Project Office Registration

The establishment and management of the Project Office are controlled by the Foreign Exchange Management Act, of 1999 and the guidelines are issued by the Reserve Bank of India periodically. Foreign entities typically establish Project Offices to carry out projects awarded by Indian Companies. The RBI permits foreign entities to set up project offices in India if they have obtained a contract from an Indian company to carry out a project in India.

Below are the requirements for establishing a project office in India for a non-resident individual.

• The project needs to have obtained the required regulatory approvals, and
• The project receives funding directly from overseas remittances, or
• The funding for the project comes from an International Financing Agency that is either bilateral or multilateral.
• An Indian company or entity that has been granted a Term Loan by a Public Financial Institution or a bank in India is awarding the contract for the project.

Applications to set up a Project Office in a sector where 100% FDI is permitted must go through a specific AD Category I Bank. The forms FNC, along with the required documents mentioned in them, are submitted to an AD Category-I bank as per RBI guidelines.

PO may contact an AD Category I Bank in India to establish an Interest Foreign Currency Account for its activities in India, under specific terms. Foreign currency receipts from the Project Sanctioning Authority and remittances from parent/group companies abroad or bilateral/multilateral international financing agencies are the only credits allowed in the bank account. The only debits allowed are payments for expenses related to the project.

• Allowed actions: The Project Office in India is simply an extension of foreign companies and is limited to activities directly related to project execution.
• Account at a financial institution: A foreign entity, excluding those from Pakistan, can open a bank account in India without needing approval from the Reserve Bank if they have been awarded a project contract by the Government authority or Public Sector Undertakings, or are permitted by the AD to operate in the country. Every Project Office has the option to establish two foreign currency accounts, typically in USD and the local currency of the project winner, as long as they are held at the same AD Category-I bank.
• Profit sending: AD Bank may authorize sporadic payments from the Project Office until the project is finished, as long as they are convinced of the legitimacy of the transaction and certain conditions are met.
• Expanding the range of fund and non-fund-based services: An AD Category I Bank can provide Fund/Non-Fund facilities to a Project Office if it complies with the approved Board policy, practices sound business judgment and adheres to the current rules/regulations set by DBR, RBI.
• Project Office Closure: Submission of requests for the closure of the Project Office and remittance of winding-up proceeds must be made to the specified AD Category - I bank with the required documents.

• Official communication about the project

The foreign company must establish a protected project in India and enter into an official and legal agreement to assist with the financial statements concerning the project.

• Project completion

Ensure that the project has obtained authorization from the relevant and reputable authorities.

• Funds from abroad

Make sure the project receives financial support from the foreign country's inward remittance, or else an International Financing Agency will need to sponsor it.

• Funding from India

If there is no foreign funding involved, the Indian organization must secure the term loan from a Public Financial Institution or a bank within India.

• Completely completed Form FNC;
• Presentation of the Certificate of Incorporation / Registration, as well as the Memorandum of Association and Articles of Association, duly notarized by a Notary Public in the country of registration. If the original Certificate is not in English, it can be translated into English, notarized, and verified by the Indian Embassy/Consulate in the home country.
• The company's balance sheet has been audited for the past five years. If auditing is not required in the company's home country, a Certified Public Accountant or Registered Accounts Practitioner can provide a certified account statement showing the net worth.
• Bankers report in the host country/country of registration indicating how long the applicant has been banking with that bank.
• Power of Attorney will be granted to the individual signing Form FNC if the Head of the overseas entity is unable to sign the form.

• Authentication of Documents

Filing all the foreign company's documents with the RBI is essential. The Document list consists of a certificate of incorporation, MOA and AOA of the foreign company, and board resolutions. Furthermore, ensure that the paperwork of the approved representative of the foreign organization is properly authenticated either through the Indian Embassy or through apostille by the Hague Convention.

• Submitting Application to RBI via Authorized Dealer Bank.

A request for the parent company's office application is submitted to the Foreign Company Department (FNC). The request is submitted to the Reserve Bank of India through an AD Bank (Authorised Dealer). The AD bank plays a crucial role as it serves as the intermediary for all communication with the RBI.

• Confirmation of KYC by the parent company's banker

A plea to review the documents is sent to the banker of the foreign company. The act of requesting verification is also known as swift-based verification. Once the foreign banker confirms the Documents, the application is then processed for approval. The RBI/AD may also request supplementary documents as necessary.

• Acceptance by RBI for Project Office Registration in India

After the company is officially formed, the next task is to establish a bank account for the company, with foreign direct investment needing to be deposited within 180 days of incorporation while notifying the banker beforehand.

• Establishing a Project Office for a Foreign Company with the ROC.

After getting the green signal from RBI to set up the Project Office in India, a request is made to register the foreign company's project office within 30 days of receiving approval. DIN is necessary if any Indian director and the authorized signatory require a digital signature for e-filing statutory forms with the ROC.

• PAN Card, TIN, and Opening a Bank Account

The PAN number, a 10-digit identifier, is assigned by the Income Tax Department of India. After the PAN number is acquired, the branch office can proceed to open its bank account. Every taxpayer must get a Tax Deduction Account Number to comply with all TDS regulations.

• Additional Registrations and Permits

Once the Project Office becomes inactive, various compliance activities depend on the type of business and specific laws of the state that apply to all entities involved in commercial activities. An example include the Goods and Services Tax (GST), Professional Tax Act, Provident Funds Act, and Employee State Insurance Act (ESIC).

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