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    Liaison Office

    Liaison Office is set up to represent the parent company in India.  It can’t undertake any business activity in India and cannot earn any income in India. Liaison Office is regulated by RBI Regulations.  

    • Set up to represent parent company
    • Work as a channel of communication
    • Cannot undertake any business activity
    • Cannot earn any income in India
    • All expenses are met by head office



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    2.

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    Overview


    Liaison Office is set up to represent the parent company in India and work as a channel of communication between the parent company and business entities in India. It can’t undertake any business activity in India and cannot earn any income in India. Expenses of Liaison office are met by the Head Office through inward remittances received in Convertible Foreign Exchange.

    It can be a good prelude for any foreign entity looking for a sourcing division in India or to test and understand the Indian market or to carry out the research and development activities or to improve the relations with the authorities and business community, etc.

    Features


    • Name and Permissible Activities

      The name of Indian liaison office shall be same as parent company. A Liaison Office is not permitted to carry out any business activity or earn any income in India. It can only work as a channel of communication between parent company and business entities/regulatory authorities in India

    • Expenses of Liaison Office

      Expenses of Liaison office are met by the Head Office through inward remittances received in Convertible Foreign Exchange.

    • Bank Account

      Liaison Office may open current account with designated AD Category I Bank in India to receive remittances from its Head Office outside India. Liaison Office cannot maintain more than one bank account without the prior permission of Reserve Bank of India.

    • Closure of Liaison Office

      Requests for closure of Liaison Office and for remittance of winding-up proceeds needs to be submitted to designated AD Category - I bank along with prescribed documents.

    Things to Know


    Track record

    The non-resident entity applying for Liaison Office should have a profit making track record during the immediately preceding three financial years in the home country and net worth of not less than USD 50,000 or its equivalent.

    Application for establishment of Liaison Office

    The applications for establishment of Liaison Office in a sector in which 100% FDI is allowed are routed through designated AD Category I Bank. The application is required to be submitted to AD Category-I bank (AD Bank) in Form FNC along with the prescribed documents mentioned in the Form and the LOC (wherever applicable), as per the guidelines issued by the Reserve Bank of India.

    Before issuance of approval letter, AD Bank forwards a copy of Form FNC along with the details of the approval proposed to be granted by it to the General Manager, Reserve Bank of India, CO cell, New Delhi for allotment of Unique Identification Number (UIN) to each Liaison office.

    An applicant that has received a permission for setting up of a Liaison Office shall inform the designated AD Bank as to the date on which the Liaison Office has been set up which shall not be later than 6 months from the date of the approval letter.

    Permissible debits and credits from bank account

    The permissible credits in bank account are:

    1. Funds received from Head Office through normal banking channels for meeting the expenses of the office;
    2. Refund of security deposits paid from Liaison Office’s account or directly by the Head Office through normal banking channels;
    3. Refund of taxes, duties etc., received from tax authorities, paid from Liaison Office’s bank account;
    4. Sale proceeds of assets of the Liaison Office

    Permissible debits include meeting the local expenses of the office.

    Validity period of Liaison Office

    The validity period of a Liaison Office is generally three years, except in the case of Non-Banking Finance Companies (NBFCs) and those entities engaged in construction and development sectors, for whom the validity period is two years only.

    Annual Activity Certificate

    Liaison Office are required to submit Annual Activity Certificate (AAC) as at the end of March 31 each year along with the prescribed documents to the designated AD Category -I bank as well as Director General of Income Tax (International Taxation), New Delhi.

    Registration with Registrar of Companies

    A foreign company establishing a liaison office in India is required to file Form FC-1 with the Registrar of Companies within 30 days of the establishment of its place of business in India.

