Mentoassociates.com – Legal Articles

A person with Overseas Citizenship of India (OCI) can live and work in India indefinitely. However unlike an Indian Citizen, he cannot vote, have no right to hold constitutional offices, and no right to buy agricultural properties. He is also exempt from registration with the Foreigners Regional Registration Officer (FRRO) on his arrival in India.

An OCI is allowed to set up a proprietorship concern in India, on non-repatriation basis. The money to conduct the business should come from Indian Bank accounts in INR. The OCI should have a PAN Number and Indian Valid Address proof (ideally Aadhaar). The OCI can also buy/rent/ lease immovable property in India for the purpose of his business, except agricultural land.

If the OCI intends to put in any money at any point in time in the business from an overseas account, such a transfers qualify as an FDI and FDIs are not permitted in Sole Proprietorship.

The basic licenses/registrations required are registration under the Shops and Establishment Act and GST Registration.

Important documents required are Passport, Aadhar, PAN and address proof for the business establishment.

The Ministry of External Affairs attests original documents or true copies of documents for use in abroad.

Apostille is an authentication of a signature on a document that is recognized by an international body. It is the legalization of a document for international use under the terms of the 1961 Hague Convention abolishing the requirement of legalization for Foreign Public Documents. The country of destination determines whether the authentication is an apostille or certification. The apostille ensures that public documents issued in one signatory country will be recognized as valid in another signatory country.

Apostille is done for personal documents like birth/death/marriage certificates, Affidavits, Power of Attorney, etc. and educational documents like degree, diploma, matriculation and secondary level certificates etc.

Apostille is first authenticated by the designated authorities of the State/Union Territory from where the document has been issued. Thereafter Ministry of External Affairs legalizes the document on the basis of the signature of the designated signing authorities of the State Government/Union Territory.

Authored by:
Shrinivas Mudagannavar
Attorney
Mento Associates

1. Can foreign companies set up liaison office, branch office or project office in India?
A. Yes
2. Where is the application for the setting up of a liaison or branch office to be submitted?
A.Applications need to be submitted to Foreign Investment Division, Foreign Exchange Department,

Reserve Bank of India, Central Office, Mumbai through an Authorized Dealer bank

3. Which are the two routes under which application for liaison offices and branch offices considered

by the Reserve Bank?
A.Reserve Bank route where FDI is permitted under the automatic route and Government route

where FDI is not permitted under the automatic route.

4. What is profit making track record required for a branch office and liaison office to set up office in

India?
A. 5 years for a branch office and 3 years for a liaison office.

5. What is the net worth expected for a foreign company to set up branch office and liaison office in

India?
A. Not less than USD 100,000 for a branch office and not less than USD 50,000 for a liaison office.

6. What is the initial period of operation permitted for a branch office or a liaison office?
A. Initially three years. The same can be renewed later.

7. Is it mandatory for branch office and liaison office to obtain a PAN number?
A. Yes.

8. What are the activities a liaison office can undertake in India?
a.Representing the parent company in India.
b.Promoting export or import from or to India.
c.Promoting technical and financial collaborations
d.It cannot undertake any business activities and cannot earn income in India.

9. What are the activities a branch office can undertake in India?
a. Export or import of goods
b. Rendering professional or consultancy services.
c. Carrying out research work, in areas in which the parent company is engaged.
d. Promoting technical or financial collaborations between Indian companies and parent or overseas

group company.
e. Representing the parent company in India and acting as buying or selling agent in India.
f. Rendering services in information technology and development of software in India.
g. Rendering technical support to the products supplied by parent/group companies.
h. Airline / shipping company.
i. Retail and manufacturing activities are not permitted for branch offices.

10. Whether branch offices can remit profit outside India?
A. Yes, subject to applicable taxes in India.

11. When can a foreign company set up a Project office in India?
A. Foreign Companies who have secured a contract from an Indian company to execute a project in

India can set up a project office in India.

12. Are foreign partnership or proprietorship concerns permitted to set up branch/liaison office/

project office in India?
A. No.

