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Legal status of Branch Office


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Legal status of Branch Office

  1. 1.  According to Regulation 2(c), Branch shall have the meaning assigned to it in sub-section (9) of Section 2 of the Companies Act, 1956 ( 1 of 1956).Sec. 2(9) of the Companies Act,1956 defines a Branch as follows: Branch office in relation to a Company means- (a) any establishment described as a branch by the company; or, (b) any establishment carrying on either the same or substantially the same activity as that carried out by the head office of the company; or (c) any establishment engaged in production, processing or manufacture All types of Persons such as individuals, partnership firms etc. are eligible to open a branch in India and the above definition of Branch will apply to their branches in India as it applies top companies.
  2. 2. According to sec 2(v) (iii) of FEMA, Personresident in India includes an office, branch oragency in India owned or controlled by aperson resident outside India. Thus, all suchbranches or offices would become personsresident In India.
  3. 3. 3. Permitted Activities The activities, which can be carried out by a Branch Office, are specified in Schedule I. They are as follows: * Export/Import of goods * Rendering professional or consultancy services. *Carrying out research work, in which the parent company is engaged. *Promoting technical or financial collaborations between Indian companies and parent or overseas group company. *Representing the parent company in India and acting as buying/selling agent in India. * Rendering services in Information Technology and development of software in India. *Rendering technical support to the products supplied by parent/group companies. * Foreign Airline/shipping Company.
  4. 4. The Branch Office can open a bank account inits name with any bank in India. It can evenavail credit facilities from the Bank like CashCredit, Overdraft etc. without permission ofthe RBI as its status is person resident in Indiaand it will be treated at par with any otherbusiness India established in India.
  5. 5. The application has to be made in form FNC-1 and submitted along with the following documents: * Copies of last three years audited Balance Sheet, Profit & Loss Account of the PC. * Undertaking that the BO will not carry out any trading and commercial activity in India. * Translated English version of the Company’s Certificate of Incorporation/Registration * Memorandum & Articles of Association * English version of the Copy of the Board resolution for opening office in India * Reasons for opening office in India like business transacted, details of customers, vendors etc. * Company’s profile with brief history, product details, group companies etc. * Special power of Attorney in favor of a local representative duly notarized
  6. 6.  A person resident outside India permitted by the Reserve Bank under Regulation 5, to establish a branch or Project Office in India may remit outside India the profit of the branch or surplus of the Project on its completion, net of applicable Indian taxes, on production of the following documents, and establishing the net profit or surplus, as the case may be, to the satisfaction of the authorized dealer through whom the remittance is effected.