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    Branch Office of Foreign Company

    There is a lot of interest among foreign companies to start their operations in India and tap into one of the largest and fast-growing market, and have access to some of the best human resources in the world. One of the routes for Foreign Companies to enter into Indian market is setting up of Branch Office of Foreign Company.

     

    Foreign Companies desirous of opening Branch Office in India has take to approval from Reserve Bank of India (RBI) through AD category 1 Banker in the prescribed format along with required documentations and after approval, get registered with concerned Registrar of Companies (ROC). Such Branch office is treated as Foreign Company and is subject to higher Income tax rate (40%).Establishment of a branch office in India is regulated by the Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016.

     

    ComplianceIndia can be your legal and professional partner in India to get you registered Branch office of Foreign Company in India started quickly and cost-effectively.

    Advantages of Branch Office of Foreign Company

    Permanent place of business in India

    By registering a Branch Office of Foreign Company in India, the Foreign Company establish a permanent place of business in India by opening access to New Markets for Products and Services

    Controlling Power

    The Branch Office offers a greater level of control to the Parent Foreign company.

    Legal Compliance

    The Branch office will be subject to the laws in the Parent Foreign Company’s country. The laws of the Country in which it is established have a limited effect.

    Cost effective

    It is cheaper to open a Branch Office of Foreign Company rather than Indian Subsidiary of Foreign Company.

    Global Market

    Expansion of Brand Recognition across the world.

    Tax Benefits

    The branch office offers more tax benefits than compared Indian Subsidiary of Foreign Company.

    Eligibility to form a Branch Office of Foreign Company

    – The applicant foreign entity must have profit making track record for preceding five financial years in the home country.

    – In case the applicant foreign entity is a subsidiary and not eligible, then the Parent company or group company may remove the defect by issuing a Letter of Comfort (LOC).

    – Net worth should not be less than USD 100,000 or its equivalent.

    – Name of Branch Office of Foreign Company must be the same or similar to the applicant Foreign Parent company.

    – Only allowed to carry out the permitted activities as prescribed below

    • 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.
    • Foreign Airline/shipping Company.

    How we Work?

    Step 1

    Fill-up our Contact Form and Submit

    Step 2

    Our Expert/ Legal Professional will contact you and provide brief guidance into the related context

    Step 3

    All Required Documents and Details to be provided as discussed with our Expert

    Step 4

    Our Expert will start Drafting of required documents for registration process

    Step 5

    Drafting of MOA & AOA

    Step 6

    Application for DSC of the Directors

    Step 7

    Once all required documents are prepared, Our Expert will file the application with required authorities for registration process.

    Step 8

    On approval of RBI and Successful filing of Form with ROC, Certification of Incorporation will be issued to you by ROC.

    Packages

    Consultation Charges

    Nil

    Complete assistance by Experts or Professionals indicating Process, Documents required, Benefits, Tax compliance, Legal Compliance, etc.

    Start-up Plan

    Rs. 2,999/- only

    • – Registration of your Branch Office of Foreign Company
    • – Company MOA and AOA
    • – Allotment of DIN of all Directors
    • – PAN and TAN Registration
    • – Expert advice from Experts/ Legal Professionals

    Basic Plan

    Rs. 7,999/- only

    • – Registration of your Branch Office of Foreign Company
    • – Company MOA and AOA
    • – Allotment of DIN of all Directors
    • – PAN and TAN Registration
    • – GST Registration
    • – Legal Drafting of documents
    • – Expert advice from Experts/ Legal Professionals

    Advance Plan

    Rs. 15,999/- only

    • – Registration of your Branch Office of Foreign Company
    • – Company MOA and AOA
    • – Allotment of DIN of all Directors
    • – PAN and TAN Registration
    • – GST Registration
    • – IEC Licence registration
    • – Current Account Opening in your nearest Branch
    • – Board Minutes of First year on Incorporation
    • – Legal Drafting of documents
    • – Annual Filing with RBI
    • – MCA Annual Filing of Form AOC-4/ AOC-4 XBRL and MGT-7
    • – DIR-3 KYC filing
    • – Expert advice from Experts/ Legal Professionals

    Ultimate Plan

    Rs. 29,999/- only

    • – Registration of your Branch Office of Foreign Company
    • – Trademark Application
    • – Company MOA and AOA
    • – Allotment of DIN of all Directors
    • – PAN and TAN Registration
    • – GST Registration
    • – IEC Licence registration
    • – Current Account Opening in your nearest Branch
    • – Board Minutes of First year on Incorporation
    • – Legal Drafting of documents
    • – Appointment of First Auditor
    • – Annual Filing with RBI
    • – MCA Annual Filing of Form AOC-4/ AOC-4 XBRL and MGT-7
    • – DIR-3 KYC filing
    • – Income Tax Return filing of Company and its Directors
    • – GST Return filing for 6 months
    • – Expert advice from Experts/ Legal Professionals

    Documents required for Branch Office of Foreign Company

    Letter to RBI

    Letter from the Principal officer/ Local Representative of the Parent Foreign Company to RBI.