13. Can entities from Nepal establish branch offices and project offices in India?
A. No.

14. Can foreign liaison offices, project offices and branch offices acquire immovable property in

India?
A. Only branch office and project office, not liaison office (exception being companies from Pakistan,

Bangladesh, Sri Lanka, Afghanistan, Iran, Bhutan or China).

1. What is FIPB?
A. FIPB stands for Foreign Investment Promotion Board. This is a government body which offers a single window clearance for proposals on Foreign Direct Investment in India.

2. What types of foreign investments are approved by FIPB?
A. Investments which are not through the Automatic Route require the approval of FIPB.

3. Are the recommendations of Foreign Investment Promotion Board final?
A. No. Recommendations of Foreign Investment Promotion Board, for foreign investment proposals not more than Rupees Six Hundred Crore will  be considered and approved by the Finance and Company Affairs Minister. Investment proposals beyond Rupees 600 crores would be initially recommended by Foreign Investment Promotion Board and thereafter sent to Cabinet Committee of Economic Affairs for decision.

4. Under which ministry is FIPB placed?
A. FIPB is placed in the Department of Economic affairs under the Ministry of Finance.

5. Which department looks after Foreign Investment Policy?
A. The Foreign Investment Policy is looked after by DIPP (Department of Industrial Policy and Promotion).

6. Where is the office of FIPB?
A. At North Block, New Delhi.

7. What is the normal time frame for an approval from FIPB?
A. Six weeks.

1. What are the legal forms in which a foreign company or a foreigner can conduct business in India?

a. By incorporating a company under the Companies Act 1956, which may be a joint venture or a wholly owned subsidiary.
b. By opening an office of a foreign entity which may be a liasoning office, representative office, a project office or a branch office.

2. What are the two routes through which foreign investment is permitted in India?
a. Automatic route
b. Government route.

3. What is automatic route of Foreign Investment?
Under this up to 100% of investment is permitted in most of the activities and sectors. There is no requirement of any prior government approval for the investments in this route. The investor shall notify the Reserve Bank of India within 30 days of the receipt of the inward remittance and file the required documents with RBI within 30 days of issue of shares to the non resident investors.

4. Explain Government route of Foreign Investment?
These are sectors or activities where foreign investment requires prior government permission from Foreign Investment Promotion Board (FIPB). These include:
a. Sectors mentioned in Press Note I(2005 series) issued by the Government of India
b. Areas reserved for Small Scale sector.

5. Which are the areas where Foreign Direct Investment is not permitted in India?
A.   a. Retail Trading
b. Atomic Energy
c. Lottery business
d. Gambling and betting
e. Chit fund
f. Nidhi company
g. Agricultural or plantation activities
h. Housing and real estate business.
i. Transferable Developmental Rights.

6.  Can a foreigner repatriate the profits made in India?
Yes.

7. Can a foreigner do partnership or proprietorship concern business in India?
No. However NRIs and PIOs are permitted for the same. But the profits are not repatriable.

The Foreign Contribution (Regulation) Act 1976 regulates the acceptance and utilization of foreign contributions or foreign hospitality by people and associations in India. The act prohibits acceptance of foreign contribution by any:
a. Candidate for election
b. Correspondent, columnist, cartoonist, editor, owner, printer or publisher    of a registered news paper.
c. Judge, Government servant or employee of any corporation
d. Member of any legislature
e. Political party or office-bearer thereof.

Organizations which are not a political party, but which have a political nature can accept foreign contribution only with prior permission of Central Government.Associations like trust, society, companies etc with a definite cultural, economic, educational, religious or social program can accept foreign contribution, only if they register with Central Government. Further such associations are permitted to receive foreign contribution only through a particular branch of a bank of their choice. Such an association shall give intimation to the Central Government regarding the amount of each foreign contribution received by it, the source and manner of receipt, purpose and manner for which such foreign contribution was utilized.

Every citizen of India who receives any scholarship or stipend from any foreign source shall give intimation to the Central Government regarding the amount, source and purpose of the said scholarship or stipend. If the amount of such scholarship or stipend does not exceed Rs 36,000/- per annum, the recipient is not bound to give intimation to the central government

No member of a legislature, office bearer of a political party, judge, government servant or employee of any corporation shall, while visiting any country outside India, accept any foreign hospitality except with the prior permission of the Central government. This restriction is not applicable for receipt of emergent medical aid during such visits. Further, a member of an Indian delegation is permitted to accept a gift from a foreign source, during a foreign trip, subject to the regulations made by the Central government in this regard.

