A Complete Guide for Branch Office Registration in India
by EzyBiz India Tax & Accounting Consulting Firm
A foreign company desirous of business set up in India has multiple options to enter India and operate its business activity. One such option is to set up a branch office.
This article will discuss branch office registration in India, the procedure involved, documentation required, and time is taken in the entire procedure.
What is a Branch Office?
branch office can be defined as an extension of the head office of a
corporate house. It is a business model for establishing a temporary
office in India usually taken up by foreign companies that want to learn
more about the Indian market without making long-term investments or
commitments. The activities undertaken by a branch office is similar to
those of its parent company.
Establishing a branch office in India by foreign entities is regulated in Section 6(6) of the Foreign Exchange Management Act, 1999, read with 1Notification No. FEMA 22(R)/2016-RB dated March 31, 2016.
Branch Office registration in India is subject to prior approval of the Reserve Bank of India and fulfillment of the following conditions by the parent company-
- The applicant parent company must be incorporated outside the Indian Territory.
- The company must be engaged in activities like trading or manufacturing etc.
- The company’s net worth or business in its home country should not be less than US $100,000.
case the financial criteria are not met by the parent company. It must
issue a Letter of Comfort (LOC) from the ultimate parent company/Group
company subject to the condition that the parent/ group company
satisfies the prescribed criteria for net worth and profit.
- The parent company should have a continuous track record of profit for five years in the home country.
the name of the parent company and the branch office in India must be
exact. The parent company is liable to meet the expenses of the branch
office in case it does not generate apt revenue through its operations
Permissible activities to be undertaken by Branch Office:
As per RBI guidelines, the branch office can do only the following prescribed activities:
- Import and export of goods
- Research and development work
- Buying and selling agent representative of the parent company
- Consultancy services
- Rendering any professional services
of branch office in India for carrying out manufacturing activities
directly is not permissible unless the manufacturing work is carried on
in a Special Economic Zone (SEZ). The purpose behind this is to export
products outside India. However, the branch office can sub-contract an
Indian manufacturer for manufacturing any products.
The procedure of registration of branch office in India
The following steps must be taken for registering a branch office in India by its parent company-
entities desirous of registering Branch Office in India may apply form
FNC to designated AD category-1 bank along with prescribed documents in
case the principal business of the foreign company falls under any
sector where 100% Foreign Direct Investment (FDI) is permissible through
automatic route. In other sectors, i.e. where the automatic approval
route is unavailable, the application needs to be filed with the
Ministry of Finance and relevant documents.
receipt of such application and documents, the AD banker would exercise
his due diligence and, in case all conditions are satisfied, grant
approval for setting up a branch office in India.
establishing more than one branch office across India, the parent
company must seek approval from RBI for each location separately.
- Approval from RBI for every additional business activity undertaken by the branch office is also required.
- Once approval is granted, the Branch office need to be opened within six months. Otherwise, the approval will lapse.
opening BO in the Special Economic Zones (SEZs) to undertake
manufacturing and service activities, general permission has been given
to non-resident companies, subject to fulfilment of prescribed
case, parent company desirous of opening BO in India is from certain
prescribed countries, they have to register with the state police
Prescribed countries are as under:
Sri Lanka, Bangladesh, China, Iran, Pakistan, Afghanistan, Hong Kong, Macau.
the AD banker must submit an approval letter for countries above to the
Ministry of Home Affairs, Internal Security Division-I, Government of
India, New Delhi for necessary action and record. Company Registration in India
Documents required for Registration of Branch Office in India:
- Form FNC duly signed by an Authorized Representative (AR).
certificate, MOA, AOA of the parent company duly attested by a notary
public or by the Indian Embassy in its registration country.
- Information and details about the company duly attested by the notary public or the Indian Embassy in its home country.
- Audited financial statements of the parent company for the last five years
- Documents of incorporation of the Branch office
- Proof of a registered office
- Note on the proposed activity to be carried on by the branch office.
- A board resolution for opening the branch office
- KYC of authorized signatory
- Information regarding the local representatives hired by the parent company.
Time Involved in the entire process
It takes upto 50 to 60 working days to get branch office registration approval from the date of submission of all the documents.
Created on Sep 14th 2021 07:31. Viewed 109 times.