One of the legal manners for starting a company in India is by establishing a liaison office. Also known as a representative office, it can only enter specific activities and it cannot start any commercial operations. Although this business structure does not fall under the regulations for commercial companies, similar incorporation steps have to be followed – such as setting up a corporate bank account at a local bank. Our team of consultants in company registration in India can assist foreign investors with information on the documents that have to be filed with local authorities when setting up a liaison office in India.
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What is a liaison office? | It is a representative office established by a company in a foreign location to facilitate coordination without engaging in profit-generating activities. |
Purpose | It facilitates communication and coordination between a company and its affiliates or partners. |
Legal status of a liaison office in India | A registered liaison office in India considered a foreign company, must annually file an income tax return. |
Approval | To set up a liaison office in India, approval from the Foreign Exchange Department of the Reserve Bank of India (RBI) is mandatory. |
Submissions | The Indian liaison office must submit a list of its established business locations in India, along with the financial statement, using Form FC.3 to the Registrar on the balance sheet date. |
Decision-making | No decision-making authority; advisory role. |
Activities | Does not engage in any commercial, trading, or industrial activities, either directly or indirectly. |
Audit | The liaison office must annually prepare and have its Indian business operations’ financial statements audited by a practicing Chartered Accountant in India. |
Land acquisition | A representative office in India is prohibited from purchasing any immovable property, except through leasing for a duration not exceeding five years. |
Compliance required for a liaison office in India (Yes/No) | Yes, must comply with the Companies Act, 2013. |
Funding | A liaison office in India sustains itself using funds received from abroad through regular banking channels. |
Eligibility | To register a representative office in India, a foreign entity needs a profitable track record in the last three financial years in its home country and a net worth of at least US$ 50,000 or equivalent. |
Additional liaison office application | If the number of liaison offices surpasses four, the applicant must provide justification for any additional office(s), and prior approval from the RBI is necessary. |
Contracts | Limited business activities; no contracts signing power. |
Legal assistance | Certainly, our Indian company formation agents can assist you in setting up a representative office in India. |
Setting up a liaison office in India involves several steps and compliance with regulatory requirements. A representative office is typically established by foreign companies to facilitate communication and promote their parent company’s interests in India. Here is a comprehensive guide provided by our Indian company formation consultants to help you navigate the process:
Please note that opening a liaison office in India can be complex and may involve specific requirements depending on your industry and the nature of your business activities. Seeking guidance from our company formation experts in Indian business regulations is advisable to ensure smooth compliance with all legal and regulatory aspects.
The registration of a liaison office in India is defined under the Foreign Exchange Management Act (FEMA). According to the provisions of the Act, a representative office can be seen as a channel of communication between the headquarters of a foreign company and the legal or institutional entities operating in India.
The Act also states that the liaison office cannot operate in the following activities:
Businessmen interested in the procedure of company formation in India should know that the liaison office has to be registered with the Reserve Bank of India (RBI) and obtain approval from this institution to operate on the Indian territory. Our representatives can assist investors with more details on the registration with the RBI.
To open a company in India registered as a liaison office, foreign investors may enter only the following activities:
Generally, it takes approximately 20 to 24 weeks to register a liaison office, which may operate on the local market for three years. However, if necessary, the investors may apply for an extension.
Foreign businessmen are invited to consult our team of specialists in company formation in India for more details regarding the registration of a liaison office.
Indian liaison offices facilitate networking with local businesses, industry associations, and government authorities, potentially leading to collaborations and partnerships that can benefit your company financially. Furthermore, a liaison office can help you conduct market research and gather valuable insights into the Indian market at a relatively lower cost than establishing a full-fledged subsidiary or branch. This information can assist in making informed investment decisions. Please find below the average salary of a liaison officer:
Our experts can help you manage payroll in India for your liaison office.
Besides this, if you need information on how to start a company in India, please contact our agents.