If a foreign firm has been given a project to work on in India by the public or private sectors, it is allowed to open a project office there, whether it be temporary or permanent. Before the project office can begin operations, it must be registered with the RBI and ROC. Before an application for Project Office Registration is pushed further, a few requirements must be met.
A project office can be registered by submitting an application to the Category 1 AD Bank along with all necessary supporting documentation, such as a copy of the project agreement and an assurance that funding will come from international remittances or from a bilateral or multilateral international finance agency arrangement. Within 30 days following the RBI approval of the application, the project office must register with the local police and ROC.
General Permission:
The Reserve Bank of India has authorized foreign companies to open purchase orders (POs) in India as long as they have a contract with an Indian company to carry out a project, and the project is funded directly by remittances from overseas; alternatively, the project may be funded by a bilateral or multilateral International Financing Agency; approved by the relevant authority; or a company or entity in India that is awarding the contract has been granted a Term Loan by a PFI or a bank in India for the project. However, the foreign business must apply for clearance from the RBI Central Office if the aforementioned requirements are not satisfied.
Whatever name they go under, the establishment of project offices by foreign non-governmental organizations, nonprofit organizations, foreign government bodies, or departments falls under the government route. Therefore, before opening an office in India whether it be a Project Office or not—such firms must apply to the Reserve Bank for clearance. [as modified by September 17, 2012, AP (DIR) No.31]
Documents Required for Registration of Project Office in India
- papers filed with the RBI Memorandum of Association and Articles of Association, attested by an Indian Embassy or Notary Public in the nation of registration.
- current audited balance sheet of the company making the application.
- a board decision from the foreign business outlining the rationale for opening the project office in India.
- documentation proving that the Project Office has a term loan from an Indian bank or financing institution, OR the Project Office is financially supported by bilateral or multilateral international financing agencies.
- Banker’s report submitted by the company’s banker stating the company’s relationship with the bank.
- a letter of authorization from the main business regarding the local agent.
- All information regarding the activities carried out in the Indian project office.
- Home Evidence of the authorized staff.
- a copy of the authorized personnel's passport
- a letter announcing the opening of an Indian bank account by the corporation
Documents Submitted to the ROC project office set up
- RBI approval to open a project office in India
- MOA and AOA of the International Business
- Notarized copy of COI: A notarized copy of a power of attorney designating the individual resident in India and designating him as the person responsible for accepting any correspondence or paperwork on the company's behalf
- A comprehensive list of the Company's Directors
- Full KYC verification for shareholders owning more than 10% of the applicant company's equity
Checklist for Project Office Registration
1. Official Communication for the Project office set up
A formal, binding agreement must be established for the same financial statement, and the foreign business must have secured a project in India.
2. Project clearance
that the project has received approval from the relevant ministry or authority, including if relevant, the environment ministry.
3. International Finance
Either an international financing agency or inward remittances from overseas must provide the project's funding.
4. Funding from India
The Indian Entity awarding the contract will get the term loan from an Indian bank or public financial institution in the event that foreign finance is not available.
Project Office Registration Process and project office set up
STEP 1 – Attestation or Legalisation of Documents
All of the foreign company's required paperwork, including its certificate of incorporation, board resolutions, articles of incorporation, and documents from authorized signatories, must be legalized through an Indian embassy or apostilled in accordance with the Hague convention before being submitted to the RBI.
STEP 2 – Filing of Application with RBI through AD Bank
A foreign company's Form - FNC application for the registration of a project office is submitted to the Reserve Bank of India through AD Bank (Authorized Dealer). Since all communications with the RBI must go via the AD Bank, they play a vital function. Our strong working relationships with numerous Indian banks are quite beneficial when it comes to applying to the RBI and following up.
STEP 3 – Verification of KYC from Banker of Parent Company
A request for document verification is issued to the foreign company's banker following the filing of the FNC Form with the AD Bank. Another name for this procedure is swift-based verification. The application is sent to the RBI for clearance following the foreign banker's confirmation of the paperwork. The RBI may request further information or any documents that need to be presented.
STEP 4 – Approval of RBI for Project Office Registration in India
Following the incorporation of the firm, a bank account must be opened. Within 180 days of the company's incorporation, foreign direct investment must be made with prior notice to the banker. Following an investment, the business has a tight obligation to submit sufficient reports to the RBI within 30 days of receiving FDI.
