The Act clearly defines a foreign company under Section 2(42). A foreign company is any company or body corporate incorporated outside India which—
1. has a place of business in India whether by itself or through an agent, physically or through electronic mode; and
2. conducts any business activity in India in any other manner.
Hence, a foreign entity to be considered as a foreign company, has to fulfill both the criteria mentioned above, i.e., having a place of business in any manner specified above, and conducting any business activity in India.
A Liaison Office (LO) functions as a representative office set up primarily to explore and understand the business and investment climate. A Liaison Office (also known as Representative Office) can undertake only liaison activities. The role of such offices is, Therefore, Limited to collecting information about possible market opportunities, Source of supply, providing information about the parent company and its products to the prospective Indian customers or vise versa to its vendor.
Liaison Office (LO), Branch Office (BO); Project Office (PO) can undertake the following activities in India
a) Representing parent company / group companies in India.
b) Promoting export/import from/to India.
c) Promoting technical/financial collaborations between parent/group companies and companies in India.
d) Acting as a communication channel between the parent company and Indian
Once the purpose of setting up the Liaison / Branch / Project Office is completed in India, such offices have to be closed. And approval for closure has to be taken from Income Tax Department / RoC and AD / RBI.
1. First such offices have to get NOC from MCA / RoC for closure of place of business in India
a. For getting NOC all the required forms and details should have been provided to Forms like FC 2, FC-3 and FC-4 should have been filed on annual basis and as per the instructions mentioned.
b. If all the Annual Returns are filed with the RoC. After filling Annual Activity Certificate, Undertaking from such Offices in India, Certificate from Auditors and also from the parent company has to be uploaded as an attachment to form FC-2 for closure of place of business in India.
2. Approval from AD / RBI for closure of Office and Remittance of Proceed
a. Every LO / BO / PO should have submitted its Annual Report, along with the AAC and other certificate from such Office and its Auditor to the AD / RBI on annual basis.
b. There should be a valid letter from AD / RBI for Opening such places of business in If the validity of such letter has expired, one has to approach the bank for extension of same.
c. Financial statement as on date along with the status of assets in India.
d. Details of all Annual Returns filed with the RoC, Annual Activity Certificate, Undertaking from such Offices in India, Certificate from Auditors and the parent company along with the details and acknowledgement has to be attached with form FC-2 for closure of place of business in India.
e. Amount of remittance and Procedure of calculation of such remittance.