Branch Office of Foreign Company
Foreign companies looking for entry into India can opt to register a Branch Office without creating a separate subsidiary of the Foreign Company. Filecrat can provide you all-round service for your requirement.
Branch Office of Foreign Company
A company needs expansion of its business to flourish over the globe. An expansion in a developing state like India has now become a great choice of foreign companies. Foreign Company as defined under section 2(42) Companies Act, 2013 is any company or body corporate incorporated outside India which has 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.
A branch office is required for cross-border business practices. There are various rules established under RBI (Reserve Bank of India) and FEMA, 1999 for the establishment of branch office. It is also important for the branch offices of foreign companies established before FEMA,1999 to comply with the set rules to continue their business in India.
Benefits & Advantages
- Tax benefits
- One name one identity across the globe
- A branch office helps to maintain greater level of control than any subsidiary company
- The expansion through branch office will result in greater brand’s visibility over globe
- The perk is also that it provides an opportunity to enter in a new market and test new products
- It reduces business risks because of natural calamities, economic degradation in a particular state
Eligibility Criteria
- Profit making track record in the preceding five financial years in the home country
- Net worth of not less than USD 100,000 or its equivalent
Requirements
- Place of Business
- Bank Account
- Permanent Account Number (PAN)
- Tax Deduction Account Number
- GST Registration
Procedure
STEP 1: Attestation of Parent Company’s Incorporation document by Indian Embassy present in the parent company.
STEP 2: Application of establishment of branch office in Form FNC to a designated AD Category - I bank.
STEP 3: The AD Category-I bank shall forward a copy of the application to the Reserve Bank of India for allotment of Unique Identification Number.
STEP 4: After receipt of the UIN from the Reserve Bank, the AD Category-I bank shall issue the approval letter to the non-resident entity for establishing BO/LO in India.
General permission to non-resident companies for establishing BO in the Special Economic Zones (SEZs) to undertake manufacturing and service activities subject to the conditions that such BOs:
- are functioning in those sectors where 100% FDI is permitted
- Comply with Chapter XXII of the Companies Act, 2013
- Function on a stand-alone basis.
STEP 5: Application to Ministry of Corporate Affairs in Form FC-1 to obtain a CIN (Corporate Identity Number).
What's included
- Drafting of Documents
- Filing of Form FNC with RBI through AD bank
- Digital Signature of the Authorised Signatory
- Filing of Form FC-1 with ROC
- Registration with Local Police
- PAN and TAN Registration
- Consultation with our Experts
Documents Required
- Company’s incorporation documents attested by Indian Embassy present in the parent company
- Structure of the Company
- Details in respect of Directors/ Key Executives
- Contact details of the authorized person in Home Country
- Details of shareholders of Applicant Company
- Shareholding structures of the company
- Letter of Comfort.
- Audited Balance sheet of the applicant company for the last three/ five years in case of branch office/liaison office respectively
- The quotations or funds that will be used for the Indian branch
- Appointment letter of local representative in India appointed by company’s representative.
- Power of Attorney in favour of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC
- Copy of the Certificate of Incorporation/ Registration; Memorandum of Association and Articles of Association attested by the Notary Public in the country of registration
- Bankers' Report from the applicant’s banker in the host country / country of registration showing the number of years the applicant has had banking relations with that bank.
FAQ's
Yes, it is the first and most important step to start the procedure.
Yes, it is important to translate the document in English and certify it by company if the documents are in language other than English for the purpose.
- 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.
Yes, this is the guiding footprints to achieve the goal of opening a branch office in India.
Yes, it is important to appoint local representative in India for signatures on behalf of the company and easy communication between the Indian authorities and company.
Company’s representative will appoint local representative.
Yes, this is the pre-requisite of RBI for the consideration of application to open a branch office in India.
- Persons/ Entities list who are holding more than 10 percent of company’s share
- Structure of the company
- Shareholding structure of the company
It can be used only for the purpose approved by RBI. It is important to note that any new activity needs prior approval of RBI.
Requisites after approval by RBI are:
- Application to Ministry of Corporate Affairs to obtain Corporate Identity Number
- Permanent Account Number (PAN)
- Tax Deduction Account Number
- GST Registration
- Digital Signature Certificate
- Place of business
- Bank Account
- Proper follow up of accounting procedure as guided by Companies Act, 2013:
- Keeping Books of accounts
- Auditing of company’s annual account
- Branch needs to file for an Annual Activity Certificate with the RBI every year of business on Indian land
- Branch needs to deposit the Annual Return and annual Balance Sheet to Registrar of Companies (RoC)
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