Forming Branch / Liaison Office
Branch offices and liaison offices are specialised entry routes for foreign entities and are governed by RBI and FEMA rules. We help foreign businesses evaluate whether these structures are suitable and support the approval and implementation process.
Branch Office
A branch office is generally used where the foreign entity wants an approved presence in India for permitted business activities under the FEMA and RBI framework. The scope of activity, approval route, and ongoing compliance depend on the current rules applicable to the foreign entity.
Liaison Office
A liaison office is generally limited to permitted liaison and communication functions and cannot undertake commercial, trading, or income-generating activity in India. It is usually considered where a foreign entity needs a representative presence without carrying on business operations in India.
Liaison Office is permitted to undertake following activities
- Representing the Parent Company in India
- Promoting Export / Import from / to India
- Promoting Technical / Financial collaborations between the Parent company and companies in India
- Acting as a Communication Channel between the Parent company and Indian companies
The basic criteria considered by the Reserve Bank while sanctioning Branch / Liaison Offices of foreign entities
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.
Net Worth:
The Net Worth means 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 should be.
- For Branch Office — not less than USD 100,000 or its equivalent.
- For Liaison Office — not less than USD 50,000 or its equivalent.