Regulations 4 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The last clauses of regulation 4 cover three end-of-life topics: how an office may acquire property, how its assets may pass to a joint venture or wholly owned subsidiary, and how it closes and remits winding-up proceeds. The Master Direction (paragraphs 10 and 11) restates closure and transfer in more detail.
This article reads the Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 (Notification No. FEMA 22(R)/RB-2016, dated 31-3-2016), as per the copy consulted, a third-party print of the Regulations as notified, beside the Master Direction updated as on May 18, 2021. Closure of a branch or liaison office is applied for to the Authorised Dealer Category-I bank with the approval copy, an auditor's certificate, a no-litigation confirmation and a Registrar of Companies report. Transfer of assets to a joint venture or wholly owned subsidiary goes to the bank too. Changes after 18 May 2021 are not in the sources consulted.
Authority
The preamble cites "sub-section (6) of section 6 of the Foreign Exchange Management Act, 1999". See the Act articles on section 6(4) to (6) and sections 11 and 12. For closing an office, see our liaison, branch and project office service, and for the wider process our guide on closing a foreign company's operations in India.
Regulation 4(j): acquisition of property
Acquisition of property by a branch office or project office "shall be governed by the guidelines issued under Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations". That is how the copy prints it. The word "outside" sits oddly in a clause about offices in India; it is flagged here and not corrected, and the cross-reference should be checked against the current text. The Regulations on immovable property in India are not in the sources consulted, and the Master Direction (paragraph 12) repeats the same wording. The Master Direction's guidance note adds that, under section 6(3)(h) of the Act, BOs, LOs and POs have general permission to carry out permitted or incidental activities from leased property if the lease period does not exceed five years. The Act text now prints section 6(3) as omitted and section 47(3) keeps earlier Reserve Bank regulations in force, so read the Act articles above with that in mind.
Regulation 4(k) and Master Direction paragraph 11: transfer of assets
A person permitted to establish a branch, liaison or project office may apply to the concerned AD Category-I bank to transfer its assets to a Joint Venture, Wholly Owned Subsidiary or any other entity in India. The bank is guided by the Reserve Bank's instructions. Paragraph 11 of the Master Direction gives the conditions:
- only offices that adhere to operational guidelines: AACs submitted up to the current financial year at regular annual intervals with copies endorsed to the Director General of Income Tax (International Taxation), a PAN obtained, and registration with the Registrar of Companies under the Companies Act, 2013 if necessary;
- transfer by way of sale to a JV or wholly owned subsidiary allowed only when the non-resident entity intends to close its BO, LO or PO operations in India;
- a statutory auditor's certificate with details of assets (date of acquisition, original price, depreciation, book or written down value and sale consideration), confirming the assets were not revalued; sale consideration not more than book value in each case;
- assets acquired from inward remittances, no intangible assets such as goodwill or pre-operative expenses, and no revenue expenses such as leasehold improvements capitalised;
- all applicable taxes paid; and
- credits to the office's bank accounts on account of the transfer are treated as permissible credits.
The paragraph also lets the bank permit donation of old furniture, vehicles, computers and other office items to NGOs or other not-for-profit organisations after satisfying itself about the bonafides.
Regulation 4(m) and Master Direction paragraph 10: closure and winding-up proceeds
Under regulation 4(m)(I), requests for closure of a branch office or liaison office may be submitted to the AD Category-I bank with:
| Document | Content |
|---|---|
| Approval copy | Copy of the Reserve Bank's or the bank's approval for establishing the office |
| Auditor's certificate | (1) the manner in which the remittable amount has been arrived at, supported by a statement of assets and liabilities and the manner of disposal of assets; (2) all liabilities in India, including arrears of gratuity and other benefits to employees, have been fully met or adequately provided for; (3) no income accruing from sources outside India, including proceeds of exports, remains unrepatriated to India |
| Confirmation | From the applicant or parent that no legal proceedings in any Court in India are pending against the office and there is no legal impediment to the remittance |
| Registrar of Companies report | Regarding compliance with the Companies Act, 2013, in case of winding up of the branch or liaison office in India |
| Others | Any other document specified by the Reserve Bank or the bank in the approval |
Regulation 4(m)(II) adds that remittance of winding-up proceeds of a branch or liaison office is governed by the guidelines under the Foreign Exchange Management (Remittance of assets) Regulations, which are not in the sources consulted.
What the Master Direction (paragraph 10) adds. It extends closure to POs as well as BOs and LOs, and allows the nodal office to submit. It lists the same documents, with the ROC report "wherever applicable", and adds that the designated bank must ensure the BO, LO or PO had filed its AACs. It permits remittance of winding-up proceeds in respect of offices of banks and insurance companies after obtaining copies of permission of closure from the sectoral regulators with the other documents. Also, paragraph 2(viii) says that for winding up of the business of an SEZ branch, the branch approaches an AD Category-I bank with the documents listed in paragraph 10.
Example
Linden Hydraulics Ltd, an invented foreign manufacturer, decides to close its liaison office and convert its India presence into a wholly owned subsidiary. The liaison office has filed all AACs, holds a PAN and has no court proceedings. It first deals with transfer of assets: the statutory auditor certifies the assets, their book values and that none was revalued, and the sale to the subsidiary is priced at no more than book value; no goodwill or leasehold improvements are capitalised. It then applies to the designated bank for closure with the approval copy, the auditor's certificate on liabilities, gratuity and export proceeds, the no-litigation confirmation and the Registrar of Companies report. Once the bank is satisfied, winding-up proceeds can be remitted under the guidelines referred to in regulation 4(m)(II).
Our guide on the Annual Activity Certificate covers the filing that the bank checks before closure. The earlier articles in this series cover profit remittance and the AAC and validity and project office conditions. Later amendments and circulars should be checked; changes after 18 May 2021 are not in the sources consulted.
Need help closing an Indian office?
A clean closure needs the AACs, tax position, auditor's certificates and Registrar of Companies report to line up. Our liaison, branch and project office team prepares the closure file and the transfer-of-assets certificate.
Key takeaways
- Closure of a BO or LO is applied for to the AD Category-I bank with the approval copy, an auditor's certificate, a no-litigation confirmation and a Registrar of Companies report.
- The Master Direction extends closure to project offices and requires AACs to have been filed.
- Transfer of assets by sale to a JV or wholly owned subsidiary is allowed only when the entity intends to close the office, at not more than book value.
- Regulation 4(j) is printed with the words "immovable property outside India"; the cross-reference should be checked.
- Winding-up remittances are governed by the Remittance of assets guidelines, which are not in the sources consulted.
Read next
- Profit remittance and the Annual Activity Certificate: regulation 4
- Liaison office validity and project office conditions
- Closure of foreign company operations in India
- Annual Activity Certificate for BO, LO and PO
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.