Monday, January 24, 2011

Procedure for Closure of Branch or Liaison Office or project office


Procedure for Closure of Branch or Liaison Office or Project Office
 
While closing down the Branch or Liaison offices, the company has to approach the designated AD Category -1 bank with the following documents:

Permission to remit winding up proceeds of branch/office (Other than Project Office)—

(1) A branch or office established in India by a person resident outside India may, for making remittance of its winding up proceeds, apply to the Authorised Dealer concerned supported by the following documents, namely :

(A) copy of the Reserve Bank’s permission for establishing the branch/office in India;
(B) Auditors certificate :—
(i) indicating the manner in which the remittable amount has been arrived and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets;
(ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees etc. of the branch/office have been either fully met or adequately provided for;
(iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained unrepatriated to India; and
(iv) confirming that the branch/office has complied with all regulatory requirements stipulated by the Reserve Bank of India from time to time regarding functioning of such offices in India.
(C) no-objection or Tax clearance certificate from the Income-tax authority for the remittance;
(D) confirmation from the applicant that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance; and
(E) a report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the office in India.

(2) On consideration of the application made under sub-regulation (1), the authorised dealer concerned may permit the remittance subject to the directions issued by the Reserve Bank in this regard, from time to time.”
Obligations on the part of Designated AD Category -1 Bank
 
AD banker has to ensure that the LO/ BO had filed their respective Annual Activity Certificates with RBI for the previous years in respect of the existing Liaison / Branch Office.  It is the duty of the bank to obtain such confirmation in this regard from the Central Office of the Reserve Bank in cases of BO and the regional offices concerned in the case of LOs. 

Designated AD Category-1 Bank has to report winding up of such BO/LO to the Reserve Bank ( Central office for BO and regional office in case of LO’s ) along with  a declaration stating that all the required documents were submitted by BO / LO which have been duly scrutinised and found to be in order. If the documents are not found in order or cases are not covered under delegated powers, the AD –Category – 1 bank may forward the required application to the Reserve Bank with their remarks for necessary action.

From the Company Law point of view , Form 52 has to be filed with MCA.

For winding up project office, the following procedure is required to be followed:

a. For establishing a project office in India where  prior approval has been taken from Reserve Bank of India , following steps should be taken
  1. Sumit an application to the respective regional office of the Reserve Bank of India
    a request for winding up of Project Office .

The application for winding up shall be submitted along with the following documents:
  1. Copy of the Reserve Bank's permission/ approval from the sectoral regulator(s) for establishing the project office.


  1. A Chartered Accountant's certificate :
    1. indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets;
    2. confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc. of the office have been either fully met or adequately provided for;
    3. Confirming that no proceeds accruing from sources outside India has remained un-repatriated to India.

  • No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance 
  •  
  • confirmation from the parent entity that no legal proceedings in any Court in India are pending against the Liaison Office and there is no legal impediment to the remittance

  • A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the project office in India.
  • On receipt of approval from regional office of Reserve Bank of India, AD category bank 1 can allow the remittance of funds.

4 comments:

  1. Dear Visitor,

    If you need any further info or clarification on the subject , please revert to me in the following email id:

    rvsekar2007@gmail.com

    Regards

    R.V.Seckar

    ReplyDelete
  2. Sir,

    We have closed a liason office in 2006 . It is still shown as active status on MCA. What to do to update MCA. we have done all formalties with RBI.

    Aditya Garg
    adityagarg13@gmail.com

    ReplyDelete
  3. Dear Sir,

    in one of my private limited companies whihc was incorporate in sept 2010, we incorporate company wiht a one indian shareholder (41%) and one foriegn shareholder (59 %). The foriegn director took laon of Rs 51000 from me and paid for the intial expenses and thereafter as per the suggestion by My banker we opened a regular salary account in the name of the foriegn director in India ( as he was appointed as Cheif technology officer and was holding employment visa) after five months we took the inital subscription money from his salary account. On insitance by our company secretary, as by then we had not colsed our accounts, we converted the amount so received as unsecured loans. and now we are awaiting fresh FIRC from the foreign director.
    this has been done on the basis of the suggestion of our company secretary. pleas suggest if teh same is correct

    ReplyDelete
  4. For the query relating to shifting of liaison office, I got your reply from csmysore as follows: "If you shift the office to another place within the city, you should intimate the designated AD Category - I bank and the Reserve Bank. In the event of shifting the Office to any other city in India, prior approval of the Reserve Bank shall have to be obtained."

    Dear Sir

    My case is shifting to another city but within the same state.

    1. Now my query is whether intimation to RBI through AD Category -I Bank is sufficient OR whether we have to intimate AD Category - I bank and the Reserve Bank separately?

    2. Apart from the aforesaid prior approval, is there any approval from Ministry of External Affairs/ Ministry of Finance etc.?

    3. Whether the requirement intimation to the Police Station of respective jurisdiction within 14 days apply for shifting also?

    4. Is there any other Pre and Post reporting/ compliance requirements in this regard?

    Thank you.

    ReplyDelete