Any Foreign Body Corporate (incorporated outside India) /Firm/AOI (Association of Individuals) who wants to expand their business in India and wants to reach the Indian Customers, then it may be done by establishing a Liaison Office (LO) under the provisions of Foreign Exchange Management Act, 1999 subject to RBI approval.
There are two routes available for setting up the LO:
1. First one is called the Reserve Bank Route.
2. Second one is called the Government Route.
If any person being a citizen of/having registecoral in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, Macau wants to establish LO in India, then they have to take prior permission of RBI.
1. Liaison Office is also called Representative Office.
2. It carries only liaison activities.
3. Initially, permission to set up such office is granted only for 3 years.
4. An Authorized Category I Bank may extend the Initial time limit to set up such office from time to time
5. It has to collect the information about possible market opportunities.
6. It also has to provide the information in regards to the Company (situated outside India) & the products manufactucoral by them to the Indian Customers.
The Following requirements have to fulfill by the Foreign Entities for establishing the Liaison Office in India:
1. The Foreign Entities should have a profit making track record during the immediately preceding 3 financial years in the home country.
2. It should have minimum Net worth of USD 50,000
3. The name of Liaison office must be similar to that of the parent company. In addition, a new approval is needed for each new liaison office from the Reserve Bank of India within complete justification.
4. Profits earned by the Liaison office are freely remittable from India, subject to payment of applicable taxes.
1. Certificate of Registration/Incorporation of Parent Company
2. Memorandum of Association
3. Article of Association
4. details of Directors
5. details of shareholders of the Parent company
6. Net worth certificate attested by Certified Public Accountant (CPA)
7. Audited financial statement of the last three years
8. Applicant’s banker’s report
1. Copy of National Identity card
2. Passport size photos
3. Copy of passport
4. Business visa with immigration stamp of arrival
5. Address Proof (Bank Statement/ Electricity / Water Bill / Phone Bill)
6. Board resolution while appointing the Authorized Signatory
7. Power of attorney in the name of Authorized Signatory
Foreign companies are permitted doing following activities through its Liaison office in India :
1. It can represent the Parent/Group companies in India.
2. It can promote export from India.
3. It can promote import to India.
4. It can promote the technical or financial collaborations between Indian companies and parent or overseas group company.
5. It can act as a communication channel.
6. It can render the insurance activities in India after getting IRDA approval.