How to Set Up a Liaison Office in India

Steps to Set Up a Liaison Office in India

1. Understand the Purpose and Restrictions:

   • A liaison office can only undertake liaison activities, such as promoting business, representing the parent company, and facilitating communication.
   • It cannot engage in any commercial, trading, or industrial activities directly or indirectly.

2. Eligibility Criteria:

   • The foreign parent company must have a profitable track record for the preceding three financial years.
   • The parent company must have a net worth of at least USD 50,000, as evidenced by the latest audited balance sheet or account statement.

3. Application to the Reserve Bank of India (RBI):

   • Submit an application to the RBI through an authorized dealer bank.
   • The application should include the prescribed form (Form FNC), a copy of the Certificate of Incorporation/Registration of the parent company, the latest audited balance sheet, and other required documents.

4. Approval from RBI:

   • The RBI processes the application and grants approval based on the fulfillment of eligibility criteria and other conditions.
   • The approval is usually valid for three years and can be renewed.

5. Registration with the Registrar of Companies (RoC):

   • Upon receiving RBI approval, the liaison office must be registered with the RoC within 30 days.
   • File Form FC-1 along with the necessary documents, including the RBI approval letter.

6. Obtaining Permanent Account Number (PAN):

   • Apply for a PAN from the Income Tax Department to fulfill tax obligations.

7. Opening a Bank Account:

   • Open a bank account in India for the liaison office, which will be used for receiving funds from the parent company.

8. Comply with Annual Filing Requirements:

   • The liaison office must comply with annual filing requirements, including submitting an Annual Activity Certificate (AAC) from a Chartered Accountant to the RBI.
   • File annual returns and financial statements with the RoC.

Documents Required

1. Application Form (Form FNC):

   • Filled and signed application form.

2. Certificate of Incorporation/Registration:

   • Certified copy of the parent company’s Certificate of Incorporation or Registration.

3. Board Resolution:

   • A board resolution from the parent company authorizing the establishment of the liaison office in India.

4. Audited Financial Statements:

   • The latest audited balance sheet of the parent company.

5. Address Proof:

   • Proof of the registered office address of the liaison office in India.

6. Details of Directors/Executives:

   • Information about the directors or executives of the parent company and the proposed person in charge of the liaison office.

Benefits of Setting Up a Liaison Office in India

• Market Presence: Establishes a physical presence in the Indian market, facilitating better communication and understanding of local business practices.
• Brand Promotion: Helps in promoting the brand and building relationships with Indian businesses and customers.
• Market Research: Conducts market research to identify potential business opportunities and market trends.
• Regulatory Compliance: Ensures compliance with local regulations, paving the way for future business expansion.

Conclusion

Setting up a liaison office in India involves several steps and requires compliance with specific regulatory requirements. At MDCO, we provide expert guidance and support throughout the process, ensuring that your liaison office is established smoothly and efficiently. Our comprehensive services include assistance with RBI and RoC filings, obtaining necessary approvals, and ongoing compliance support.

Contact us today to learn more about how we can help you set up a liaison office in India and start your journey in the Indian market with confidence.