Liaison office of a Foreign Company in India
Companies registered outside India (Foreign Company) can establish their operations in India without registering a subsidiary company. The scope of operation of such offices is limited and is preferred for representative office, sourcing, technical support, market support in India.
The steps involved in establishing a branch / liaison office in India are:
- RBI approval through an authorized dealer of category I bank
- Registration with Registrar of Companies, New Delhi.
I) Basic criteria
- Reserve Bank Route — Principal business of the foreign entity falls under sectors where 100 per cent foreign direct investment (FDI) is permissible under the automatic route.
- Government Route — Principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category are considered by the Reserve Bank, in consultation with the Government of India, Ministry of Finance.
II) Additional criteria
i) Track Record
- For Branch Office — a profit making track record during the immediately preceding five financial years in the home country.
- For Liaison Office — a profit making track record during the immediately preceding three financial years in the home country.
ii) Net Worth [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].
- For Branch Office — not less than USD 100,000 or its equivalent.
- For Liaison Office — not less than USD 50,000 or its equivalent.