How to Set up a Branch Office in India: Eligibility Criteria and Procedure

How to Set up a Branch Office in India: Eligibility Criteria and Procedure

How to Set up a Branch Office in India: Eligibility Criteria and Procedure

Setting up a branch office in India is a common method for foreign companies to extend their business operations in India. Branch offices in India are usually established by foreign companies to explore the Indian markets without making any long-term commitment. But how to set up a branch office in India? What are the eligibility criteria and procedure for the branch office registration? Let’s find out!

Eligibility to Set up a Branch Office in India

The following are the eligibility criteria to set up a branch office in India:

  • The applicant shall be a body corporate incorporated outside of India
  • The company must have a consistent track record of profitability in the home country in the previous 5 financial years 
  • The name of the Indian branch office shall be the same as the parent company 
  • The net worth of the company is not less than $100,000 or equivalent

Further, in case the applicant company fails to meet the financial criteria but is a subsidiary of a parent company, then such applicant company can submit a ‘Letter of Comfort’ from the parent company stating that the parent company satisfies the prescribed financial criteria. 

Procedure to Establish a Branch Office in India

Primarily, the foreign company must obtain approval from RBI as per the provisions of the Foreign Exchange Management Act, 1999 to open a branch office in India. However, the foreign entities whose principal business falls under the category where 100% foreign direct investments are permissible through an automatic route must complete Form FNC and submit it to the RBI along with the necessary documents.

In other cases, the applicant must submit the form to the Ministry of Finance through AD Category-I bank. Following is the procedure for the same:

  • Form FNC shall be submitted to the AD Category-I bank.
  • The bank may grant approval as per the guidelines and/or directions issued by RBI.
  • In case the office is not opened within a period of 6 months from the receipt of the approval letter, then the approval granted to open the branch office in India shall stand canceled.
  • In case the applicant wasn’t able to open the office within the stipulated time period of 6 months due to reasons beyond its control, then the AD Category-I bank may grant an extension of time of a further period of 6 months for setting up the office. 
  • Any further extension shall be subject to the approval of the RBI

Documents Required for Branch Office Registration in India

Following are the information and documents required for branch office Registration in India:

  • Name and address of the applicant
  • Copy of the certificate of incorporation or registration attested by the Notary Public in the country of registration
  • Copy of memorandum of association and articles of association attested by the Notary Public in the country of registration
  • Financial details of the applicant including an audited balance sheet for the last 5 years
  • Value of the goods imported into or exported from India
  • Details of the bankers in the home country
  • Banker’s report of the bankers in the home country showing the number of years for which the banker has had banking relations with the bank
  • Details of Branch office registration in India including address, email, contact details, and expected number of employees
  • Any other document as may be required

Further, prior approval of RBI shall be required in the following cases:

  • The applicant is either a citizen of or is incorporated or registered in Pakistan.
  • The applicant is either a citizen of or is incorporated or registered in Sri Lanka, Bangladesh, China, Iran, Hong Kong, Afghanistan, or Macau and the application is filed to open the branch office in Andaman and Nicobar Islands, Jammu and Kashmir or North Eastern region.
  • The primary or principal business of the applicant falls in either of the following sectors i.e., telecom, defense, information and broadcasting, and private security.

However, in the case where government approval or permission or license from the concerned ministry or department is obtained, then the approval of RBI is not required.

ROC Filings 

Within 30 days of setting up a branch office in India, the foreign company shall file Form FC-1 with the registrar of companies along with the following documents:

  • Attested copy of the approval of RBI as per the FEMA rules and regulations as well as from the other regulators. In case no approval is required, then a declaration for the same shall be submitted by the authorized representative of the foreign company
  • Certified copies of the charter or statutes or memorandum or articles of association or any other instrument defining the constitution of the company
  • Power of attorney or the board resolution appointing the authorized representative
  • List of all the directors and secretaries of the foreign company

Following were the explicit requirements and procedures to set up a branch office in India. In case you require any assistance in branch office registration in India, then feel free to contact the ASC Group.

Also Read: Business Incorporation in India - A Complete Guide to Company Formation

 

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