Project Office Registration in India - Eligibility, Process, and Documents

Project office Registration in India is a strategic move for many foreign companies who want to set up their presence in India. This strategy is perfect for situations where a foreign company needs a temporary establishment in India to carry out a project that it has obtained from an Indian entity. The establishment is temporary and lasts only up to the tenure of the project. Further, a project office can only carry out activities related or incidental to the project’s completion, subject to approval by the RBI. This includes commercial as well as non-commercial activities. The funding and expenses of the project office are borne by its foreign parent/holding company. At Bizfoc, we provide full assistance in registration of project offices with expert consultation at every step, be it documentation, RBI approval, or ROC registration.

What is Project Office?

A foreign company which has been awarded a project in India either by the Indian Government or by a private entity can establish a project office for its completion. A formal contract for the same would be necessary between the foreign and Indian parties involved. Further, funding for the project comes as an inward remittance from the holding/parent company, and in the absence of the same, from an international or Indian funding agency. The tenure and the business activity of the project office extends only to the scope of the project, indicating that the office will cease to exist and carry out operations immediately after the project is executed.

Prior to Project Office Registration in India, a foreign company is required to meet certain eligibility criteria. Refer to the detailed list of eligibility criteria for registration of project office below.

• Legitimate Contract: The foreign company must sign a legitimate contract with the Indian entity awarding the project. The contract must contain details about the requisite objectives, associated activities, estimated budget, sources of funding, and timeline. Including other information will require mutual agreement between parties.
• Funding: Funding for the project will be received as inward remittance from the foreign parent or holding company. This includes the entire expenses and credit required for completion of the project and its associated activities. In the absence of funding from the parent company, project funding may be granted by a bilateral or multilateral international financing agency. In case this is absent too, the Indian entity awarding the project may arrange funds as a term loan from a public financial institution or bank. No funding sources other than these are permitted for a project office in India.
• Clearance: The project must receive clearance from the relevant Indian authorities. This includes sector-specific clearances, environmental clearances, and approvals from relevant regulatory institutions. Additionally, clearances from local authorities like the state police may be required in certain cases. While a contract ensures legitimacy of the project, clearances ensure legitimacy of the associated business operations.
• Scope of Activities: The activities of a project office must not extend beyond the scope of the contract signed between the Indian and foreign parties, provided the same have been approved by the RBI. However, associated activities may be permitted if they are necessary for the project’s completion. Note here that project offices are not prohibited from undertaking commercial activities, if they fall within the scope of the contract and have been approved by the RBI.
• Tenure: The tenure of a project office extends till the completion of the project. The term is mentioned in the contract and mutually agreed by the parties. Further, the same is approved by the RBI as well. Once the project is completed, the closure procedure can be initiated by obtaining a closure certificate from the Ministry of Corporate Affairs. Further steps include preparing the closing financial statements, surrendering PAN and TAN, and closing the project office bank account.

Stepwise Process of Project Office Registration in India

The stepwise process of Project Office Registration in India is as follows:

Step 1: Legalization and Attestation of Documents

The first step of project office registration is legalizing the documents of the Foreign parent / holding company since they have a foreign origin and execution. This step is necessary to ensure the company’s documents are acceptable to the Indian authorities. The documents which must be legalized include Certificate of Incorporation, MOA, AOA, Board Resolution, and KYC documents of shareholders as well as the authorized signatory. For this, the company can approach a public notary, or the Apostille Office if the country of origin is party to the Hague Convention. Further, the legalized documents must be attested by the Indian embassy in the country of origin as well.

Step 2: Applying for AD Bank Approval

As soon as the documents are ready for submission, the foreign company can apply for RBI approval of project office registration in form FNC. The form seeks details of the company, the project awarded, and most importantly, the funding amount and sources. Once the details are filled correctly, certain attachments will be required for completion. The form is submitted to AD Category 1 bank for scrutiny and verification.

