Opening of Branch

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Prashant (Querist)
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07 April 2011 Dear Expert,

Just wanted to know the mandatory pre-requisites to open branch outside India for any pvt ltd co engaged or doing business in India.

Please do revert

Thanks,
Prashant

CA Sumat Singhal

CA Sumat Singhal (Expert)
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11 April 2011 The following procedures are required for opening branch outside india:
Procedure for Opening Branch Offices by a Company Out of India

It is provided under the Companies Act, 1956, according to which: In order to open new branch offices in India, a company must pass a resolution in its Board meeting specifying:

* The business to be carried out at that particular branch office.
* The appointment of somebody to look after the everyday business of the branch and operate the bank account of that branch.
* The provision for authorizing somebody to make arrangement for establishment, accommodation, and other requirements which are essential to run that branch office successfully.

The general terms and conditions for opening the offices abroad normally are:
1. The overseas office should not create any financial liabilities contingent or otherwise for the head Office in India.
2. Exchange released by the authorised dealer should be strictly utilised for the purpose(s) for which it is released. They unused exchange may be repatriated to India under advice to the authorised dealer.
3. The details of bank account opened in the overseas countries should be promptly reported to authorised dealer.

4. The approval granted for the purpose should be made valid for 6 months from the date thereof, within which time the applicant should open its overseas office or post representative abroad. In case the overseas office is not opened or the representative is not posted abroad within this period, intimation in writing to the effect should be sent to the authorised dealer immediately after expiry of 6 months period. Fresh application for release of exchange should be submitted to the authorised dealer as and when the overseas office is desired to be opened.
5. Profits, if any, earned by the overseas office/s should be repatriated to India.
6. The following statements should be submitted by the applicant to the authorised dealer:
1. A statement showing details of initial expenses incurred together with suitable documentary evidence, wherever possible, within three months from the date of release of exchange for that purpose.
2. Annual account of trading/non-trading office abroad duly certified by statutory Auditors/Chartered Accountants.
Application for permission to post a representative/ Establish office/branch overseas:
·The application is to be made in form OBR to the Bank with supporting documents.

· The estimates of foreign exchange expenditure should be given in units of foreign currency and the appropriate rupee equivalent furnishing the exchange rate applied.

Documents to be submitted along with the Form OBR:
·Correspondence, if any, in original together with photocopies regarding the arrangement made in foreign country for posting of representative/establishment of branch/office.

· Bank certificates, in form BCX (certificate of export),together with photocopies thereof for the immediately preceding four calendar half years in support of export realisations.

· In the case of a trading branch, cashflow statement in the proforma attached indicating the value of stock to be held, percentage of marked-up price and projected income and expected profit margin should be furnished.
any further opinion of members are invited
regards,
CS SUMAT SINGHAL

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