Foreign companies planning to open a branch in India are required to seek approval from

Reserve Bank of India “RBI” for setting up their Branch Office. Foreign company has to make
application to RBI through AD Category-1. The applications for Branch Office approval are
considered by the RBI under two routes- Automatic Route or Government Route considering
the following

1. Track Record - a profit making track record during the immediately preceding five
financial years in the home country

2. Net Worth - not less than USD 100,000 or its equivalent

[total of paid-up capital and free reserves, less intangible assets as per the latest
Audited Balance Sheet or Account Statement certified by a Certified Public
Accountant or any Registered Accounts Practitioner by whatever name]

Permission to set up Branch Office is initially granted for a period of 3 years, which may be
extended from time to time with RBI approval.

CHECKLIST REQUIRED FOR BRANCH OFFICE APPROVAL

Following documents are required from the foreign company for obtaining approval from RBI.

1. Form FNC 1 *– 3 Copies

2. Letter from the Principal officer of the Parent Company to RBI*

3. Copy of the Certificate of Incorporation / Registration attested by the Notary Public in

the country of registration

[If the original Certificate is in a language other than in English, the same may be translated
into English and notarized as above and cross verified/attested by the Indian Embassy/
Consulate in the home country].

4. Latest Audited Balance sheet of the applicant company.

[If the applicants’ home country laws/regulations do not insist on auditing of accounts, an
Account Statement certified by a Certified Public Accountant (CPA) or any Registered
Accounts Practitioner by any name, clearly showing the net worth may be submitted]

5. 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.

6. Letter from the Principal Officer of the Parent Company to RBI.

7. Copy of Certificate of Incorporation / Registration attested by the Notary Public in the

country of registration [If the original Certificate is in a language other than in English,
 the same may be translated into English and notarized as above and cross
verified/attested by the Indian Embassy/Consulate in the home country.

8. Certified copy of the certificate of incorporation and MOA and AOA of the Foreign
Company. (English Translation of these documents required if they are in any other
language.)

9. Latest Audited Balance sheet of the applicant company. [If the applicants’ home
country laws/regulations do not insist on auditing of accounts, an Account Statement
certified by a Certified Public Accountant (CPA) or any Registered Accounts
Practitioner by any name, clearly showing the net worth may be submitted]

10. Banker’s 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.
11. Nature and location: Nature and location of the activity of proposed branch/liaison
office and parent company on parent company’s letter head.

12. Sources of funds: A declaration to be obtained from the customer and the judgment
should be made that the source is in line with the activities of the customer (parent
company)

13. Power of Attorney in favor of a person resident in India, authorizing him to accept on
behalf of a company service of process and any notices or other documents required to
be served on the company.

14. A list of directors of the Company, containing particulars regarding name & surname in
full, his usual residential address, nationality, business occupation and if he has no
business occupation but holds any other directorships, particulars of that directorship
or of some one of those directorships

15. A list of secretary(s) of the Company, containing particulars regarding name &
surname in full, his usual residential address (If any secretary otherwise the Director
or Chief Executive may be assigned as Secretary)
 16. Extracts of Board Resolutions of the Foreign Company

17. Documentary Proof of Establishment of office (E.g.: - Rent agreement, lease deed
etc.)

18. Telephone Number(s) Fax Number(s), E-mail ID of the parent company

19. Amount of i)Paid-up capital, ii) Free Reserves/Retained earnings as per last audited
Balance Sheet and iii) Intangible assets, if any

20. Brief description of the activities to be carried out by the Parent company

21. If the company had any previous Import or Export with India the provide the following
details:
i) Value of goods imported from and / or exported to India by the applicant during each of the
last three years:
a) Imports from India
b) Exports to India
22. Particulars of the existing arrangements, if any, for representing the company in India
23. Particulars of the proposed Liaison/ Branch Office
a) Details of the activities / services proposed to be undertaken / rendered by the office.
b) Place where the office will be located.
c) Phone number
d) E-mail ID
e) Expected number of Employees
24. Any other information which you wishes to furnish in support of the application that
why you shall be allowed to establish a Liaison office in India. (If any)

FILING WITH MINISTRY OF CORPORATE AFFAIRS

Immediate filing after the establishment of Branch office in India foreign companies shall
within 30 days of RBI approval shall file following with MCA through Form 44
25. a certified copy of the charter, statutes or memorandum & articles of the company or
other instrument constituting the constitution of the company ( in English language).

