Meaning of Branch Office: Branch office implies an establishment set up by parent company to perform the similar business operations at different locations. One of the common strategies of the Companies to expand their business at the national or international level, is to set up branches, at different places. Branches are a part of the parent organization, which are opened to perform the same business operations as performed by the parent company to increase their reach.

Meaning of Subsidiary Company: Subsidiary Company is understood as the company whose fully or partially controlling interest is held by another Company.

Point of Difference Branch Office Subsidiary Company
Approving Authority

 

Reserve Bank of India and Ministry of Corporate Affairs Ministry of Corporate Affairs
Registration Requirements Net Worth of Foreign company must be above $100000

The Foreign Head Office shall have a profitable track record of 5 years

Minimum No. of Directors: 2 in case of Private and 3 in case of Public;

Minimum No. of shareholders: 2 in case of Private and 7 in case of Public;

Registered Office: The Registered office shall be situated within India in any State;

Name: The name of the Subsidiary Company may or may not be same as of its Holding Company.

Registration in India Companies incorporated outside India engaged in different activities can setup a BO in India with specific approval of Reserve Bank of India (RBI).
  • An incorporated entity formed and registered under Companies Act, 2013. It is generally a private limited company for a closely held shareholding.
  • It is distinct and legal entity apart from its shareholders.
Liabilities Liabilities extend to Parent Organization. Liabilities limited to Subsidiary Company.
Reports to Head office Holding Company or Shareholders
Business Activities Branch conducts the same business as of parent organization Subsidiary may or may not conduct same business as parent organization
Separate Legal Entity

 

Yes, as far as MCA filings and Taxation are concerned. Yes
Ownership The parent organization has 100% ownership interest in the branch The parent organization has more than 50% ownership interest in the subsidiary
Whether invoicing from India allowed ? Yes Yes
 
Renewal of registration required? Generally, no but in some cases RBI gives approval for 2-3 years. No
Exchange Control

 

  • Outflow: Remittance of profits after payment of tax
  • Inflows: Allowed as transfer from HO
  • Outflow: allowed as Dividend, Royalty, service or technical fee
  • Inflows: Allowed as Equity or Loans
Whether expatriates allowed to work on payrolls of rolls of Indian entity? Yes Yes
Can any number of projects be executed? Yes Yes
Prior Approval from Reserve Bank of India Yes No
Payment of Dividend to its shareholders No Yes
Submission of Annual Certificate with RBI Yes No
Conducting Board Meeting and Members Meeting on yearly basis No Yes
Annual Compliances with ROC and Income Tax Yes Yes

Subsidiary Company

Branch Office

ACS Divya Goel

About the Author

Author is Divya Goel, ACS working as Assistant Manager- Company Secretary with Neeraj Bhagat & Co. Chartered Accountants, a Chartered Accountancy firm helping foreign companies in setting up business in India and complying with various tax laws applicable to foreign companies while establishing their business in India

Author Bio

Qualification: CA in Practice
Company: Neeraj Bhagat & Co.
Location: New Delhi, New Delhi, IN
Member Since: 28 Feb 2019 | Total Posts: 68
Neeraj Bhagat & Co. is helping foreign companies in opening up of Liaison/ Branch Office in India and complying with various tax laws applicable to foreign companies while establishing a business in India. Neeraj Bhagat is the founder of Neeraj Bhagat & Co. Chartered Accountants, a Chartered View Full Profile

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