A foreign hospitality shall mean any offer made by a foreign source, for providing a person with the costs of travel to any foreign country or with free board, lodging, transport or medical treatment. A foreign source does not include NRIs but the same shall include PIOs.Associations, organizations, trusts, societies etc. receiving foreign contribution shall maintain proper accounts in that regard.

Acceptance of salary, wages or other remuneration by a person, from any foreign source by way of payment in the ordinary course of business transacted in India is not prohibited by the Act.

The Foreign Contribution (Regulation) Act 1976 regulates the acceptance and utilization of foreign contributions or foreign hospitality by people and associations in India. The act prohibits acceptance of foreign contribution by any:
a.Candidate for election
b.Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered news paper.
c.Judge, Government servant or employee of any corporation
d.Member of any legislature
e.Political party or office-bearer thereof.

Organizations which are not a political party, but which have a political nature can accept foreign contribution only with prior permission of Central Government.
Associations like trust, society, companies etc with a definite cultural, economic, educational, religious or social program can accept foreign contribution, only if they register with Central Government. Further such associations are permitted to receive foreign contribution only through a particular branch of a bank of their choice. Such an association shall give intimation to the Central Government regarding the amount of each foreign contribution received by it, the source and manner of receipt, purpose and manner for which such foreign contribution was utilized.
Every citizen of India who receives any scholarship or stipend from any foreign source shall give intimation to the Central Government regarding the amount, source and purpose of the said scholarship or stipend. If the amount of such scholarship or stipend does not exceed Rs 36,000/- per annum, the recipient is not bound to give intimation to the central government. No member of a legislature, office bearer of a political party, judge, government servant or employee of any corporation shall, while visiting any country outside India, accept any foreign hospitality except with the prior permission of the Central government. This restriction is not applicable for receipt of emergent medical aid during such visits. Further, a member of an Indian delegation is permitted to accept a gift from a foreign source, during a foreign trip, subject to the regulations made by the Central government in this regard.
A foreign hospitality shall mean any offer made by a foreign source, for providing a person with the costs of travel to any foreign country or with free board, lodging, transport or medical treatment. A foreign source does not include NRIs but the same shall include PIOs.
Associations, organizations, trusts, societies etc. receiving foreign contribution shall maintain proper accounts in that regard.
Acceptance of salary, wages or other remuneration by a person, from any foreign source by way of payment in the ordinary course of business transacted in India is not prohibited by the Act.

There are about 20 million People of Indian Origin found all over the world. A PIO is one who has held an Indian passport anytime earlier or whose parents or grandparents or great grand parents were citizens of India having born and permanently resided here. However citizens of Pakistan and Bangladesh cannot be a PIO.

The Government of India started the PIO card scheme with effect from 31-03-99. As per a union home ministry 2002 notification, PIO card is provided even to foreign nationals married to Indian citizens or PIO. There is an international association of PIO called Global Organization of People of Indian Origin (GOPIO). 

There are several advantages for a person with a PIO card. They are entitled for visa free entry into India, have equal rights as NRI over property matters, their children can study in Indian institutions under NRI category. They need not report their presence in FRRO (Foreigners Regional Registration Office) up to 180 days. After 180 days, they need to report their presence to the nearest FRRO, within 30 days. However they have no political or voting rights in India.

PIO who are out of India can apply for the PIO Card, through concerned Indian embassy/High commission /Consulate. Those who are in India on a long term visa for more than one year can apply through concerned FRRO at Delhi, Mumbai, Chennai and Calcutta. Those living in other areas can apply to Joint Secretary (Foreigners), Ministry of Home Affairs located at 1st floor, Loknayak Bhavan, Khan Market, New Delhi. Citizens of Pakistan and Bangladesh cannot get PIO card. Government can reject an application without assigning any reason.