STEP 5 – Registration of Project office of Foreign Company with the ROC
The foreign company must apply to the ROC for foreign company registration within 30 days after receiving RBI approval. If the foreign business has directors who are Indian, they must have a DIN number, and in order to e-file statutory paperwork with the ROC for approval, the authorized signatory must have a digital signature.
STEP 6 – PAN Card, Tax Deduction Number & Bank A/c Opening
A permanent account number, or PAN Number, is assigned by the Income Tax Department and is a unique 10-digit alphanumeric number. In order to be in compliance with TDS regulations, each taxpayer must have a Tax Deduction Account Number. These identifying numbers are necessary in order to comply with tax regulations. After receiving a Pan Number from the Income Tax Department, the branch office can open a bank account.
STEP 7 – Other Registration and Licensese
Depending on the type of business and the state-specific rules that are applicable to all entities engaging in commercial activity, there are a variety of additional compliance-related actions that need to be completed when the Project office opens for business. For instance, registering under the Employee State Insurance Act (ESIC), Professional Tax Act, Provident Funds Act, Shops and Establishment Act, Goods and Services Tax (GST), etc.
Reporting Requirements After the Establishment of the PO:
- Within five working days of the Project Office (PO) becoming operational, all newly established entities are required to submit a report to the Director General of Police (DGP) of the state in which the PO has established its office. If the foreign entity has multiple offices, it must submit a report to each DGP of the state in which it has established an office in India, following the format outlined in Annex 3. [As amended vide AP(DIR) No.35 dated September 25, 2012]
- The foreign company setting up a project office in India must submit a report, including the following information, to the relevant Reserve Bank of India Regional Office—whose authority the project office is under—through the relevant AD branch.
- Name and address of the overseas business,
- The contract awarding letter's reference number and date are mentioned in clause (ii) of Regulation 5 of Notification No. FEMA 22/2000-RB, which was issued on May 3, 2000.
- specifics of the body that awarded the contracts or projects,
- The entire contract sum,
- The Project Office's address, email address, phone number, and fax number
- Duration of the Project Office
- A brief description of the project being worked on, the AD branch that started the account, the foreign currency used to open the account,
- An acknowledgment that the Project Office is qualified to use the General Permission under Regulation 5(ii) to RBI Notification No. 22/2000 – RB dated May 3, 2000read with Notification No. FEMA 95 of July 2, 2003 indicating the rationale behind it.
- Within two months of the Project Office's founding, this report will be sent via the AD branch to the relevant Reserve Bank of India Regional Office.
A Certificate from a Chartered Accountant indicating the Project Status and attesting to the fact that the Project Office's accounts have been audited and the actions carried out are compliant with the General / Specific permission granted by the Reserve Bank must also be submitted by the Project Office to the AD branch each year.
Additional Reporting Requirements after project office set up: Each year, a copy of the report in Annex 3 and a copy of the annual certificate must be filed with the AD in question as well as the DGP in question and submission has to made [as modified by September 25, 2012, AP (DIR) No.35.
How SKMC Global Can Help?
At SKMC Global, we recognize that the establishment of a project office in India is not merely a regulatory formality; it's about empowering foreign entities to efficiently and successfully execute specific projects within the country. Here's how SKMC Global can assist at each critical stage of setting up a project office:
- Comprehensive Consultation: We begin with an in-depth consultation, helping foreign entities define the objectives of the project office and charting a clear strategy for project execution in India. Our experts provide guidance on navigating the Indian regulatory landscape and project-specific requirements.
- Reserve Bank of India (RBI) Approval: SKMC Global assists in the meticulous preparation of the application for RBI approval, ensuring that all essential project details are accurately presented to streamline the approval process.
- Ministry of Corporate Affairs (MCA) Compliance: We ensure that all necessary approvals and compliance with MCA regulations are secured, enabling the proper incorporation of the project office in India.
- Financial Documentation: Our team guides foreign entities in preparing comprehensive financial documents that meet RBI requirements for the project office, ensuring smooth approval.
- Legal and Financial Compliance: SKMC Global facilitates the procurement of a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN), as well as opening a dedicated business bank account. This enables efficient financial operations and reporting.
- Project-Specific Activities: We support project offices in focusing on activities directly related to their specific project, ensuring that resources are optimally allocated for project execution.
- Local Networking: SKMC Global can assist foreign entities in establishing local connections and partnerships, facilitating efficient communication with local partners, authorities, and stakeholders.
- Compliance and Reporting: Our dedicated team ensures that the project office adheres to Indian compliance requirements, including regular reporting and financial disclosures. This enables foreign entities to operate within the scope of the project and in compliance with local laws and regulations.