Post on 16-Jul-2015
INTRODUCTION
Branch office:-
Section 2(14) of Companies Act, 2013 – anyestablishment decsribe as such by the company
Who can establish a branch abroad?
A person resident in India can establish a branch orliaison office outside India or he can establish a JV orWOS with a person resident outside India.
Branch Office Vs. Liaison Office Vs. Project Office
Branch Office Liaison Office Project office
Office established
outside India by an
Indian entity for
conducting normal
business activity
abroad
It acts as a channel of
Communication
between Head Office
in India and parties
abroad.It is not allowed
to undertake any
business activity.
A temporary office
established abroad for
a specific project.
Benefits of setting up of branch abroad
• Spreading up of Business
• Increasing Customer Base
• Easy accessibility of product
• Geographical Benefits
Residential Status:- Overseas Branch office
will be considered as resident of India
STEPS INVOLVED
• Approval of Board for establishment of
Branch
• Appointment of Authorised Representative
• Opening of Bank Account
• Filing of forms and applications, along with
supporting documents to RBI through AD
• Compliance with country specific
requirements
No specific approval of RBI is required subject to compliance of following conditions.
1. Conducting normal business activities of Indian Entity
2. The details of bank account opened in the overseas countries
should be promptly reported to the banker of Indian entity
3. Profits, if any, earned by the overseas office(s) should be
repatriated to India
4. Remittance of expenses by Indian Entity
Initial Expenses :- 15 per cent of the average annual
sales/ income or turnover of the Indian entity during the
last two financial years or
up to 25 per cent of the net worth whichever is higher
Recurring Expenses :- 10 per cent of such average annual sales/ income or turnover during the last financial years
Exemption for restriction on remittance of
expenses
• If remittances are made out of funds held in
EEFC account of Indian Entity
• Within 2 years of establishment of branch in
100% EOU or EPZ or STP/HTP
3. The details of bank account opened in the
overseas countries should be promptly
reported to the banker of Indian firm / company
4. Profits, if any, earned by the overseas
office(s) should be repatriated to India
Failure to satisfy the above condition
requires RBI approval through AD
Acquisition of Property for branch office
•Purchase of Office equipments and other assets for the normal business operations of the overseas branch office shall not be treated capital account transactions and hence No RBI permission.
•Acquisition of immovable property outside India by way of lease, not exceeding a period of five years by the overseas branch or office is permitted without obtaining the RBI’s permission.
Prohibition on activities of Branch Office:
• Shall not enter into contract or agreement in contravention of the Act or rules or regulations applicable to it.
• Shall not create any financial or contingent liabilities for head office in India.
• Shall not invest surplus fund abroad without prior approval of RBI but such surplus fund should be repatriated to India.
Documents to be submitted
• Form A2
• TT Application
• Form OBR- Along with the following documents
• Correspondence, if any, in original together with photocopies regarding the arrangement made in foreign Countries.
• Bank certificate together with copies for immediately preceding four calendar half years in support of export realization.
•Particulars of the turnover duly certified by the Statutory Auditors.
back
COUNTRY SPECIFIC REQUIREMENTS
1. New Zealand
- Reservation of name by the branch
- File application for registration within
10 working days along with the
required documents
- Post registration requirements
2. Portugal
- Appostalised Documents to Commercial
Registry
- Post Registration
- Balance sheet and Profit and loss
account of Company and Branch
Separately
- IT return in form “Modelo 22” within 5th
month of end of FY
3. CYPRUS
- Documents to be filed with National Registrar
of Companies within 1 month of setting up of
branch prior registration.
- Documents submitted required to be
notarised, apostalised and translated into
Greek Language.