Documents required may include:
A) For applications based on spouse:
a) Original Indian passport of wife/husband
b) Original PIO card of husband / wife
c) Original marriage certificate

B) For applications based on PIO definition:
a) Parent’s birth certificate
b) Grand Parent’s or Great Grand parent’s birth certificate 
Apart from this there may be other documents asked by the authorities at the time of filing of the application.

NRIs and PIOs can purchase residential and commercial property in India. To purchase agricultural and plantation lands, they require special permission of the Reserve Bank of India.Foreign nationals of non-Indian origin, who are resident outside India, cannot purchase immovable property in India. But they can take a property on lease for residential purpose, for a term not exceeding more than 5 years. A foreign national who is a person resident in India can purchase immovable property, provided they take all the approvals from the concerned state government and other authorities. However, this benefit is not applicable for the citizens of Nepal, Bhutan, Bangladesh, Afghanistan, Pakistan, Sri Lanka, Iran and China. Citizens of these countries require prior permission from Reserve Bank of India.A foreign company which has a place of business in India is entitled to acquire immovable property in India for the purpose of undertaking activities of such a company. Again companies which are incorporated in Nepal, Bhutan, Bangladesh, Afghanistan, Pakistan, Sri Lanka, Iran and China having place of business in India need prior approval of Reserve Bank of India  to acquire immovable property.

NRIs and PIOs can acquire immovable property in India by way of gift from a person resident in India, NRI or a PIO. However, only residential and commercial properties can be acquired by way of gift. Agricultural and plantation properties cannot be acquired by way of gift. NRIs and PIOs and can inherit immovable property from a person resident in India, NRI or a PIO. However citizens of Nepal, Bhutan, Bangladesh, Afghanistan, Pakistan, Sri Lanka, Iran and China need prior permission of the Reserve Bank of India in this regard. For NRIs and PIOs, the payments required for purchasing immovable property in India shall come through funds remitted through normal banking channels or from funds in NRE, NRO, FCNR (B) accounts of the person held in India. No payment can be made outside India for this purpose. The funds required for the property purchase by a foreign company having a place of business in India shall come through foreign inward remittance. After the purchase of the property, necessary intimation shall be given to the Reserve Bank of India in this regard. The sale proceeds of such a property can be repatriated only with the permission Of Reserve Bank of India.

1)Valid passport is a very essential document for a person to depart from India.

2)There are three types of Passports.
a. Ordinary passport
b. Official passport
c. Diplomatic passport.

3)A passport authority may refuse a passport in the following cases:
a. If an applicant has been convicted by a Court during a period of 5 preceding years.
b. If any criminal proceedings are pending against said person
c. If a warrant or a summons is issued by Court against the applicant.

4)A passport authority may impound a passport in the following cases:
a.If a passport was obtained on the basis of wrong information or suppression of material  information.
b.If the holder of the passport has been convicted by a    Court in India, for any offence involving moral turpitude.
c.If any criminal proceedings are pending against the    passport holder.

5)The Court convicting the holder of a passport for any offence under the Passport Act or the rules made hereunder may also revoke the passport or travel document.

6)There are various offences under the Passport Act which provide punishment for the violation of   various provisions of the Act. It is an offence to furnish false information or ppress any material information while applying for a Passport. Similarly using passport issued to another person, allowing   another person to use one’s passport are all offences under the Passport Act. Customs officers,   Police officers, and Emigration officers are authorized to arrest people who commit offences under the Passport Act.

7)An ordinary passport for persons other than children below the age of 15 years, containing 36 pages  or 60 pages, shall be in force for a period of 10 years or 20 years as the case may be, from the date of  its issue. An ordinary passport for a child below the age of 15 years, containing 36 pages shall be in   force for a period of 5 years, from the date of its issue or until the child attains the age of 15 years,   which ever is earlier.

8)An application for passport may be submitted personally or through a representative carrying an  authority letter, all original documents should be shown and self attested copies attached.

9)Any person having an ECR stamp put on his passport have to get a clearance from the Protector  General of Emigrants,

before they leave the Country. But the passport rules specify a list of persons  for whom ECR stamping is not required. These include all Gazetted governmental officials, all income  tax payers, all professional degree holders, all people with educational qualification of matriculation  and above, all persons above the age of 50, all children up to the age of 18 etc.