Establishment of Liaison office in India
For setting up a liaison office in India Permission from Reserve Bank of India is required. Permissions are normally granted for a period of three years and can be extended by further request. A liaison office of the foreign company cannot engage in any commercial activities, and the parent company shall meet all the expenses of the liaison office. All expenses of a liaison office must be compulsorily met only out of inward remittances into a designated bank account opened in India by the liaison office for the specific purpose.
A liaison office cannot import goods of its own nor can it carry on any business of its own. A liaison office cannot raise any invoices on behalf of the parent company. All sale proceeds generated by the efforts of the liaison office must be directly paid to the foreign parent company by means of proper banking channels or negotiable instruments such as cheques and demand drafts. A liaison office cannot also charge any commission from Indian customers for providing liaison services.
Important Points to Register Liaison or Representative Office
- A foreign company intending to apply for a liaison office in India must have a successful, profit making track record during the immediately preceding three financial years in the home country.
- Foreign parent company must have Net Worth of USD 50,000 or its equivalent as per its latest Audited Balance Sheet or Account Statement duly certified by Certified Public Accountant or any Registered Accounts Practitioner by whatever name.
- The name must be same as that of the foreign parent company, and for each new office of such liaison office, a new approval is required from RBI with justification.
- Representing in India the parent company/group companies.
- Promotion of export/import from/to India and also facilitate technical/ financial collaboration between parent company and companies in India.
- Acting as a communication channel between the parent company and Indian companies.
- Collecting information about possible market opportunities and providing information about the company and its products to prospective Indian customers.
- A liaison office of a foreign company upon approval from the RBI must be registered under the (Indian) Companies Act, 2013.
Compliance under Companies Act, 2013
Any foreign entity establishing its place of business in India by way of Branch office, liaison office or any other place of business shall be treated as foreign company as defined under section 2(42) of the Companies Act, 2013 which says:
A foreign company is a company or body corporate incorporated outside India having a place of business in India whether by itself or through an agent, physically or through electronic mode and conducts any business activity in India in any other manner.
Such foreign companies shall be governed by the provisions of:
(i) Chapter XXII of the Companies Act, 2013
(ii) Companies (Registration of Foreign Companies) Rules, 2014
Rule 3(3) of the Companies (Registration of Foreign Companies) Rules, 2014 requires every foreign to file e-Form FC-1 to the Ministry of Corporate Affairs within 30 days of the establishment of its place of business in India.
Rule 3(4) provides that in case of any alteration in the aforesaid documents the Foreign Company is require to submit a return in e-Form FC-2 containing the particulars of alteration as per the prescribed format with the Registrar of Companies, within 30 days of any such alteration.
The foreign company shall prepare Financial Statement i.e. Balance Sheet and Profit and Loss account of its LO in India in accordance with Schedule III or as near thereto as may be possible for each financial year. A copy of such Financial Statement shall be filed with the Registrar of Companies in Form FC-3 within a period of six months of the close of the every financial year of the foreign company. Along with Financial Statement, in Form FC-3, a list of all the places of business established by the foreign company in India as on the date of Balance Sheet is required to be submitted with the Registrar.
Every foreign company shall prepare and file annual return of its LO within a period of sixty days from the last day of its financial year with the Registrar in Form FC-4.
How S.K. Agrawal & Co. Helps in Establishment of Liaison Office in India?
- Obtaining approval of RBI for Establishment of Liaison office in India.
- Getting Liaison office registered with Registrar of Companies.
- Obtaining CIN of Liaison Office
- Obtaining PAN / TAN and registration under Labour Laws.
- Maintenance of Financial books of Accounts of Liaison office.
- Filing of Withholding Tax Returns/GST Returns on monthly/Quarterly basis.
- Annual Audit of Books of accounts.
- Issuance of Annual Activity Certificate (AAC).
- Getting all Statutory Compliances with regard to Labour laws within timelines.
- Reporting of Liaison office on annual basis with concerned authorities like MCA, Police Department, Income Tax Department, AD Banker.
- Issuance of Various certificates as may be required by LO in regular course.
Service Area
We provide strategic and qualitative advisory services to all our clients from domestic to international organizations, small, medium and large sized enterprises, assisting them with their incorporation and quality management services so they can establish their business successfully globally. To help them deal with their tax issues, financial and legal requirements we provide all support for post incorporation services, so they are able to run their business seamlessly. We are based at New Delhi and Faridabad, but our wings are spread to serve clients across the globe. Customer Satisfaction, Quality of Service and our Turnaround time are the drivers of our enthusiasm and success. We are continuously serving our client at Faridabad, Delhi, Gurgaon (Gurugram), Noida (Gautam Budh Nagar), Sonipat, Panipat, Palwal, Jind, Karnal, Meerut, Kolkata, Mumbai (Bombay), Pune, Bangalore, Nasik, Aurangabad, Nagpur, Ludhiana, Amritsar, Mohali, Hyderabad, Kanpur, Agra ,Rudrapur, Haridwar, Jamshedpur, and many other Industrial Areas.