Step-by-step process in closing Branch office in India
Like a business outpost established by a foreign corporation to conduct business in India, a branch office serves the same purpose. The international business may find it advantageous to join the Indian market. But occasionally, the business may choose to close it for various reasons. The foreign business must adhere to regulatory regulations and fulfill certain conditions in order to open a branch office/ branch office closure in India. They must provide specific documentation and obtain approval from the Ministry of Corporate Affairs (MCA) and the Reserve Bank of India (RBI).
Understand the Branch Office in India and its Validity Period:
In India, a branch office's first validity period is normally three years. However, the foreign company may renew the registration if they intend to continue conducting business through the branch office following those initial three years. In order to renew, the business must submit the necessary paperwork and adhere to any additional guidelines established by the Reserve Bank of India (RBI), which regulates the operations of foreign businesses in India.
The process to shut down the Branch office in India:
A completion certificate issued by the Ministry of Corporate Affairs (MCA): The following procedures must be followed in order to get a Certificate of Completion from the Ministry of Corporate Affairs (MCA) for shutting the branch office
- Form Submission: in order branch office closure to end the required form to the Ministry of Corporate Affairs (MCA) after filling it out. Make sure you fill out the appropriate form intended for asking for a closure of branch office in India.
- Board Resolution: Obtain from the parent company a board resolution attesting to the closure of branch office in Indian. This resolution needs to be formally approved and submitted with the application for branch office closure.
- Bank Closure Application: As a necessary step in closing branch office, the branch office for the Indian branch must submit a request for branch office closure to the bank.
- Audited Financials: Financial statements and all other mandatory reports must be prepared by the branch office until the branch office in India closes.
- No Due Certificate: You must provide the income tax authorities with a closure certificate, branch office financial statements, and other necessary reports in order to receive this certificate.
- Remittance of Surplus Funds: Extra money can be transferred back to the parent firm from the Indian Branch Office's bank account. But the bank can only take this action following its application and clearance for closing branch office from the Reserve Bank of India.
- Closure of Bank Account and Unique Identification Number: You should ask the bank to terminate the branch office's bank account after the monies have been repatriated.
Conclusion:
In conclusion, foreign businesses wishing to penetrate the Indian market may find that opening a branch office in India is a wise move. But occasionally, for a variety of reasons, it becomes necessary to close the branch office. Adherence to regulatory mandates is an essential facet of the closing branch office procedure.