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A Foreign Company / Corporation can establish a representative or liaison office in India by obtaining permission from the Reserve Bank of India (RBI) and subsequently registering it with the ROC and State Police. We have good relationships to deliver smooth services in India.
Liaison Office Registration
A Liaison Office (LO) functions as a place in India which represents a foreign company primarily to understand and explore the general business environment, market research for the products of the parent company and to provide and seek information from potential customers or vendors. A liaison office can be set up for representing in India the parent company/group companies, Promoting export/import from/to India, Promoting technical/financial collaborations between parent/group companies and companies in India and to Act as a communication channel between the parent company and Indian companies.
A liaison office of the foreign company can not engage in any commercial activities, and the parent company shall meet all the expenses of the liaison office. A liaison office is a foreign company and Indian government taxes the profits of such entities when it carries out the transactions which amount to commercial activities through a permanent establishment (PE) at higher rates..
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Important Points to Register Liaison or Representative Office
1
Net Worth Requirement: The foreign parent company must have a profitable track record of three years in a row & the net worth must be more than $ 50,000 attested by their auditors.
2
No Income Generating Activity: The liaison office can not earn any income in India, and the parent company must finance all its operations. An undertaking from the parent company is required.
3
Name & New Office: The name must be same as that of the foreign parent company, and for each new office of such liaison office, a new approval is required from RBI with justification.
4
Taxation in Indian: The income tax on a Liaison Office can be imposed by Indian tax authorities when it is established that the transaction amounts to commercial operation through PE.
List of Documents for Liaison Office Registration
| S.No | A. Mother/Parent Company (If Applicable) | B. The Authorized Signatory |
| 1. | Certificate of Incorporation / Registration of Foreign Company | Colour Photo – 5 |
| 2. | Memorandum of Association (MOA) and Articles of Association (AOA) | Passport – 5 Copy |
| 3. | List of Details in respect of Directors/Key Executives | Business Visa Copy with Immigration Stamp of arrival |
| 4. | Details of shareholders of the applicant company | National Identity Card – 5 Copy |
| 5. | Net worth certificate attested by Certified Public Accountant (CPA) | Latest Address Proof (Bank Statement/ Electricity/ Water Bill/ Phone Bill) |
| 6. | Audited financial statement of the last Three preceding years | Board Resolution Appointing the AR |
| 7. | Banker’s Report from the applicant’s banker in the host country | Power of Attorney in the name of AR |
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Preparation & Documentation for Registration of Liaison Office
The establishment of place of business in India for a foreign company/corporation is governed by the Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016. For the purpose of setting up a liaison office following is the most important qualifications.
- No income generating activity is permitted
- The networth of foreign head office must be above $ 50,000
- The applicant company should have profitability track record of three years.
Basic Documentation: The documentation plays a crucial rope in smooth processing of the application for setting up the Lision Office.
Drafting of Government Forms and Documents: After we receive the complete set of basic documents we shall draft following documents for signature by the applicant company and the authorized signatory
- Board Resolution approving the opening of the liaison office in India
- Declaration from the applicant on FDI eligibility and source of fund
- Declaration about the nature of the activity, the location of the activity of proposed LO and nature of the activity, the location of activity of the applicant company.
- Form FNC
- Letter of Comfort form holding company
Legalisation of Documents: All documents which are originating from a foreign country or which is signed/executed in a foreign country shall be legalized either through Indian Embassy or to be apostilled as per the Hague Convention.
Process & Timeline for Liaison office Registration in India
- Application for Digital Signature of Authorised Signatory
A digital signature is the equivalent of physical or paper signature under the information technology act. As per new process all applications to the registrar of companies are filed in digital format which need to be authenticated by the digital signature of the proposed shareholders and directors as the case may be. The filing process starts with the issue of digital signature for all the promoters.
- Filing of Application with RBI through AD Bank
The application for registration of a Liaison office of a foreign company is filed in FNC to the reserve bank of India through AD Bank (Authorised Dealer). The AD Bank plays a crucial role as all the communication to the RBI has to be routed through them. We have an excellent relationship with many banks in India, which certainly help in applying to the RBI and Follow Up.
- Verification of KYC from Banker of Parent Company
After FNC Form is filed with the AD Bank, a request for verification of documents is sent to the banker of the foreign company. This process is also known as swift based verification. After receipt of confirmation of the documents from the foreign banker, the application is submitted to the RBI for their approval. The RBI may seek clarification or any additional document which need to be submitted..
- Approval of RBI for Branch Office Registration in India
There is a specific policy of approving the establishment of a liaison office by the AD Banker itself and only cases where the automatic route is not available the cases are forwarded for prior approval of the RBI. The process of approval after swift verification is of a week.
- Registration of Branch Office with the ROC
After company incorporation, the Bank A/c has to be opened, wherein the FDI (foreign direct investment) must reach within 180 days of incorporation of the company with advance intimation to Banker. Please note that the new company can not start any of its business activities unless the capital has been received in India.
- PAN Card, Tax Deduction Number & Bank A/c Opening
Income Tax Department allots a unique 10 Digit alphanumeric number as a permanent account number, also known as PAN Number. To comply with TDS provisions, every taxpayer needs to obtain a Tax Deduction Account Number. These identification numbers are essential to compliance with the tax rules. The bank account of the liaison office can be opened after allotment of Pan Number by the Income Tax Department.
- Registration with State Police
Finally, the liaison office needs to register it with the state police (In the office of the superintendent of Police). The application must be accompanied by the RBI approval and KYC of all authorised persons in India and the foreign company.
- GST Registration & IEC
By this time the Liaison office would have received the Bank Account and cheque book, we would need a copy of the check for making application for GST Registration and Import Export Code for the Liaison Office of the foreign Company
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