Step 3: Swift-Based Verification by Foreign Banker

A request is generated to the banker of the foreign company for verifying the documents submitted to the AD bank. The AD bank issues a confirmation as soon as the verification is complete. This information is intimated to the RBI immediately. This entire process is also termed as “Swift-based verification”.

Step 4: Seeking RBI Approval in Special Cases

Generally, the AD bank completes the scrutiny of Project Office registration application, finalizes the decision of granting approval, and issues an approval letter to confirm the same. However, in certain cases, a foreign company cannot complete project office registration without specific RBI approval. In such cases, the AD bank transfers the application to the ROC for further scrutiny and approval. RBI approval is required if:

• The foreign company is incorporated in Pakistan
• The foreign company is incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau and the application is for opening a branch office in Jammu and Kashmir, North East region, or Andaman and Nicobar Islands
• The awarded project is in the defense, telecom, private security, or information and broadcasting sector
• The foreign company is an NGO, NPO, or an agency associated with a foreign government

Step 5: Approval From State Police Authorities

If the foreign company is incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau, an additional clearance may be required from the police authorities of the Indian state where it is establishing its project office. For such approval, the AD bank may transfer the application to the Ministry of Home Affairs.

Step 6: Issuance of AD / RBI Approval Letter

The AD bank or RBI shall issue an approval letter to the foreign company once the application has been successfully verified. This shall confirm its permission granted to the foreign company for Project Office registration in India. The approval letter will be valid for 6 months within which the project office must be fully established in India.

Step 7: Project Office Registration With ROC

Within 30 days from the issuance of the approval letter, the foreign company must seek project office registration with ROC. For this, an application is required to be filed in FC-1 form along with the prescribed set of documents. It shall further be scrutinized by the ROC, and if found to be accurate, a Project Office registration certificate will be issued. This certificate shall be valid throughout its tenure, without any need for renewal.

Required Documents for Project Office Registration

The complete list of required documents for Project Office Registration in India is given below:

Important Points to Note:
The Certificate of Incorporation, MOA, and AOA must be available in English Language or translated to the same. Moreover, since they have a foreign origin and execution, they must be legalized by a public notary, and attested by the Indian Embassy in the parent company’s country of origin.

If auditing of financial statements is not permitted in the parent company’s home country, an account statement showing the company’s net worth, and certified by the CPA or registered accounts practitioner can be submitted in its place.

Banker’s report must show the number of years the foreign parent/ holding company had a relationship with the bank.

Funding evidence must show the source of funding as the foreign parent / holding company, an international financing agency like World Bank or IMF, or an Indian Public Financial Institution / Bank.

Annual Filing of Project Office in India Compliances

The project office of a foreign company is a recognized legal and taxable entity in India. Hence, post-registration, it must adhere to the annual compliance requirements set forth by the Companies Act, the Income Tax Act, and RBI regulations. These majorly include submission of the audited financial statements, annual returns, annual activity certificate, ITR, and FLA returns to the relevant authorities. Also, since the project office may carry out commercial activities as well, its accounts need to be audited under the Companies Act and the Income Tax Act. Refer to the table below for major due dates regarding the annual filings and compliances of a foreign company project office in India:

Why BizFoc

At Bizfoc, we specialize in providing comprehensive Project Office Registration services in India. Our team of experts ensures a seamless registration process, guiding you through each step with precision and efficiency. We handle all the intricate legal and regulatory requirements for your ease and convenience. With our in-depth knowledge and extensive experience, we guarantee timely and hassle-free Project Office registration tailored to your specific needs.

Conclusion

Registration of Project Office in India requires a thorough understanding of the process and associated FEMA / RBI guidelines. FEMA or Foreign Exchange Management Act permits foreign funding for the project office through RBI or government approval route. In either case, the funding is received as inward remittance from the foreign parent company or an international finance agency. As far as the outward remittance is concerned, the project office can send intermittent remittance to the foreign company, provided such remittance does not affect the project’s completion in any way. The project office is a commercial and taxable entity in India. It conducts revenue-generating activities, pays income tax, and files annual ITRs for the same.

Frequently Asked Questions (FAQs) on Project Office Registration