Forming Branch / Liaison Office
One of the simplest mode to set up your entity in India - set up Liaison offices and Branch offices with RBI permission. These are amongst one of the most popular structures adopted by our clients while they are new to Indian market. Preferred for ease of opening and running, these structures are ideal for the companies wishing to 'explore' Indian market.
Foreign companies engaged in manufacturing and trading activities abroad allowed Branch office registration in India. Therefore, when the purpose of the Foreign company is to do engage in manufacturing and trading activities India, its opt for Branch office registration.
Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to setup branch offices with specific approval of the RBI. Normally, the Branch office should be engaged in the activity of the parent company.
It can only up liaison activities in India and can act as a channel for communication between its head office abroad and Indian parties. It cannot undertake any commercial activities in India. Therefore, when the purpose of foreign company is to do water testing in India without indulging in full-fledged commercial activity. It opts for Liaison office registration India.
It can act as a channel of communication between the head office abroad and parties in India. It is not allowed to undertake any business in India and cannot have any income in India.
Liaison Office is permitted to undertake following activities
- Representing the Parent Company in India
- Promoting Export / Import from / to India
- Promoting Technical / Financial collaborations between the Parent company and companies in India
- Acting as a Communication Channel between the Parent company and Indian companies
The basic criteria considered by the Reserve Bank while sanctioning Branch / Liaison Offices of foreign entities
- For Branch Office — A Profit making track record during the immediately preceding five financial years in the home country.
- For Liaison Office — A Profit making track record during the immediately preceding three financial years in the home country.
The Net Worth means total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name should be.
- For Branch Office — not less than USD 100,000 or its equivalent.
- For Liaison Office — not less than USD 50,000 or its equivalent.