Foreign companies planning to set up their business operations in India need to start a liaison office. The main purpose of starting a liaison office is to explore possible business opportunities in India by gathering relevant business information. This helps the companies to develop a business strategy to tap the existing business potential in India.
The application for Liaison office Licenses is approved by the RBI, but as per the recent changes the applications for Liaison office are routed through the A.D i.e Authorised Dealers. Due to this the timeline for setting up the liaison office has increased tremendously. Further the documentation required for the same has also increased.
GENERAL FEATURES OF LIAISON OFFICE
The name of Indian liaison office shall be same as parent company.
The governing body for the Liaison office License is Reserve Bank of India.
It is suitable for foreign Companies looking to setup a temporary office in India to liaison its existing business with Indian clients.
The Liaison office does not have any ownership; it is just extension of the exiting company in the foreign country.
All the expenses of the Liaison office are met by the head office; hence the funds shall be received from head office account only.
The License for the Liaison office is given for three years and shall be renewed every 3 years.
ACTIVITIES ALLOWED TO LIAISON OFFICE IN INDIA
Representing in India the parent company / group companies.
Promoting export / import from / to India.
Promoting technical/financial collaborations between parent/group companies and companies in India.
Acting as a communication channel between the parent company and Indian companies.
CONDITION FOR SETTING UP LIAISON OFFICE
The company looking to start a Liaison office in India shall have a profitable track record during immediately preceding three years in the home country.
The Net Worth i.e 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 shall be not less than or equal to USD 50000/- .
DOCUMENTS REQUIRED FOR LIAISON OFFICE SETUP
Currently as per the RBI Requirement the application for the branch office and Liaison office is submitted through the Authorised dealer. The authorised dealer means the various institution having banking licenses.
The applicant of the Branch/Liaison office has to opt for the any of the Authorized Dealer; it is always preferable for the company to opt for the same authorized dealer as it is dealing in the home country.
Form FNC 1 Three copies
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 the English version of the Certificate of Incorporation, Memorandum & Articles of association (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 Notarised 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 organisation in brief about the product and services of company in Brief.
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
NOTE – THE ABOVE LIST IS NOT EXHAUSTIVE AND MAY DIFFER DEPENDING UPON THE REQUIREMENT FROM THE AUTHORISED DEALER
BRIEF SUMMERY OF STEPS TO GET RBI LICENCES
Selection of Authorised Dealer by Client, as the same AD will have the bank account of the Company.
Working on the documentation required for Liaison office.
Submission of documents to the AD.
Scrutiny of documents by the AD
Providing clarification and additional documents to AD
Submission of final application to RBI by the AD.
Follow up and getting the Licenses from AD.
PROCEDURE AFTER GETTING THE RBI LICENCE
Every Liaison office registered with RBI shall get itself registered with the Ministry of Corporate Affairs; it is a registration by the Liaison office as a establishment of foreign company in India. On such registration a CIN i.e Corporate Identity Number is allotted by the Registrar of Companies.
The following documents shall be filled with the Registrar of Companies:-
Charter, statutes or memorandum and articles of association or other Instrument constituting or defining the constitution of the company(In the manner provided under Rule 16, 17 of the Companies (Central Govement’s) General Rules and Forms, 1956)
If the above documents are not in English then the translated version of the documents.
The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author. Compliance Calendar LLP and the Author of this Article do not constitute any sort of professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove. Compliance Calendar LLP shall not be responsible for any loss or damage in any circumstances whatsoever.