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📚 Learn/ / FEMA - Foreign Exchange Management Act
Microlesson · 5-min read

Artificial Person under FEMA - Branch/Office/Agency Rules

# Artificial Person under FEMA

An Artificial Person refers to any person, body corporate, or entity registered or incorporated under Indian law. The residential status of branches, offices, and agencies is determined by specific rules.

## Person Resident in India (PRI) - Artificial Persons

An artificial person is treated as PRI if:

1. Any person or body corporate registered or incorporated in India

  • Example: Tata Motors (incorporated in India)

2. Branch, Office, or Agency located in India that is owned OR controlled by a PROI

  • Example: Tesla Mumbai (Tesla USA is PROI, but Mumbai branch is in India)

## Person Resident Outside India (PROI) - Artificial Persons

An artificial person is treated as PROI if:

  • Branch, Office, or Agency located outside India that is owned OR controlled by a PRI
  • Example: Tata Motors Dubai Branch (Tata Motors is PRI, but Dubai branch is outside India)

## Key Rule

> The location of the branch/office/agency determines its residential status, regardless of who owns or controls it.

## Quick Reference Table

Location of BranchOwner/ControllerStatus
In IndiaPROIPRI
Outside IndiaPRIPROI

Worked example

### Example 1

Example 1: Tata Motors is incorporated in India. Status: PRI (incorporated in India).

### Example 2

Example 2: Tesla USA (PROI) operates a Mumbai office. Status of Mumbai office: PRI (branch in India, owned by PROI).

### Example 3

Example 3: Tata Motors (PRI) operates a Dubai branch. Status of Dubai branch: PROI (branch outside India, owned by PRI).

### Example 4

Example 4: Infosys Ltd. (incorporated in India) opens an agency in Singapore. Status of Singapore agency: PROI.

⚠️ Common exam mistakes

  • Determining the status of a branch by looking at the parent company's status instead of the branch's location.
  • Assuming an agency in India of a foreign company is PROI - it is PRI because of location.
  • Forgetting that 'owned OR controlled' (either, not both) by PROI is sufficient for an Indian branch.
  • Confusing registration/incorporation (relevant for parent) with location (relevant for branches).
Reference:
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