Branch office of foreign company in India:As the name suggest the Branch office is setup by a foreign company in India to carry out the Branch activity for its business. The foreign company can have any revenue from the Indian Branch office only from the activity allowed by the Reserve Bank of India; it has to meet all its expenses of Indian office through remittances from the Head office or through the revenue generated from the Indian operation permitted by the Reserve Bank of India.
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Branch office is suitable for a foreign company to test and understand the Indian market with a very strict control by the Reserve Bank of India, as it does allow the companies to do business but just to do the activity which are mentioned in the application of Branch office, Any additional activity to be carried by the Branch office shall be illegal. Branch office can carry additional business activities only with the prior approval from the Reserve Bank of India.
DOCUMENTS REQUIRED FOR BRANCH OFFICE SETUPIN INDIA
Currently as per the RBI Requirement the application for the branch office and Branch office is submitted through the Authorized dealer. The authorized dealer means the various institution having banking licenses.The applicant of the Branch/BRANCH 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 BRANCH 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
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
Operating history of the company worldwide, Proposed interests and activities in India,
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.
Details of the Individuals / Company holding more 10% of Equity
Organization Structure - 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.
Reasons for wanting to open a branch office &, any foreign exchange implications for such matters.
NOTE - THE ABOVE LIST IS NOT EXHAUSTIVE AND MAY DIFFER DEPENDING UPON THE REQUIREMENT FROM THE AUTHORISED DEALER.
Foreign Company can open branch office in India due to several reasons; Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India subject to few Conditions:
ACTIVITIES ALLOWED TO BRANCH
Export/Import of goods
Rendering professional or consultancy services.
Carrying out research work, in which the parent company is engaged.
Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
Representing the parent company in India and acting as buying/selling agent in India.
Rendering services in Information Technology and development of software in India.
Rendering technical support to the products supplied by parent/group companies.
Foreign Airline/shipping Company.
CONDITION FOR SETTING UP BRANCH
Normally, the Branch Office should be engaged in the activity in which the parent company is engaged.
The company looking to start a Branch office in India shall have a profitable track record during immediately preceding five 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 1,00,000/- .
ACTIVITIES ALLOWED TO BRANCH
Retail trading activities of any nature is not allowed for a Branch Office in India.
A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly without Approval of RBI.
Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.
Simple Steps To Opening a Branch Office in India Registration!
The application for Branch office Licenses is approved by the RBI, but as per the recent changes the applications for Branch office are routed through the Authorized Dealers (AD). Due to this the timeline for setting up the Branch office has increased tremendously. Further the documentation required for the same has also increased to a great extent.
APPLICATION ENTITY THROUGH A DESIGNATED AD CATEGORY – I BANK FOR SETUP A BRANCH OFFICE IN INDIA
The application for establishing Branch Office in India should be forwarded by the foreign entity through a designated AD Category – I bank to the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Fort, Mumbai-400 001, 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.
Other details like the profile of the applicant, nature and location of activities and source of funds etc.
A KYC of the parent Company in a prescribed format
Besides the above, certain Authorized Dealers may ask for certain information or documents or certifications to convince themselves of the credibility of the applicant.
These applications are considered on a case-to-case basis. The RBI generally gives permission in a time span of about 2 to 4 weeks. The application must include the required documents.
PROCEDURE AFTER GETTING THE RBI LICENSE, APPLICATION SUBMITED TO WITH REGISTRAR OF COMPANIES, DELHI
Every Branch office registered with RBI shall get itself registered with the Ministry of Corporate Affairs, The foreign company is also required to obtain a Certificate of establishment of place of business in India from the Registrar of Companies (ROC. On such registration a CIN i.e. Corporate Identity Number is allotted by the Registrar of Companies. Which required following document including:
A certified copy of the charter, statutes or memorandum and articles, of the company or other instrument constituting or defining the constitution of the company and, if the instrument is not in the English language, a certified translation thereof in the English language
The full address of the registered or principal office of the company;
The full address of the office of the company in India which is deemed to be its principal place of business in India;
List of directors and secretary of the foreign company.
Reserve bank of India approval letter.
