Foreign company liaison office registration in India
As one of the fastest-growing economies in the world, India has become an attractive destination for foreign companies looking to expand their business. If you're one of those companies, opening a liaison office in India can be a great way to establish your presence and explore potential opportunities. A liaison office is a type of representative office that allows foreign companies to promote their business interests in India without engaging in any commercial activities. In this guide, we'll walk you through the steps involved in opening a liaison office in India, including the eligibility criteria, registration process, and compliance requirements.
A liaison office is a place of business that serves as a communication hub between the principal place of business/head office and entities in India. Liaison offices do not engage in any commercial, trading, or industrial activity, either directly or indirectly, and are not permitted to receive inward remittances from abroad.
The role of the liaison office is limited in India to the collection of information, facilitating technical or financial collaborations, and promotion of exports and imports, a liaison office is not permitted to undertake any commercial activity directly or indirectly.
Approval from the government of India is required to open a liaison office.
Every liaison office (LO) shall get itself registered with the registrar of companies (ministry of corporate affairs) and obtain approval from RBI, A liaison office is registered as an establishment of a foreign company in India. On such registration, a CIN i.e., corporate identity number, is allotted by the registrar of companies.
The parent organization holds a 100% ownership interest in the branch. The parent company must have a profitable track record during the last three financial years in its home country.
The validity period of a liaison office is generally three years, and two years for NBFCs and in the construction and development sectors.
Permitted Income is only the receipt of inward remittance from the parent company or head office through normal banking channels.
Since a liaison office is not meant to earn any income in India, it is generally not liable to pay any income tax.
The following documents are required for opening a project office in India.
- Letter of intent and comfort letter from the authorized signatory of the parent company intending to support the operation in India.
- Authorization letter from the parent company in favor of a local representative.
- Board resolution from the parent company for setting up a liaison office in India.
- Existing company incorporation certificate/registration certificate, memorandum & articles of association (charter document) of the parent company duly attested by the Indian embassy or notary public in the country of registration.
- The latest audited balance sheet and annual account statement of the parent company of the last three years duly attested and notarized in the English language.
- Details bank account of the parent company in the home country.
- Commitment statement from the organization to open to report/opinion sought from its bankers by the government of India / reserve bank of India.
- Expected investment/ expenses for operations in India.
- Rent agreement/ lease agreement of the proposed local office.
- A number of people are likely to be employed, including foreign nations.
- Details of business activity carried out in the home country by the applicant organization, products, and services of the company in brief.
- Bankers’ certificate from India.
- Identity proof and address proof of all the directors duly certified by a banker in their home country.
- Details of individuals or companies holding more than 10% of equity.
- Organization structure and its shareholding pattern details.
- Board resolution for opening up bank accounts and signed bank account opening forms of Indian banks.
- Full address of the office of the company in India, which is proposed to be its principal place of business in India.
FAQS
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What is a digital signature certificate (DSC)?
A digital signature is software by which applicants sign documents electronically.. Registrar of companies (ROC) mandates that the directors sign application documents using their digital signature. Hence, a digital signature is required for all directors of a proposed company.
- What is the director identification number (DIN)?
- Is an address proof mandatory?
- What are annual compliance activities required for a liaison office?
- What is a liaison office?
- Can a liaison office generate revenue in India?
- What is the eligibility criteria for opening a liaison office in India?
- Can a liaison office hire employees in India?
- Do liaison offices need to register with any regulatory bodies?
- What are the documents required to register a liaison office with the RBI?
- How long does it take to register a liaison office in India?
- Can a liaison office transfer funds to the parent company?
- Is it mandatory to have a local representative for a liaison office in India?
- What is the role of a local representative in a liaison office?
- What is the validity of a liaison office registration?
- Can a liaison office convert into a branch office?
- Can a liaison office undertake market research in India?
- Can a liaison office open a bank account in India?
- Can a liaison office import goods into India?
- Can a liaison office rent or purchase property in India?