26. the full address of the registered office of the company

27. a list of the directors & secretary of the company (complete details)

28. the name & address of one or more persons resident in India , authorized to accept on
behalf of the company service of process and any notices or other documents for the
company.

29. the full address of the office of the company in India which is to be deemed to be the
principal base in India.

ANNUAL FILING

Foreign companies having branch office in India shall, in each calendar year are required to
make certain filings with regard to accounts (including its subsidiaries) MCA as per company
laws.

ESTIMATED TIME FOR RBI APPROVAL FOR SETTING UP BRANCH OFFICE

Two to three weeks

PERMITTED ACTIVITIES OF BRANCH OFFICES IN INDIA

1. A branch office is not allowed to carry out manufacturing activities on its own but is
permitted to subcontract these to an Indian manufacturer.
info@india of Branch Office in India 2011
2. Activities permitted for Branch Office

a) Export/ Import of goods.

b) Rendering professional or consultancy services
c) Carrying out research work in which the parent company is engaged
d) Promoting technical or financial collaborations between Indian companies and parent or
overseas group company.
e) Representing the parent company in India and acting as buying/selling agent in India
f) Rendering services in IT & development of software in India
g) Rendering technical support to the products supplied by parent company
h) Foreign airline/shipping company.

Note

• Retail trading activities of any nature is not allowed for a Branch Office in India.

• A Branch Office is not allowed to carry out manufacturing or processing activities in India,
directly or indirectly.
• Profits earned by the Branch Offices are freely remittable from India, subject to payment of
applicable taxes

GENERAL TERMS AND CONDITION

1. Partnership / Proprietary concerns set up abroad are not allowed to establish Branch
Offices in India.

2. Branch Offices of a foreign entity, are permitted to acquire property for their own use and
to carry out permitted/incidental activities but not for leasing or renting out the property.

3. Branch Offices are allowed to open non-interest bearing INR current accounts in India and
keep funds as deposits for a maximum period of 6 months.

4. Transfer of assets of Branch Office to subsidiaries or other Branch Offices is allowed with
specific approval of the Central Office of the Reserve Bank.

5. Entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China are not allowed
acquire immovable property in India even for a Branch Office . These entities are allowed to
take such property on lease basis only for a period not exceeding five years.

6. Entities from Nepal are allowed to establish only Liaison Offces in India.

7. Profts earned by the Branch Offces are freely remittable from India, subject to payment of
applicable taxes.

8. Branch office have to submit annual activity cirtifcates from chartered accountants to RBI.

REMITTANCE OF PROFIT BY BRANCH OFFICE

Branch Offices established with the approval of RBI may remit outside India profit of the
branch, net of applicable Indian taxes and on production of the following documents to the
satisfaction of the Bank through whom the remittance is effected:

1. A Certified copy of the audited Balance Sheet and Profit and Loss account for the
relevant year;

2. A Chartered Accountant’s certificate.

RESTRICTION

However there are certain restrictions on Liaison Offices, which are as follows :
1. The Liaison Office cannot undertake any business activity in India nor can it generate
any income in India without the approval of RBI.
2. All expenses of the office must be met through inward remittances to the office from
 abroad through normal banking channels. However, at the time of closure of the
Liaison Office, RBI grants permission to repatriate the balance in the Indian bank
account to the parent company.
3. It is not subject to taxation in India. However, liaison office would be required to
withhold taxes from certain payments.
4. It cannot borrow, lend money, or accepts deposits.
5. It cannot acquire, hold, (otherwise than by way of lease for a period not exceeding
five years) transfer or dispose of any immovable property in India, without prior
approval of RBI.
6. However, the office must file regular returns to the RBI. Such returns must include
Audited Annual Accounts and an Annual Activity Certificate by a Chartered Accountant