Set up of Branch Office/Liaison Office
- Ideal for foreign entities
- For starting business in India
- Simple & Secure Online Process
- Get your RBI compliances
- Get Post Incorporation Assistance
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Introduction
Setup Branch Office in India:
Branch Office as stated in section 2(13) of Companies Act, 2013 “office in relation to a company, means any establishment described as such by the company“. With help Branch Office foreign companies can conduct their business in India in a full-fledged manner. Branch Offices are allowed to carry the same or substantially the same activities as carried out by their main/parent or group organizations. The Branch Offices are not allowed to directly indulge in carrying out the manufacturing activities as they are permitted to sub-contract such kind of services to an Indian manufacturer.
Liaison Office in India
Liaison Office also known as Representative office is primarily set up for exploring the business environment and for understanding the business and investment needs and climate of a country in which the parent company wants to diversify or through which the parent company facilitates its business. Liaison Office cannot conduct any commercial activities also and must use remittance received only from its parent foreign company to carry its activities.
Project Office in India
Project Offices are set up In India to create a presence for a limited period of time It is more or less like a branch office set up for executing a specific project like turnkey constructions, highways etc for carrying out their operations in India. Project Offices can represent the interest of the foreign company by undertaking the work of commercial activities in India if it has a secured contract with an Indian Company. These projects offices are duly registered with ROC and RBI, hence are preferred by foreign companies.
Conditions for Setup of Branch Office
Set Up of Branch Office
- Foreign Parent Company must have net worth of at least $100,000 or equivalent
- Five Financial Year records of parent company of its annual profit
- The profits of the branch office can be remitted from India to its parent company after audit of books of A/c and payment of applicable taxes.
- The name of foreign parent company and branch office must be same.
Set Up of Liaison Office
- Foreign Parent Company must have net worth of at least $50,000 or equivalent
- Three Financial Year records of parent company of its annual profit
- The liaison office set up in India cannot earn any income in India. Must be financed from parent company.
- The name of foreign parent company and branch office must be same.
Set Up of Project Office
- Foreign Parent Company must have contract with Indian Company for the execution of a Project
- The project must be approved and cleared from the appropriate authority.
- The project is funded by inward remittance from abroad or International Financial Agency. In absence, Indian Entity will avail the loan from banks of India.
- The Project Office must be opened within 6 months from the date of approval letter.
Documents Required for Incorporation
- Passport size photo
- Business Address Proof Owned: Copy of Registry and Latest Electricity / Water Bill / Phone Bill
- PAN Card and Aadhar Card of the Authorized representative
- Business Address Proof Rented/Leased: Rent Agreement / NOC from the Owner and Latest Electricity / Water Bill / Phone Bill
- Passport of Foreign Nationals
- POA/Board Resolution for appointing authorized representative
Specific Documents
- Incorporation documents from the parent company translated in English
- Audited financial statement of the last Five/Three preceding years
- List of Directors and Shareholders of parent company
- Board Resolution from the parent Company for setting up of branch office / liaison office / project ofice in India
- Details of shareholders of the applicant company
- Banker’s Report from the applicant’s banker in the host country
- Net worth certificate attested by Certified Public Accountant (CPA)
- Board Resolution for Opening Bank Account with the Banker
Process of Liaison /Project Office/Setup Branch Office in India
1. Complete the Application Form
2. Document Processing
3. Application for DSC
4. Filing of Application with AD Bankers
5. Approval from RBI for Set up
6. Preparation and E-filing for Registration with ROC
7. Get Certificate of Incorporation
More Insights on Setup Branch Office in India
- A Branch Office is not given the status of separate legal entity and is subject to pay tax @ 40% plus surcharge and cess and shall be treated same as like its parent company.
- No additional place of business can be introduced to the business or be started unless approval is taken from Reserve Bank of India.
- Various other regulatory compliances are required to be made to Reserve Bank of India for both the Branch Office and the Liaison Office.
- Renewal of Registration, the initial approval for operating a liaison office in India is granted for a period of three years which can be further extended to a period of another 3 years subject to compliances made and the permission granted by the Reserve Bank of India. The extension can be applied at least one or two months before the expiry of the initial time period.
FAQs on Setup of Branch Office/Project Office/Liaison Office
Yes, a Branch Office shall have a PAN Card for opening of bank accounts as well as for payment of tax for keeping a track of the monetary transactions;
The Investors who want to operates a Company through a branch office shall be allowed to purchase property in India as long as their respective assets are used for performing the company’s activities and the other associated operations. Foreign Companies cannot acquire property in India with the purpose of renting it.
The application from the above entities are considered by the Reserve Bank of India under two routes which are :-
- Automatic route – In this principal business of the foreign Company falls under such sectors where the government has allowed 100 percent of Foreign Direct Investment.
- Government route – In this route principal business of the foreign Company falls under such sectors where the government has not permitted 100 percent FDI. Here applications from the entities falling under this category and the non-government organizations are considered in consultation with the Ministry of Finance, Government of India by the RBI.
A Company is required to file within 30 days of its allotment Form FCGPR along with the requisite documents with the RBI on FIRMS portal www.rbi.org.in.
The formula for calculating Net Worth is as follows:-
Net Worth is total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement which shall be certified by a Certified Public Accountant or any Registered Accounts.
The Branch Office is required to carry the below mentioned activities every year:
- Maintenance of the Books of Accounts;
- Audit of Annual Accounts;
- Filling of the Annual Activity Certificate with Reserve Bank of India;
- Filling of the Annual Return and respective Balance sheet for the Financial Year ending with the Registrar of Companies;
- Intimating the change in constitution of the Foreign Company to Reserve Bank of India & ROC if any;
- Intimating the changes in the Directors of Foreign Company to RBI & ROC if any;
- Intimating each and every change with respect to Branch Office to RBI & ROC;
- No additional place of business can be introduced to the business or be started unless approval is taken from RBI.
The initial approval for operating a liaison office in India is granted for a period of three years which can be further extended to a period of another 3 years subject to compliances made and the permission granted by the Reserve Bank of India. The extension can be applied at least one or two months before the expiry of the initial time period.
It is the documentary proof evidencing that the Company has been registered and having its unique identification number as Corporate Identification Number.