Liaison Office Registration in India
A Liaison office operates as a representative office. Setting up a liaison office in India is the initial stage of exploring and understanding the business and investment type of the country. A Liaison Office can take part in liaison activities like building communication between parties in India and the Head Office in foreign countries.
So the role of such office is limited to acquiring enough information on possible market opportunities in India, providing adequate details of the parent company and its products, rendering enough particulars on the source of supply to the Indian consumers, or vice versa to its vendor.
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What are the procedures to set up a Liaison Office in India?
For all the Foreign companies whoare willing to establish a Liaison Office in India, they need to obtain priorapproval from the Reserve Bank of India. This whole process may take up to 3 to4 weeks for processing the application. The life span of this approval will be3 years, and it can be renewed on expiry. If a body corporate, which isincorporated outside India, wants to open a Liaison Office, it must obtain suchpermission through an application in Form FNC. This application needs to be supported by-
- Certificate of Registration/ Incorporation, or AOA & MOA attested by Indian Notary Public/ Indian Embassy in the country of registration
- The latest audited balance sheet of the applicant
What activities can a Liaison Office undertake?
- Representing the parent companies in India
- Promoting the technical or financial collaborations between the parent company and companies in India
- Promoting export or import services from or to India
- Acting as the only bridge of communication between the parent company and Indian companies
RBI imposed Eligibility Criteria to sanction a Liaison Office in India
Reserve bank of India has imposed certain criteria to set up a Liaison Office in India. These are-
- The parent company must hold a track record of profit-making during the preceding 3 taxation years.
- The total net worth of the foreign applicant company has to be equivalent to USD 50,000 or more than that, including Paid-up capital and free reserves.
- Every Liaison Office, which is registered with RBI, has to be registered under the Ministry of Corporate Affairs as a corporate entity. The registration of the Liaison Office is meant to establish a foreign company in India. The registrar will assign a Corporate Identity Number (CIN) to these companies.Note: In case, the foreign applicant company fails to satisfy the above-mentioned criteria and is a subsidiary of another company, it can submit a Letter of Comfort from the parent company, given that the parent company meets the eligibility criteria as set by RBI. After a proper checking, AD bank must forward the application to the Reserve Bank along with their comments. Once the application gets approval from RBI, the applicant will be allotted a UIN (Unique Identification Number). After that, they shall obtain PAN (Permanent Account Number) from the Income Tax Authorities for setting up the Liaison Office in India.
Salient features of Liaison Office
Reserve bank of India has imposed certain criteria to set up a Liaison Office in India. These are-
- The parent company must hold a track record of profit-making during the preceding 3 taxation years.
- The total net worth of the foreign applicant company has to be equivalent to USD 50,000 or more than that, including Paid-up capital and free reserves.
- Every Liaison Office, which is registered with RBI, has to be registered under the Ministry of Corporate Affairs as a corporate entity. The registration of the Liaison Office is meant to establish a foreign company in India. The registrar will assign a Corporate Identity Number (CIN) to these companies.Note: In case, the foreign applicant company fails to satisfy the above-mentioned criteria and is a subsidiary of another company, it can submit a Letter of Comfort from the parent company, given that the parent company meets the eligibility criteria as set by RBI. After a proper checking, AD bank must forward the application to the Reserve Bank along with their comments. Once the application gets approval from RBI, the applicant will be allotted a UIN (Unique Identification Number). After that, they shall obtain PAN (Permanent Account Number) from the Income Tax Authorities for setting up the Liaison Office in India.
Restrictions on operation of the Liaison Office
- Liaison Office is not allowed to undertake any kind of direct or indirect trading, commercial, or industrial activity; so they can’t earn any money in India
- A Liaison Office can’t borrow or lend money in India
- It cannot hold, acquire, dispose or transfer any immovable property of India without any prior approval of RBI
How can VJM & Associates LLP help you in setting up a Liaison Office in India?
- We can assist you through the process of establishing a Liaison Office in India. We can help you in-
- Obtaining approval from the Reserve Bank of India
- Acquiring CIN for your Liaison Office
- Getting your Liaison Office registered with the Registrar of Companies
- Maintaining the Financial books of Accounts of your Liaison Office
- Doing Annual Audit of Books of accounts
- Payroll processing
- Reporting of the Liaison Office on an annual basis with the concerned authorities
- Getting the Statutory Compliances done within the stipulated time
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Freecharge
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Services for Foreign Companies
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Business setup in India
The global economic growth has already started its journey of shifting towards developing nations. Being one of the fastest-growing economies in the world, India offers plenty of opportunity to businesses looking to expand their operations in India. A physical existence is what you need to break into India’s developing business sector. However, the right kind of presence can be the make or break.
Branch Office
A foreign company can smoothly operate in India by opening a Branch Office. The parent company must obtain approval from the Reserve Bank of India, and get the registration done with ROC prior to branch office setup. A corporate body formed outside India willing to open their branch office in the country needs to get permission from the Reserve Bank under the FEMA act 1999.
Project Office
Foreign companies looking for a limited presence in India should opt for setting up a project office in the country. It is the ideal method for companies who have the objective of completing a project within a specific time frame. Foreign companies need to get approval from the Reserve Bank of India and register themselves with the RoC if they have a contract to execute a project in India.
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