Branch office registration in India can be done by foreign companies which are engaged in manufacturing or trading activities after getting approval from RBI. Branch office registration in India requires the parent company should ensure that the Branch Office should be engaged in the same business activity in which the parent company is engaged.
- Export / Import of goods.
- Rendering professional or consultancy services.
- Carrying out research work, in areas 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.
The profits earned by the Branch Office cab be freely remitted from India back to the parent company, after payment of applicable taxes.
The RBI has a few other considerations:
- Track Record: For a Branch office, the parent company will require a profit making track record in the in the immediately preceding five financial years in the home country.
- Net Worth: “a 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”. The net worth has to be equal to or more than USD 100,000.
- Proprietary firm: set up abroad are not allowed to establish Branch Offices in India
A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly and Retail trading activities of any nature is not allowed for a Branch Office in India. If you choose to do manufacturing activities, a wholly owned subsidiary is a better option.
All new branch offices set up must submit a report containing certain information within 5 working days of the Branch Office becoming functional to the Director General of Police (DGP) of the state concerned in which Branch Office has established its office.
Branch Offices have to file Annual Activity Certificates (AAC) from a chartered accountant at the end of March 31, along with the audited Balance Sheet on or before September 30 of that year.
Documents Required for setting up a branch office:
- Form FNC – Three copies.
- Letter from the principal officer of the Parent company to RBI.
- Letter of authority from the parent company in favor of Local Representative.
- Letter of authority/ Resolution from parent company for Branch office Registration in India.
- Comfort letter from the parent company intending to support the operation in India.
- Two copies of the English version of the Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the parent company duly attested by the Indian embassy or notary public in the country of registration.
- Certification of Incorporation – Translated & Duly Notarized and Certified by Indian Consulate.
- The Latest audited Balance sheet and annual accounts of parent company duly Translated notarized for past Three years. & Certified by Indian Consulate & Directors.
- Name, Address, email ID and telephone number of the authorized person in Home Country.
- Details of Bankers of the Organization the Country of Origin along with the bank account number.
- Commitment from the Organization to the effect that it will be open to report / opinion sought from its banker by the Government of India / Reserve Bank of India.
- Expected funding level for operations in India.
- Details Relating to address of the proposed local office, number of persons likely to be employed, number of Foreigners among such employees and address of the head of the Local office, if decided.
- Details of Activity carried out in Home Country by the applicant organization in brief about the product and services of company in Brief.
- Bankers Certificate.
- Latest Proof of identity of all the Directors – Certified by Consulate and Banker in Home Country.
- Latest Proof of address all of Directors – Certified by Consulate and Banker in Home Country.
- Details of the Individuals / Company holding more 10% of Equity.
- Structure of the Organization w.r.t Shareholding pattern.
- Complete KYC of Shareholders holding more than 10% Equity in the Applicant Company.
- Resolution for Opening up Bank Account with the Banker.
- Duly Signed Bank Account Opening Form for Indian Bank.
Post Incorporation Licenses:
After the company is registered, it may have to get certain licenses deepening on the nature and size of business. Here are the list of licenses which is required if a company is registered in Bangalore, Karnataka
- Karnataka Shops and commercial establishment - All companies registered must get this license from the department of labour.
- Professional Tax enrolment - All companies registered must get this license from the department of professional tax.
- Employee Professional Tax - (required only when salary payable is more than Rs 15,000 per month to employees).
- Import Export License - (Required if you are importing or exporting).
- GST - Rs 3,000 (Required if Company is into export of goods or service, turnover is more than Rs 20 lakhs per year).