Companies are often required to liaison with the governmental authorities as well as understand the business scope in distant places. A good way to do so is to set up a liaison office in India. Liaison offices are also known as Representative Offices as it represents their parent company and carries out liaison activities. It is often considered a place of business and the primary role of a liaison office is to act as a communication channel between the parent company/head office and the business entities and governmental authorities.
How to Set Up a Liaison Office in India?
Liaison offices only act as a communication channel and do not carry out the activities of a branch office in India. Initially, to set up a liaison office, a time period of 3 years is granted. However, the AD Category-I Bank can extend that time limit as may be required. In case a foreign entity wants to establish a Liaison Office in India, then it shall fulfill the following requirements:
- It should have a track record of profitability in the immediately 3 preceding financial years in the home country.
- It should have a net worth of a minimum of $50,000.
Documents Required for Setting up Liaison Office in India
The following are the documents required to set up a liaison office in India:
- The applicant entity shall provide the latest copy of the audited balance sheet
- The COI, MOA, or AOA shall be attested by the Notary Public or Indian Embassy
- The applicant should also provide an English version of the Certificate of Incorporation or Registration (COI), Memorandum of Association (MOA), and Articles of Association (AOA)
- Latest financial statements certified by a Certified Public Accountant or any registered accounts practitioner
- Banker’s report from the banker of the applicant in the country of registration or the host country displaying the number of years of banking relations that the applicant had with that bank
Procedure to Set-Up Liaison Office in India
Following is the procedure to set up the liaison office in India:
- The applicant can set up the liaison office in India either through the Government route or the RBI route. The applicant shall determine which route is suitable for them.
- The applicant shall submit the specified application form in Form FNC (as per Annexure A) through a designated AD Category-I bank to the RBI
- After it gets approval from the RBI, a Unique Identification Number (UIN) shall be allotted to the liaison office
- The liaison office shall obtain the Permanent Account Number (PAN) for setting up the office in India
- If the foreign entity is unable to fulfill the eligibility criteria, then it can still submit the Letter of Comfort (as per Annexure-B) from their parent company
- Obtain all other necessary regulatory approvals
Functions of Liaison Office
A liaison office usually carries out the following functions:
- It represents the parent or group companies in India
- Promotion of export and import from India
- Acts as a communication channel
- Liaison with various governmental authorities etc.
The following were the basic requirements to set up a liaison office in India. In case you require any assistance with respect to the setting up of the liaison office in India, then feel free to contact the ASC Group.
You can set up a liaison office in India with the following requirements. If you need any help, please contact the ASC Group expert’s business consulting team.