    Authorization letter

    Board Resolution / Power of authority from the Parent Foreign Company in favour of Local Representative.

    Board Resolution

    Letter of authority/ Resolution from Parent Foreign Company for setting up Branch Office In India

    Support in Operating Activities

    Comfort letter from the Parent Foreign Companyintending to support the Indian Branch Office in developing its operations.

    Incorporation documents of Parent Company

    Two copies of English version of the Certificate of Incorporation, MOA & AOA (Charter Document) of the Parent Foreign Company duly attested by the Indian embassy or notary public in the country in which the Parent Company is located.

    Annual Accounts of Parent Company

    The Latest audited Balance sheet and annual accounts of Parent Foreign Company duly translated and notarized for preceding five financial years & Certified by Indian Consulate & Directors.

    Contact Information

    Name, Address, Email ID and Telephone number of the authorized person in the Home Country.

    List of Directors and Shareholders

    List of Details in respect of Directors/Key Executives and Details of shareholders of the applicant company.

    Bank Details

    Details of Bankers of the Organization in the Country of Origin along with the bank account number.

    Funding

    Expected funding level for operations in India.

    Address of Branch Head Office

    Address Proof 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.

    Quick Response

    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

    Business Activity of Parent Company

    List of Activities carried out in Home Country by the applicant Parent Foreign Company about the product and services of the Company in Brief.

    Bankers Certificate

    Certificate from the Bankers of the Organization in the Country of Origin stating financial position of the Parent Company

    Identity and Address Proof of Directors

    Latest Identity and Address Proof of all the Directors – Certified by Consulate and Banker in Home Country.

    Board resolution for opening Bank Account

    Resolution for Opening up Bank Account with the Banker

    Bank Account Form

    Duly Signed Bank Account Opening Form for Indian Bank

    Major Shareholders details

    Details of the Individuals / Company holding more 10% of Equity

    Procedure for Incorporating a Branch Office of Foreign Company

    Apply for DIN and DSC

    Apply for DIN and DSC

    DIN is required for appointment of all the Proposed Directors. DSC also need to be obtained so that Forms can be signed digitally and filed online with Registrar.

    Filing of Application with RBI through AD Bank

    Filing of Application with RBI through AD Bank

    The application in the prescribed Form - FNC for registration of a branch office of a foreign company is filed to the RBI through AD Bank (Authorised Dealer). They plays a crucial role as all the communication to the RBI has to be routed through them. We have an excellent relationship with many banks in India, which certainly help in obtaining the approval fast. The permission once granted remain valid for six months and you may apply for the extension of the same if required.

    Verification of KYC from Banker of Parent Company

    Verification of KYC from Banker of Parent Company

    After FNC Form is filed with the AD Bank, a request for verification of documents is sent to the banker of the foreign company. On receipt of confirmation from Foreign Company, the next process of approval is proceeded with. The RBI/AD Banker may ask for clarification or any other additional document, if any, to be submitted.

    Approval of RBI for Branch Office Registration in India

    Approval of RBI for Branch Office Registration in India

    If Principal business of Foreign Company falls under sectors where 100% FDI is allowed, AD Category-I Banker itself may consider such applications under delegated powers. In other cases, where 100% FDI is not allowed, such applications are considered by RBI in consultation with Ministry of Finance, Govt of India.

    Registration of Branch Office in India with ROC

    Registration of Branch Office in India with ROC

    After obtaining RBI Approval, Form FC-1 is to be filed within 30 days with the concerned ROC for registration of Certificate of Incorporation.

    Application for PAN and TAN registration

    Application for PAN and TAN registration

    Once ROC issues Certificate of Incorporation, Application for PAN and TAN registration to be made.

    Open a bank account for the Branch Office

    Open a bank account for the Branch Office

    The Branch Office has to open a Bank account in order to carry on the business in India.

    GST Registration and IEC License

    GST Registration and IEC License

    Application for GST registration and IEC licence for the Branch Office of Foreign Company to carry on the business activities.

