
�Liaison Office� means a place of business to act as a channel of
communication between the principal place of business or head office by whatever
name called and entities in India but which does not undertake any commercial/
trading/ industrial activity, directly or indirectly, and maintains itself out
of inward remittances received from abroad through normal banking channel;
(f)
�Project Office� means a place of business to represent the interests
of the foreign company executing a project in India but excludes a Liaison
Office;
(g)
�Site Office� means a sub-office of the Project Office established at
the site of a project but does not include a Liaison Office;
(h)
the words and expressions used but not defined in these Regulations,
shall have the same meanings respectively assigned to them in the Act.
No
person resident outside India shall, without prior approval of the Reserve Bank,
establish in India a branch or a liaison office or a project office or any other
place of business by whatever name called:
Provided
that no approval shall be necessary for a banking company, if such company has
obtained necessary approval under the provisions of Banking Regulations Act,
1949.
No
person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or
China, without prior permission of the Reserve Bank, shall establish in India, a
branch or a liaison office or a project office or any other place of business by
whatever name called.
5.
Application to Reserve Bank for opening branch or liaison or project
office, etc.:
(i)
A person resident outside India desiring to establish a branch or liaison
office in India shall apply to the Reserve Bank, in Form FNC 1.
(ii)
Where a person resident outside India has secured from an Indian company
a contract to execute a project in India, and
(a)
the project is funded directly by inward remittance from abroad; or
(b)
the project is funded by a bilateral or multilateral International
Financing Agency; or
(c)
the project has been cleared by an appropriate authority; or
(d)
a company or entity in India awarding the contract has been granted Term
Loan by a Public Financial Institution or a bank in India for the Project,
such person shall apply to the Reserve
Bank in Form FNC 1 for permission to
establish a Project or Site Office in India;
(iii)
The Reserve Bank may grant permission subject to such terms and
conditions as may be considered necessary.
Explanation
� For the purpose of this Regulation,
(i) �A bilateral or multilateral
International Financing Agency� means the World Bank or the International
Monetary Fund or similar other body;
(ii)
�Public Financial Institution� is a public financial institution as
defined in section 4A of the Companies Act, 1956
(i) A person resident outside India permitted by
the Reserve Bank under Regulation 5, to establish
a branch or a liaison office in India may undertake or carry on any activity
specified in Schedule I or, as the case may be,
in Schedule II, but shall not undertake or carry
on other activity unless otherwise specifically permitted by the Reserve Bank.
(ii)
A person resident outside India permitted by the Reserve Bank under Regulation
5, to establish a project or Site Office in India shall not undertake or
carry on any activity other than the activity relating and incidental to
execution of the project.
A
person resident outside India permitted by the Reserve Bank under Regulation
5, to establish a branch or Project Office in India may remit outside India
the profit of the branch or surplus of the Project on its completion, net of
applicable Indian taxes, on production of the following documents, and
establishing the net profit or surplus, as the case may be, to the satisfaction
of the authorised dealer through whom the remittance is effected.
I.
For remittance of profit of a branch, -
(a)
certified copy of the audited balance sheet and profit and loss account
for the relevant year;
(b)
a Chartered Accountant�s certificate certifying,-
(i)
the manner of arriving at the remittable profit,
(ii) that
the entire remittable profit has been earned by undertaking the permitted
activities, and
(iii) that the profit does not include
any profit on revaluation of the assets of the branch.
II.
For remittance of
surplus on completion of the Project, -
(a)
certified copy of the final audited project accounts;
(b)
a Chartered Accountant�s certificate showing the manner of arriving at
the remittable surplus;
(c)
income-tax assessment order or either documentary evidence showing
payment of income-tax and other applicable taxes, or a Chartered Accountant�s
certificate stating that sufficient funds have been set aside for meeting all
Indian tax liabilities; and
(d)
auditor�s certificate stating no statutory liabilities in respect of
the Project are outstanding.
Permitted
activities for a branch in India of a person resident outside India
(i)
Export/ Import of goods.
(ii)
Rendering professional or consultancy services.
(iii)
Carrying out research work, in which the parent company is engaged.
(iv)
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.
(vi)
Rendering services in Information Technology and Development of Software
in India.
(vii)
Rendering technical support to the products supplied by parent/ group
companies.
(viii)
Foreign airline/ shipping company.
Permitted
activities for a Liaison office in India of a person resident outside India
(i)
Representing in India the parent company/ group companies.
(ii)
Promoting export import from/ to India.
(iii)
Promoting technical/financial collaborations between parent/ group
companies and companies in India.
(iv)
Acting as a communication channel between the parent company and Indian
companies.
A.
General Instructions to Applicants:
The
application form only should be completed and submitted to the Chief General
Manager, Exchange Control Department (Foreign Investment Division), Reserve Bank
of India, Central Office, Mumbai -400001.
B.
Documentation:
(i)
English version of the Certificate of Incorporation/ Registration or
Memorandum & Articles of Association attested by Indian Embassy/ Notary
Public in the country of registration.
(ii)
Latest Audited Balance Sheet
of the applicant company/ firm.
(iii)
In case of Project Office,
documentary evidence that the project is funded by bilateral or multilateral
International Financing Agencies OR
the project has been cleared by the
concerned regulatory authority OR
the Indian company has been granted
term loan for the concerned Project by a Financial Institution or a Bank in
India.
1(i)
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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] (Please
specify).
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(ii)
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Date
and Place of Incorporation/ registration
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2.
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Details
of Capital
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(i)
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Paid-up
capital
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____________
divided into ___________________ shares of
__________ each
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(ii)
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Free
Reserves as per last audited Balance Sheet
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3.
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Brief
description of the activities of the applicant
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For
liaison/ branch office
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4(i)
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Value
of goods imported from and/or exported to India by the applicant during
each of the last three years:
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(ia)
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Imports
from India
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(ib)
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Exports
to India
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(ii)
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Particulars
of existing arrangements if any, for representing the company in India.
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(iii)
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Particulars
of the proposed Brach/ Liaison Office
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(iiia)
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Details
of the activities/services proposed to be undertaken/rendered by the
office.
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(iiib)
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Place
where the office will be located
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For
project office
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5.
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If
the office is to be opened on a temporary basis in connection with any
specific project or contract to be executed in India by the applicant:
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5(i)
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Brief
description of the project/ contract, including terms of payment/
duration, etc.
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5(ii)
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Place
where the office will be located
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5(iii)
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Whether
the project office is funded entirely by inward remittances or by any
other source specified at B (iii)
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6.
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Any
other information which the applicant company wishes to furnish in support
of this application
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We
hereby declare that:
(i)
The particulars given above are true and correct to the best of our
knowledge and belief;
(ii)
Our activities in India would be confined to the fields indicated in
column 4(iii)(a) or 5(i) above;
(iii)
If we shift the office to another place, we shall intimate the Reserve
Bank of India; and
(iv)
We will abide by the terms and conditions that may be stipulated by
Reserve Bank of India if approval is given.
Place:
________________
Date:
_________________
(Signature
of Authorised official of the Applicant Company)
Name: ______________________________
Designation: __________________________
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