Legal provisions applicable to every foreign company to open Branch or place of office in India:
Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) Regulations, 2000
1) RBI may permit a company engaged in Manufacturing & trading activities abroad to set up Branch office in India with the following objectives:
a. To represent the parent company or other foreign companies in various matters in India, e.g. acting as buying or selling agents in India.
b. To conduct research work in the area in which the parent company is engaged
c. To undertake export & import trading activities
d. To promote possible technical & financial collaborations between the Indian companies & overseas companies
e. Rendering professional or consultancy services
f. Rendering Services in information technology & development of software in India
g. Rendering technical support to the products supplied by the partner or group companies
2) Approval of RBI is required for establishment in India of Branch or office or other place of business by a person resident outside India.
3) A person resident outside India desiring to establish a branch or liaison office in India shall apply to RBI in Form No. FNC 1.
4) A foreign company may open branch office in India if all the following conditions are satisfied:
a. The office can act as a channel of communication between the head office abroad & parties in India. It is not allowed to undertake any business any activity in India & cannot earn any income in India,
b. Expenses of the Branch office are to be met entirely through inward remittance of foreign exchange from Head office abroad.
c. Permission to set up branch is initially granted for a period of 3 years & this period may be extended from time to time by the Regional office in whose jurisdiction the branch office set up.
d. The branch office shall file with the concerned Regional Office an Annual Activity Certificate issued by Chartered Accountant.
5) No approval of RBI is necessary for a banking company if such company has obtained necessary approvals under the provisions of the Banking Regulation Act, 1949.
6) No approval of RBI is necessary for establishment of a branch or unit in SEZ to undertake manufacturing & service activities, if the following conditions are satisfied:
a. Such units are functioning in those sectors in which 100% FDI is permitted.
b. Such units comply with Part IX of the Companies Act, 1956 (Section 592 to 602)
c. Such unit function as stand alone basis, i.e. such unit will be isolated & restricted to the SEZ alone & no business activity or transaction will be allowed outside the SEZ.
d. In the event of winding of business & for remittance of winding up proceeds, the branch shall approach an authorised dealer.
As per Companies Act, 1956
Section: 592. Documents, etc., to be delivered to Registrar by foreign companies carrying on business in India
(1) Foreign companies which, after the commencement of this Act, establish a place of business within India shall, within 1[thirty days] of the establishment of the place of business, deliver to the Registrar for Registration-
(a) a certified copy of the charter, statutes, or memorandum and articles, of the company or other instrument constituting or defining the constitution of the company; and, if the instrument is not in the English language, a certified translation thereof;
(b) the full address of the registered or principal office of the company;
(c) a list of the directors and secretary of the company, containing the particulars mentioned in sub-section (2);
(d) the name and address or the names and addresses of some one or more persons resident in India, authorised to accept on behalf of the company service of process and any notices or other documents required to be served on the company; and
(e) the full address of the office of the company in India which is to be deemed its principal place of business in India.
(2) The list referred to in clause (c) of sub-section (1) shall contain the following particulars, that is to say:-
(a) with respect to each director,-
(i) in the case of an individual, his present name and surname in full, any former name or names and surname or surnames in full, his usual residential address, his nationality, and if that nationality is not the nationality of origin, his nationality of origin, and his business occupation, if any, or if he has no business occupation but holds any other directorship or directorships, particulars of that directorship or of some one of those directorships; and
(ii) in the case of a body corporate, its corporate name and registered or principal office; and the full name, address, nationality, and nationality of origin, if different from that nationality, of each of its directors;
(b) with respect to the secretary, or where there are joint secretaries, with respect to each of them-
(i) in the case of an individual, his present name and surname, any former name or names and surname or surnames, and his usual residential address; and
(ii) in the case of a body corporate, its corporate name and registered or principal office:
Provided that, where all the partners in a firm are joint secretaries of the company, the name and principal office of the firm may be stated instead of the particulars mentioned in clause (b) of this sub-section.
(3) Clauses (2) and (3) of the Explanation to sub-section (1) of section 303 shall apply for the purpose of the construction of references in subsection (2) to present and former names and surnames as they apply for the purposes of the construction of such references in sub-section (1) of section 303.
(4) Foreign companies, other than those mentioned in sub-section (1), shall, if they have not delivered to the Registrar before the commencement of this Act the documents and particulars specified in sub-section (1) of section 277 of the Indian Companies Act, 1913 (7 of 1913), continue to be subject to the obligation to deliver those documents and particulars in accordance with that Act.
Procedure >>>>
1) Get all the above mentioned documents form the Company.
2) Submit E form 44 along with all documents attached to it; further deliver it to the state ROC with all the attached copies to e form 44.
3) Pay ROC fees as per State stamp act, before filling the e form 44.
Section: 594. ACCOUNTS OF FOREIGN COMPANY.
(1) Every foreign company shall, in every calendar year, - ( Rule 18-A & e form No 52)
(a) make out a balance sheet and profit and loss account in such form containing such particulars and including or having annexed or attached thereto such documents (including, in particular documents relating to every subsidiary of the foreign company) as under the provisions of this Act it would, if it had been a company within the meaning of this Act, have been required to make out and lay before the company in general meeting; and
(b) deliver three copies of those documents to the Registrar :
Provided that the Central Government may, by notification in the Official Gazette, direct that, in the case of any foreign company or class of foreign companies the requirements of clause (a) shall not apply, or shall apply subject to such exceptions and modifications as may be specified in the notification.
(2) If any such document as is mentioned in sub-section (1) is not in the English language, there shall be annexed to it a certified translation thereof.
(3) Every foreign company shall send to the Registrar with the documents required to be delivered to him under sub-section (1), three copies of a list in the prescribed form of all places of business established by the company in India as at the date with reference to which the balance sheet referred to in sub-section (1) is made out.
Thanks & Regards
Amit Borade
CAclubindia