Power of Attorney or board resolution in favor of the Authorised Representative’s in India.
There is no mechanism provided by the Government of India for the registration or incorporation of a Proprietorship. Therefore, the existence of a proprietorship is established only by tax registrations and other business registrations that a Proprietorship is required to have as per the rules and regulations. At Rajput Jain & Associates, we can help you establish an identity for your Proprietorship by obtaining the relevant registrations.
WHY RAJPUT JAIN AND ASSOCIATES
Transparent With Clients
We never hide anything with Client. We believe in good and long relation with Clients, this can only be possible if we remains transparent with client for their work
The process of Branch office of foreign company in India is mention in above, explaining the documentation and process of us establishment. We adopt a transparent method of pricing which is fixed and certain and same to all our customers. We do not have any discount policy. Our expertise in Branch office of foreign company in India is well known in India and outside India. We have helped many originations of all size and sector.
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FREQUENTLY ASKED QUESTIONS (FAQ)
FEATURES OF BRANCH OFFICE
The name of Indian BRANCH office shall be same as parent company.
The governing body for the BRANCH office License is Reserve Bank of India.
It is suitable for foreign Companies looking to setup a temporary office in India and not interested or not planning to have long term plans for the Indian operations.
Normally, the Branch Office should be engaged in the activity in which the parent company is engaged.
The BRANCH office does not have any ownership; it is just extension of the exiting company in the foreign country.
All the expenses of the BRANCH office are met by the head office, if it does not have the revenue from Indian operations
BUSINESS LICENSES APPLICABLE TO BRANCH OFFICE
Permanent account number – pan number
Tax deduction number – tan number Shop & establishment
Registration Service Tax Registration – if the
Branch provides any services in India
VAT & CST Registration – If the Branch carries out trading activities in India.
The branch offices may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines. They need not retain any profits as reserves in India. But in certain cases, where income is deemed to have originated in India and such income includes royalties, fees for technical services, interest and capital gains including capital gains from share of capital in India, branch offices may repatriate profits to their Head Office without obtaining prior approval from RBI.
COMPLIANCES TO BE CARRIED OUT BY BRANCH OFFICE OF A FOREIGN COMPANY IN INDIA
AFTER ESTABLISHMENT OF BY BRANCH OFFICE
A Branch Office shall submit a report containing information in a prescribed form within five working days of the Liaison Office becoming functional to the Director General of Police (DGP) of the state concerned in which Branch Office/LO/PO has established its office; if there are more than one office of such a foreign entity, in such cases to each of the DGP concerned of the state where it has established office in India;
A copy of report thus filed as above shall also be filed with AD by the Branch Office concerned.
Maintenance of Books of Account for the activity carryout in India.
Getting Annual Accounts audited for the activity carryout in India.
File Annual Activity Certificates from the Auditors to be submitted to the Reserve Bank of India,
File Annual Activity Certificates from the Auditors to be submitted to the DGP and the Directorate of Income Tax within 6 months i.e 30th September of the Balance Sheet date, i.e 31st March.
Audited Financial Statements including Receipts and Payments A/C shall be filed with the Directorate of Income Tax.
Annual Compliances and Filing with the Registrar of Companies.
Intimating any change in constitution of Foreign Company to Reserve Bank of India& ROC
Intimating any change in Directors of Foreign Company to Reserve Bank of India& ROC
Intimating each and every change in the BRANCH office to Reserve Bank of India& ROC
No additional place of business can be started unless approval is taken from Reserve Bank of India.
ACTIVITY FOR CLOSURE BRANCH OFFICE OF A FOREIGN COMPANY IN INDIA
Generally the Branch office licenses is given for three years, if at any time the Company plans to close the Branch office setup in India it shall file the necessary documents with the Authorized Dealer, and the application for the closure shall be forwarded by the Authorised Dealer.
Copy of the Reserve Bank's permission/ approval from the sectorial regulator(s) for establishing the BO / LO.
Auditor’s certificate- i) indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets; ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un- repatriated to India.
No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s.
Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance.
A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.
Any other document/s, specified by the Reserve Bank while granting approval.
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