Liaison Office

Companies incorporated outside India can open ‘Liaison Office’ (also known as representative office) in India. Liaison office is a place of business to act as a channel of communication between the principal place of business or Head OfficeThe Liaison office can undertake only liaison activities, it is not allowed to undertake any business activity in India and cannot earn any Income in India. The activity of the Liaison office can be better undertaken with the aforesaid figure.

Liaison Office activity

Branch Office

Branch office implies an establishment set up by parent company to perform the similar business operations at different locations in India. As a Branch Office (“BO”) in India, foreign companies can conduct full-fledged business in India. BO can carry the same or substantially the same trading activities as carried out by their parent or group companies. However, BO is not allowed to directly carry out manufacturing activities though it is permitted to sub-contract these services to an Indian manufacturer.

Project Office

Project Office means a place of business in India to represent the interests of the foreign company executing a project in India but excludes a Liaison Office.

Requirements for establishment

Requirements For Liaison Office For Branch Office For Project Office
Net Worth More than or equal to USD 50,000 More than or equal to USD 100,000 No Specific Requirement
Profit making track record Immediately preceding 3 years Immediately preceding 5 years No Specific Requirement

Liaison Office, Branch Office and Project Office can undertake only the following activities: –

Liaison Office Branch Office Project Office
1. Representing in India the parent company/group companies.

2. Promoting export import from/to India.

3. Promoting technical/financial

4. Collaborations between parent/group companies and companies in India.

5. Acting as a communication channel between the parent company and Indian companies.

1. Export/Import of goods,

2. Rendering professional or consultancy services.

3. Carrying out research work, in which the parent company is engaged.

4. Promoting technical or financial collaborations between Indian companies and parent or overseas group company.

5. Representing the parent company in India and acting as buying/selling agent in India.

6. Rendering services in Information Technology and development of software in India.

7. Rendering technical support to the products supplied by parent/group companies.

8. Foreign airline/shipping Company.

1. A foreign Company may be permitted to open a Project Office/s in India provided it has secured from an Indian company, a contract to execute a project in India.

2. Project Office shall not undertake or carry on any other activity other than the activity relating and incidental to execution of the project

 

 Liaison Office, Branch Office and Project Office can undertake receive following Inward remittances

Liaison Office Branch Office Project Office
Only receipt of inward remittance from the Principal / Head Office through normal banking channels The entire expenses of the Branch Office in India will be met either out of the funds received from abroad through normal banking channels or through income generated by it in India. Only receipt of inward remittance from the Principal / Head Office through normal banking channels

Procedural Aspects: –

Application for Registration

If the applicant company fulfills eligibility criteria, it shall submit an application in Form FNC (As per Annex B of Foreign Exchange Management Regulations, 2016 for Establishment in India of a branch office or a liaison office or a project office or any other place of business.

Basis Liaison Office Branch Office Project Office
Time Period for registration 40-45 days 40-45 days 10-15 days
Validity In case of Construction, development and NBFC: Two years .Other cases:- Three years RBI gives approval is not time specific but in some cases it is for 2-3 years Depends on completion of project.
Validity of Approval for establishment of office 6 months from the date of approval 6 months from the date of approval 6 months from the date of approval
 

 

 

Post Establishment Compliance

e-form FC-1 within 30 days from the date of establishment of place of business in India with the ROC e-form FC-1 within 30 days from the date of establishment of place of business in India with the ROC e-form FC-1 within 30 days from the date of establishment of place of business in India with the ROC
e-Form FC-2 containing the particulars of alteration as per the prescribed format with the Registrar of Companies within 30 days of  such alteration e-Form FC-2 containing the particulars of alteration as per the prescribed format with the Registrar of Companies, within 30 days of such alteration e-Form FC-2 containing the particulars of alteration as per the prescribed format with the Registrar of Companies, within 30 days of such alteration
Documents Required 1. Copy of the Certificate of Incorporation/ Registration; Memorandum  of Association and Articles of Association attested by the Notary Public in the country of registration.
[If the original Certificate is in a language other than in English, the same may be translated into English and notarized as above and cross verified/attested by the Indian Embassy/ Consulate in the home country].2. Audited Balance sheet of the applicant company for the last three years.
[If the applicants’ home country laws/regulations do not insist on auditing of accounts, an Account Statement certified by a Certified Public Accountant (CPA) or any Registered Accounts Practitioner by any name, clearly  showing the net worth may be submitted]3. Bankers’ Report from the applicant’s banker in the host country / country of registration showing the number of years the applicant has had banking relations with that bank.4. Power of Attorney in favor of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC.

5. Complete details of activities conducted in the project office in India

6. Residence Proof of the authorized personnel

7. Copy of passport of the authorized personnel

8. A letter saying that the company will open a bank account in India

1. Copy of the Certificate of Incorporation/ Registration; Memorandum of Association and Articles of Association attested by the Notary Public in the country of registration.
[If the original Certificate is in a language other than in English, the same may be translated into English and notarized as above and cross verified/attested by the Indian Embassy/ Consulate in the home country].2.Audited Balance sheet of the applicant company for the last five years.
[If the applicants’ home country laws/regulations do not insist on auditing of accounts, an Account Statement certified by a Certified Public Accountant (CPA) or any Registered  Accounts Practitioner by any name, clearly showing the net worth may be submitted]3. Bankers’ Report from the applicant’s banker in the host country / country of registration showing the number of years the applicant has had banking relations with that bank.4. Power of Attorney in favor of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC.

5. Complete details of activities conducted in the project office in India

6. Residence Proof of the authorized personnel

7. Copy of passport of the authorized personnel

8. A letter saying that the company will open a bank account in India

1. Certificate of Incorporation; Memorandum of Association & Article of Association attested by Indian Embassy/Notary Public in the country of Registration

2. Current Audited Balance sheet of the applicant company.

3. A resolution by the foreign company’s Board stating the intention behind establishing the project office in India.

4. Documentary proof that the Project Office is financially backed by the bilateral or multilateral International Financing Agencies OR the Indian Company has obtained term loan for the Project Office by the Financing Institution or Bank in India

5. Banker’s report submitted by the company’s banker stating the company’s relationship with the bank.

6. A letter of authority issued by the parent company in regard of the local representative

7. Complete details of activities conducted in the project office in India

8. Residence Proof of the authorized personnel

9. Copy of passport of the authorized personnel

10. A letter saying that the company will open a bank account in India

CS 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

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Author Bio

Qualification: CA in Practice
Company: Neeraj Bhagat & Co.
Location: New Delhi, New Delhi, IN
Member Since: 28 Feb 2019 | Total Posts: 74
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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