     

    Document Required


      From Foreign Entity

    • Duly filled Form FNC
    • Copy of the Certificate of Incorporation / Registration along with Memorandum of Association and Articles of Association attested by the Notary Public in the country of registration. [If the original Certificate is in a language other than in English, the same may be translated into English and notarized as above and cross verified/attested by the Indian Embassy/ Consulate in the home country].
    • Audited Balance sheet of the applicant company for the last five years [If the applicants’ home country laws/regulations do not insist on auditing of accounts, an Account Statement certified by a Certified Public Accountant (CPA) or any Registered Accounts Practitioner by any name, clearly showing the net worth may be submitted]
    • Bankers Report from the applicant’s banker in the host country / country of registration showing the number of years the applicant has had banking relations with that bank.
    • Power of Attorney in favour of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC.

    Why Companies Next


    At Companies Next, we have a dedicated team of professionals for providing quality services with accuracy and within given timelines. We provide a complete transparent and online platform for registration of your Liaison Office.

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    FAQ's


    Foreign Individuals seeking interest to start their operations in India can open a Foreign Representation Office in the form of Liaison Office, Branch Office and Project Office in India. Further, an incorporated entity can also be formed such as Wholly Owned Subsidiary, Joint Venture and Limited Liability Partnership.

    Company desirous for opening a Liaison Office in India are required to show a profit making track record during the immediately preceding 3 financial years in the home country and net worth of not less than USD 50,000 or its equivalent.

    Approval of RBI for establishing Liaison Office is required in following cases:

    1. The applicant is a citizen of or is registered/incorporated in Pakistan;
    2. The applicant is a citizen of or is registered/incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a Branch Office in Jammu and Kashmir, North East region and Andaman and Nicobar Islands;
    3. The principal business of the applicant falls in the four sectors namely Defence, Telecom, Private Security and Information and Broadcasting. However, prior approval of Reserve Bank of India shall not be required in cases where Government approval or license/permission by the concerned Ministry/Regulator has already been granted.
    4. The applicant is a Non-Government Organisation (NGO), Non-Profit Organisation, Body/ Agency/ Department of a foreign government. However, if such entity is engaged, partly or wholly, in any of the activities covered under Foreign Contribution (Regulation) Act, 2010 (FCRA), they shall obtain a certificate of registration under the said Act and shall not seek permission under FEMA 22(R).

    The validity of a Liaison Office is for three years (two years for Non-Banking Finance Companies (NBFCs) and entities engaged in construction and development sectors) and may be renewed after every 3 years by AD Category I Bank with the prior approval from RBI for a further period of three years.

     

    Liaison office are required to submit Annual Activity Certificate (AAC) as at the end of March 31 each year along with the prescribed documents to the designated AD Category -I bank as well as Director General of Income Tax (International Taxation), New Delhi.

    Request for opening an additional office to be submitted to the AD Category I Bank in a fresh Form FNC. The documents mentioned in Form FNC need not be re-submitted, if there are no changes to the documents already submitted earlier. Further, if the number of offices exceeds 4 (i.e. one Liaison office in each zone viz. East, West, North and South), the applicant has to justify the need for additional offices and shall require prior approval of RBI.

    An individual seeking interest to start their business operations in India as a representative of its already existing foreign company without creating a subsidiary company can open a Liaison Office in India by approaching AD Category –I Bank along with the application in Form FNC and requisite documents.

    An application to be submitted to AD Category-I bank in Form FNC along with the prescribed documents mentioned in the Form and the LOC (wherever applicable). Before approval, a Unique Identification Number (UIN) is allotted by the Reserve Bank of India to the Liaison office.

    1. Representing the parent company/ group companies in India;
    2. Promoting export/ import from/ to India;
    3. Promoting technical/ financial collaborations between parent/group companies and companies in India;
    4. Acting as a communication channel between the parent company and Indian companies

    UIN is a unique identification number allotted by Reserve Bank of India, before issuance of approval letter by AD Category I Bank to each Liaison Office.

    Liaison office are also required to obtain Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), Service tax Code and other statutory registrations as may be applicable. Periodic compliances include TDS Return, Service Tax Return, Income Tax Return, Annual Activity Certificate, PF/ESI returns etc. as may be applicable.

    Requests for closure of Liaison office and for remittance of winding-up proceeds needs to be submitted to designated AD Category - I bank along with prescribed documents.

     

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