Opening of Project Office by Foreign Company

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Setting up A Project Office in India

As per the company Act, any foreign company is liable to set up a project office in India if the government or private sector has assigned it a project. But the project must execute in India. The project offices can be permanent or temporary. However, an essential part is the registration of the project office. 

Registering as a Project office 

To register as a project office in India, any foreign company needs to complete its registration process with RBI and ROC. It is a compulsory process to initiate before starting business operations. Project office registration in India includes a lot of conditions; the registration process cannot be done until all the conditions are met.

As per the company Act, if any foreign entity wants to file an application, they must file with category 1 AD bank. They must submit the applications with all the necessary annexures required. It includes project agreement, undertakings, funding, and many more. 

Only the Reserve Bank of India holds the authority to approve the registration of the project office in India. But the essential part is securing the contract with an Indian Company. Any foreign company that wants to open a project office in India must have a contract with any Indian company. According to the Companies Act, 2013, it is compulsory for a foreign company to obtain registration from the registrar of companies. 

Eligibility to set up a project office

As per the Companies Act, following are the essential things required to register as a project office.

1) Secure contract with an Indian company

It is one of the essential steps to register as a project office in India. Any foreign company interested in setting up a project office must secure a contract with an Indian company. It should secure the contract under a legal agreement that will help financial statement in the project.

2) Project clearance

To register as a project office in India, foreign companies must have all the approvals from the appropriate authority in India.

3) International funding

Another essential factor that matters is foreign funding. Any international financial institution must fund any foreign company that wishes to register as a project office. 

4) Funding from India

If there is no foreign funding, it becomes compulsory for the Indian entity to offer the contract to obtain a term loan from a public financial institution in India.

5) Exceptions

All the foreign entities can register as project offices by obtaining permission from RBI. But if any foreign entity resides in Pakistan, Bangladesh, Srilanka, Iran, Afghanistan, Macau, China, and Hong Kong have to seek Approval from RBI with consultation from the Indian government. If the government allows, they can set up a Project office In India.

If a foreign entity has been approved by ministry of defense or contract has been awarded by Ministry of Defense, there is no need for Approval from government.

6) Entry Route

The two routes for obtaining the project office registration are:

A)Reserve Bank route

If the main business of a foreign entity falls under the criteria, where 100% Foreign Direct Investment is possible, the company has to seek reserve bank route

B)Government route

If the main business of the company falls under the criteria where 100% Foreign Direct investment is not permissible, then the company has to seek the foreign government route. In such cases, RBI reviews the application in association with the government of India.

Deadline to set up a project office

1) As per the Companies Act, Any foreign entity shall open its office within six months from the date of Approval. 

2) An extension of six months may be provided by AD category-1 if there is any reason beyond a person's control residing outside India. 

3) Any further extensions will only be allowed by the RBI

4) Registration of the Project office takes only 15 days of time. 

Document Required

1) Documents that are submitted to RBI

  • A copy of certificate of incorporation
  • A recent audited balance sheet of the applicant entity
  • Memorandum of association and AOA attested by the public attorney of India
  • Copy of resolution from the foreign company's board that states the intentions of Project office registration in India
  • A proof that shows that any multi-lateral international financial institution funds the project office, if the Indian entity obtains term loan, then they have to show documental proof from the financial institution from bank of India.
  • A copy of banker's report that states the company's term with the bank
  • Letter of authority from the parent company concerning local representatives.
  • All the details of the activities to be conducted from the project office in India
  • Proof of residence of the authorized personnel
  • Copy of passport
  • A report that states that the company will open a bank account in India

2) Documents submitted to registrar of companies (ROC)

  • License from RBI to set up a project office
  • Memorandum of association and AOA of the foreign company
  • A notarized copy of certificate of insurance
  • Notarized copy of power of attorney that states the name of individual residing in India should also state that the person is responsible for accepting any notice on company's behalf
  • Details about all the directors of the company
  • KYC details of the stakeholders holding more than 10% equity in the applicant entity

Time Lines

  • Purchase the Service
  • Upload / send the Documents
  • Discussion with expert
  • Filing of application with registrar authorities
  • Receipt of Registration Certificate
  • Confirmation to client

Validity Of project office

As per the Companies Act, any project office registering in India remains valid until the project's tenure. That means after wrapping up the project; the project office becomes Invalid.

Entities that are not allowed to set up a project office in India

Proprietary concerns that have abroad establishment are not eligible to open a project office in India.


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