Overview

A liaison office operates as a niche in India that primarily represents a foreign company, including business conditions, business environments, understanding the nature of the market, and market research for the parent company's product Has the purpose of conducting and understanding. Provide and see for more information from prospective customers or vendors.

The purpose of establishing a liaison office is to promote the technical and financial participation of parent company, group companies, import / export from India, parent / group companies in India and act as a communication bridge between . Parent company and Indian companies.

Lisan offices are known for the opportunities that they offer to foreign investors. This paves the way for foreign investors to explore the Indian market and sets their footprint in a growing market with the benefit of keeping their financial, legal and administrative commitments low.

The application and approval process for setting up a liaison office in India is regulated by the Foreign Exchange Management Act (FEMA). Foreign enterprises are required to get RBI approval under FEMA Act’s Foreign Exchange Department in order to oprerate a liaison office in India.

Foreign insurance companies can also operate losses in India; All they need is approval from the Insurance Regulatory and Development Authority (IRDA).

Following activities

• Establish a health communication between the foreign major company and the parties in India for the purpose of creating market opportunities
• Promoting healthy import / export relations between countries
• A form of financial and technical cooperation between Indian and foreign companies
• Represents foreign parent company in India

As India is growing and progressing rapidly in the world economy, there are many multinationals who are keen to invest in the Indian market and are always ready to establish their liaison office in India.

Important points

• Net Worth Requirement

  A parent company is required to have a profitable track record in the last three years and must own a total assets of more than $ 50,000 verified by their auditor.

• No income generating activity

  The parent company provides financial support for all the functions of the liaison office, as the liaison office is not allowed to earn income in India.

• Name & New Office

  The name must be the same as the foreign parent company, and each new liaison office requires a new approval from the Reserve Bank of India with full justification.

• Taxation in India

  Income tax authorities have the right to impose income tax on a liaison office.

Registration Process

Required documents

Necessary documents from parent company

Required documents from authorized signatory

Eligibility Criteria

Foreign Exchange Management Regulations, 2016 regulates the establishment of a place of business for a foreign company. It is important to fall under the eligibility criteria given below to set up a liaison office in India:

Drafting

The next step on obtaining the complete set of documents is to draft the following documents for the purpose signed by the applicant company and from the authorized signatory

• Application for digital signature of authorized signatory

  A digital signature is equally valued as a paper signature under the Information Technology Act. The new process has made it mandatory for the registrar of companies to submit all applications in digital format. The certification of the application is proven through the digital signature of the proposed shareholders and directors.

• Filling the application with RBI through AD Bank

  The liaison office application for the foreign company has been filed in FNC. The advertisement is filed through the AD Bank (Authorized Dealer) to the Reserve Bank of India. Since all the RBI's communications have been routed through them, the AD bank has an important role.

• Verification of KYC from Banker of Parent Company

  A request pertaining to the scrutiny of documents is sent to the foreign company’s banker.This process of sending request for verification purpose is also called SWIFT based verification. After the documents are verified by the foreign banker, the application is submitted to the RBI for approval purpose. RBI may also ask for additional documents, as the case may be.

• RBI Approval for Liaison Office Registration in India

  A special policy is followed by the banker to approve the liaison office in India. Preference is given to cases where automatic routing is not available.

• Liaison Office Registration with ROC

  After the company is created, its bank account is opened, wherein the banker should reach FDI within 180 days of formation of the company with advance declaration.

• PAN card, tax deduction number and opening of bank account

  The Income Tax Department of India issues a unique 10 digit number, known as PAN number. After receiving the PAN number, the liaison office is eligible to open its bank account. And it is necessary for all taxpayers to obtain a tax deduction account number to follow all TDS norms.

• GST Registration & IEC

  On obtaining Bank Account and cheque book the need arises for a copy of the check for making application for GST registration and Import Export Code.

  • Certificate of incorporation / registration of foreign company
  • Memorandum of Association
  • Article of Association
  • Full details of directors
  • Full details of the shareholders of the applicant company
  • Certified Net Accountant (CPA) verified net worth certificate
  • Audited financial statements for the last three years
  • Applicant’s banker’s report
  • 5 passport size photos
  • 5 copies of passport
  • Business Visa with immigration stamp
  • 5 copies of National Identity Card
  • Address proof (bank statement / electricity / water bill / phone bill)
  • AR Appointing • Board Resolution
  • Power of Attorney in the name of AR
  • Income generating activity is prohibited
  • Foreign Head Office is required to have a net worth above $ 50,000
  • Requires a beneficial track record of the last three years of the applicant company
  • Acceptance of board resolution to open liaison office in India.
  • A declaration from the applicant regarding FDI eligibility and source of funds
  • A declaration stating the nature of the activity, location of the proposed liaison office activity
  • A declaration stating the nature and location of the activity of the applicant company
  • Form FNC
  • A letter of comfort from the holding company