Law Firm in India to establish Liaison Office in India
Establishing a Liaison Office in India
Permission to set up a liaison office is granted by the Reserve Bank of India (RBI). Permissions are normally granted for a period of three years and can be extended by further request.
A liaison office of a foreign company upon approval from the RBI must be registered under the (Indian) Companies Act, 2013.
A liaison office is not permitted to generate revenue in India.
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 (checks) and demand drafts. A liaison office cannot also charge any commission from Indian customers for providing liaison services.
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.
Further the foreign parent company must have a Net Worth of USD 50,000 or its equivalent as per its latest Audited Balance Sheet or Account Statement certified by a CPA. Net worth is defined as total of paid-up capital and free reserves, less intangible assets.
A liaison office can carry on the following activities:
- Representing in India the parent company / group companies.
- Collecting information about possible market opportunities and providing information about the company and its products to prospective Indian customers.
- 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.
- We assist foreign companies in establishing their liaison offices in India and further assist them in complying with all post formation legal compliances.
Frequently Asked Questions
No. Since the liaison office is not permitted to generate any income in India, there is no income earned by it and hence there is no requirement to pay corporate income tax.
Yes. For which the prior approval of RBI is required.
Yes. The liaison office has to inform RBI of the same.
The approval granted by RBI is usually for a period of three years.
Yes. The liaison office must approach RBI prior seeking extension of the approval granted to it prior to the expiry period of the approval already granted.
The liaison office has to filed an Annual Activity Certificate (AAC) every year with RBI along with its audited yearly financial statements.
Further the liaison office has to file Form FC-3 and FC-4 with Ministry of Corporate Affairs (MCA) every financial year.
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