Register a Branch Office In India
When a foreign company wants to start its business operations in India, one of the options available is to open Branch Office in India.
Branch Office has been permitted to undertake the following activities in India:
- Export / Import of goods.
- Rendering professional or consultancy services.
- Carrying out research work, in areas in which the parent company is engaged.
- Promoting technical/financial collaborations between parent/group companies and companies in India.
- Acting as a communication channel between the parent company and Indian companies.
- Representing the parent company in India and acting as buying/selling agent in India.
- Rendering technical support to the products supplied by parent/group companies.
The Branch Office in India should be engaged in the activity in which the parent company is involved. However, they are not allowed to take any Retail Trading Activities, manufacturing or processing activities (directly or indirectly) in India.
Spreading business to new market
- Low cost for startup
- Closure access to customers
- Better business management
- Resource optimization
- Less legal compliances as compared to new company registration
Time Involved in the Process
- Approx. 45-50 working days are taken for registration. However, it depends upon processing time of AD banker and RBI as well
PROCEDURE of BRANCH OFFICE
RBI governs the rules for registration and monitoring of Branch Office in India. There are 2 routes to establish Branch Office in India. First is RBI Route (automatic route) and second is Central Government route (Approval route).
Under automatic way, there is no need to take permission from the government or other authorities before setting up BO.
Reserve Bank Route — where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route.
Government Route — where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non – Government Organizations / Non – The Reserve Bank considers profit Organizations / Government Bodies / Departments in consultation with the Ministry of Finance, Government of India.
The following additional criteria are also considered by the Reserve Bank while sanctioning Liaison/Branch 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.
- Net Worth [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].
- For Branch Office — not less than USD 100,000 or its equivalent.
- For Liaison Office — not less than USD 50,000 or its equivalent.
The application for establishing BO / LO in India should be forwarded by the foreign entity through a designated AD Category – I bank to the General Manager, Foreign Exchange Department, Central Office Cell, Reserve Bank of India, New Delhi Regional Office, 6, Parliament Street, New Delhi-110 001, India, along with the prescribed documents including
- English version of the Certificate of Incorporation / Registration or Memorandum & Articles of Association attested by Indian Embassy / Notary Public in the Country of Registration.
- Latest Audited Balance Sheet of the applicant entity.
Documents Required for Branch Office
- Form FNC 1-3copies
- Letter from the principal officer of the Parent company to RBI.
- Letter of authority from the parent company in favor of Local Representative.
- Letter of authority/ Resolution from parent company for setting up liaison office in India.
- Comfort letter from the parent company intending to support the operation in India.
- Two copies of English version of the Certificate of Incorporation, MOA & AOA (Charter Document) of the parent company duly attested by the Indian embassy or notary public in the country of registration.
- Certification of Incorporation – Translated & Duly Notarized and Certified by Indian Consulate
- The Latest audited Balance sheet and annual accounts of parent company duly Translated notarized for past Three years. & Certified by Indian Consulate & Directors
- Name, Address, email ID and telephone number of the authorized person in Home Country.
- Details of Bankers of the Organization the Country of Origin along with the bank account number
- Commitment from the Organization to the effect that it will be open to report / opinion sought from its banker by the Government of India / Reserve Bank of India
- Expected funding level for operations in India.
- Details Relating to address of the proposed local office , number of persons likely to be employed, number of Foreigners among such employees and address of the head of the Local office, if decided
- Details of Activity carried out in Home Country by the applicant organization in brief about the product and services of company in Brief.
- Bankers Certificate
- Latest Proof of identity of all the Directors – Certified by Consulate and Banker in Home Country
- Latest Proof of address all of Directors – Certified by Consulate and Banker in Home Country
- Details of the Individuals / Company holding more 10% of Equity
- Structure of the Organization w.r.t Shareholding pattern
- Complete KYC of Shareholders holding more than 10% Equity in the Applicant Company
- Resolution for Opening up Bank Account with the Banker
- Duly Signed Bank Account Opening Form for Indian Bank