Indian resident opening an offshore company? rbi and fema

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 December 2014 Dear Sir,

I would be really thankful if an learned expert can answer the query below;

1). Can a manufacturing export import proprietorship firm based in India can open up a offshore company abroad (free port) to facilitate trade for third country exports (Merchanting trade), where all the banking transactions will be from India and the offshore company will just facilitate the trade to take place? My question is "Can a Indian resident individual legitimate business owner (proprietor) can open up a office abroad as an offshore company and if YES, whom they need to inform and when (after registration or before registration)?"

2). If company can also open up a international bank account in the country of offshore set up. If yes, do they need to inform any authority in India and to whom?

3). Can the offshore company do direct business? If Yes, do they need to declare that business to Indian Authorities?

Thank you in advance!

Looking forward to hear from thee experts soon.

Best Regards,

Amol S Joglekar

Amol S Joglekar (Expert)
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16 December 2014 You can very well form the company abroad. There are instances where Indian residents have formed Companies not only on FREE port but say USA, Australia, Canada and so on
Please get into touch with Company Secretary. It should guide you about the in depth procedure to open the company abroad.
All the best

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Querist : Anonymous

Querist : Anonymous (Querist)

16 December 2014 Dear Mr. Joglekar,

Thank you very much for your reply. I appreciate it but I would be highly thankful if I can get clear answers to my questions posted here. It would be a help to many, I guess! :-)

Thanks again for your time!
Regards,

Amol S Joglekar

Amol S Joglekar (Expert)
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16 December 2014 01. Yes. No need to inform any Indian Authority, except while filing the ITR of self, needs to declare the assets located outside India
02. It can open international bank account. No need to inform any authority except as said above.
03. The off shore company can do DIRECT business, subject to however the law of the country in which you are registering the offshore company, does not restrict so.

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 December 2014 A person resident in India, being an exporter who has undertaken a construction contract or a turnkey project outside India or who is exporting services or engineering goods from India on deferred payment terms may open, hold and maintain a Foreign Currency Account with a bank outside India, provided that -

a) approval as required under the Foreign Exchange Management (Export of goods and services) Regulations, 2000 has been obtained for undertaking the contract/project/export of goods or services, and

b) the terms and conditions stipulated in the letter of approval have been duly complied with.

Please visit the site for help.

https://www.indialegalhelp.com/files/guide-business-abroad.pdf

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

16 December 2014 Thank you Mr Seetharaman for the detailed PDF link.

However, Mr. Joglekar statements differ from what has been written in the PDF file.

PDF reads "that a proprietor or individual needs to take prior approval in opening up a company outside from RBI...."""...Only patnership or limited firms can use automatic way..."

If a individual or proprietor has opened up a office abroad without the prior notification to RBI, can they inform them later on? If yes, are there any penalties?

Best Regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 December 2014 You can consult the law firm given in PDF link.

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