    Frequently Asked Questions

    1. How can foreign companies open Liaison/ Branch office in India?

    With effect from February 1, 2010, foreign companies/entities desirous of setting up of Liaison Office / Branch Office (LO/BO) are required to submit their application in Form FNC along with the documents mentioned therein to Foreign Investment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai through an Authorised Dealer bank. This form is available at RBI site.

    2. How does Reserve Bank of India functions the application?

    The applications from such entities in Form FNC will be considered by the Reserve Bank under two routes:

    • Automatic Route – Where principal business of the foreign entity falls under sectors where 100% Foreign Direct Investment (FDI) is permissible under the automatic route.
    • Government Route – Where principal business of the foreign entity falls under the sectors where 100% FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non–Government Organisations / Non – Profit Organisations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India.

    3. What are the criteria for establishing Branch Office of Foreign Company in India?

    For Setting up the Branch office of Foreign Company in India, the applicant Foreign Company must have profit making track record for preceding five financial years in the home country and Net worth should not be less than USD 100,000 or its equivalent. In case the applicant foreign entity is a subsidiary and not eligible, then the Parent company or group company may remove the defect by issuing a Letter of Comfort (LOC).

    4. What are the permitted activities of Branch Office of Foreign Companies?

    The applicant Foreign Company is allowed to carry out only the permitted activities as prescribed below:
    – 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.

    5. What is the procedure for setting up Branch office?

    Permission for setting up branch offices is granted by the Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai. Reserve Bank of India considers the track record of the applicant foreign company, existing trade relations with India, the activity of the company proposing to set up office in India as well as the financial position of the Company while scrutinising the application. The application in Form FNC should be submitted to the Reserve Bank through the Authorised Dealer bank. After obtaining approval from RBI, then it has to file Form FC-1 with ROC within 30 days for registration of Certificate of Incorporation.

    6. Whether Branch Offices are permitted to remit profit outside India?

    Branch Offices are permitted to remit outside India profit of the branch net of applicable Indian taxes, on production of the following documents to the satisfaction of the Authorised Dealer through whom the remittance is effected:
    a. A Certified copy of the audited Balance Sheet and Profit and Loss account for the relevant year;
    b. A Chartered Accountant’s certificate certifying –
    i. the manner of arriving at the remittable profit
    ii. that the entire remittable profit has been earned by undertaking the permitted activities
    iii. that the profit does not include any profit on revaluation of the assets of the branch.

    7. What are the countries for which Branch office registration cannot be done under the automatic route and can be established only after prior approval is received from the RBI?

    Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, Macau or any application for opening of a branch office in Jammu & Kashmir, North East Region and Andaman and the Nicobar Islands.

    8. What is Income Tax rate for a Branch office of a Foreign Company?

    A branch office of a foreign mother company is not treated as a separate and distinct entity in India and for all tax purposes, the Indian government taxes the profits of such entities at higher rates. As of now the Income Tax on the profit of a foreign company is 40% in contrast to the tax rate of 30% on an Indian company.

    9. Can Branch Office maintain more than one account in India?

    No, if the Branch Office wants to open more than one account it has to obtain prior permission of the Reserve Bank through its AD Category I bank justifying the reason for additional account.

    10. Are Branch Office/ Project Office/ Liaison Office required to register/report with Police authorities?

    Only applicants from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong, Kong, Macau and Pakistan shall have to register with the State Police authorities. Copy of approval letter for persons from these countries shall be marked by the AD Category I bank to the Ministry of Home Affairs, Internal Security Division – I, Government of India, New Delhi for necessary action and record. All other countries are exempted from registering with the State Police authorities.

    11. Whether there is any specific format in which application with State Police has to be filed for registration?

    Yes, please refer to the Master Directions on Reporting on RBI site. The registration is required to be done once the AD bank’s approval for the establishment of office is issued.

    12. Can the Branch Office/ Project Office/ Liaison Office acquire property for its operation?

    The Branch Office/ Project Office of a foreign entity, excluding an Liaison Office, are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property. However, entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Nepal, Bhutan, China, Hong Kong and Macau require prior approval of the Reserve Bank to acquire immovable property in India. BOs/LOs/POs have general permission to carry out permitted/ incidental activities from leased property subject to lease period not exceeding five years.

    13. How long is the Company Registration process in India?

    Compliance India can incorporate the Branch Office of Foreign Company in 25-30 working days. The time taken for incorporation will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy incorporation, please ensure you have all the required documents prior to starting the incorporation process.

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