Branch Office Registration: Eligibility, Process, and Documents

A foreign company can open a branch office in India to expand its business activities. However, it would require the prior approval of the RBI or other sectoral regulators as the case may be. Besides approval, the foreign company must also seek registration of branch office with ROC (Registrar of Companies) under the Companies Act, 2013. Branch office registration in India is valid for 3 years, beyond which it can be renewed indefinitely for 3 years at a time. To set up a branch office, a foreign company must have the minimum net worth of USD 100,000, and a profit-making track record for 5 continuous years. This ensures that the branch office established has high growth and revenue-earning potential, besides a financially sound holding company to bear its liabilities. At Bizfoc, we understand the intricacies and legal requirements for setting up a branch office in India. Our experts provide full assistance through the process, documentation, and post-registration compliances.

What is a Branch Office?

A Branch office is established by a company to expand its business activities beyond national borders. It carries the same name, brand value, and legal identity of the foreign parent, and does not get incorporated as a separate corporate structure. In India, a foreign company can open its branch office only after seeking approval from the RBI and complying with the regulations prescribed under FEMA, as well as the Companies Act, 2013. Once it receives RBI approval, the branch office seeks registration from the ROC (Registrar of Companies) to establish its existence. It’s crucial to note here that a branch office, once registered, can only carry out the permitted activities by the RBI for up to 3 years, which is its initial validity period. If needed, the validity period may be extended by renewing the registration.

Branch Office Registration Requirements in India

A foreign company can establish its branch office in India provided certain requirements are fulfilled. These include financial soundness, profitability, and permitted business activities by the RBI. Financial soundness ensures the company is capable of bearing its branch office liabilities. Profitability track record ensures the branch office has potential for growth in India. Finally, permitted business activities carried out by the foreign company ensures the same will be mirrored by its branch office in compliance with FEMA and RBI regulations. The list below highlights the branch office registration requirements in detail.

1. Foreign Incorporation: The foreign parent company must be incorporated in its country of origin. It must possess the documented proofs of incorporation, such as a valid Incorporation Certificate, Memorandum of Association, and Article of Association.Note that foreign partnership and proprietary concerns are not permitted to open Branch Offices in India.
2. Net Worth: The net worth of a company, according to the Companies Act, is the cumulative of its paid-up capital and free reserves. To set up a branch office, a foreign company must have a net worth not less than USD 100,000 or equivalent. The same must be evident in its audited financial statements. If the concerned foreign company does not have the minimum net worth, it must submit a Letter of Comfort in the name of its holding company, which must in turn qualify for the minimum net worth requirement.
3. A Name After the Foreign Parent: The branch office must carry the same name as its foreign parent. It does not receive a distinct name or legal identity since it does not get incorporated as a separate corporate structure. The branch office is required to operate under the same brand and carry out the same business activity as that of the parent company.
4. Profitable Track Record: The foreign company setting up a branch office in India must have a consistent track record of being profitable for 5 years immediately preceding the date of application for branch office registration. The profitability must be clearly shown in audited financial statements of the company.
5. Permitted Business Activity: The branch office must carry out the same activities as that of its foreign parent. Its scope of activities must not extend beyond the parent’s business objectives. Further, the parent’s objectives must remain within the scope of permitted activities by the Reserve Bank. These include:
   • Export of goods
   • Import of goods
   • Airlines or Shipping Activities
   • Consultancy Services
   • Professional Services
   • Research in the same field in which the parent company is engaged
   • Promoting collaborations between the foreign company and its Indian tie-ups
   • Representing the brand and business of the foreign company
   • IT and Software Services
   • Providing technical support in promoting products of the parent company

Foreign Branch Office Registration Procedure

Step 1: Documentation and Legalisation

The procedure for foreign branch office registration in India begins with seeking approval from the RBI. Once the approval is granted, an application is filed with the ROC seeking registration for 3 years. Both applications must be submitted with extensive supporting documents which our team will help you prepare. Further, we will guide you through all the steps to ensure a quick, and unhindered branch registration process.

Step 2: Filing FNC-1 Application for AD Bank’s Approval

After preparing the documents, the next step is applying for AO’s approval. An application for this purpose is filed in Form FNC-1. Usually, the AD bank has the authority to verify and approve the FNC-1 application and later transfer it to the RBI for UIN generation. However, in few cases, approval and thorough verification is required from the RBI in consultation with the Central Government.

Step 3: Special Cases Requiring RBI Approval

RBI approval is required for setting up a branch office if:

• The foreign company is incorporated in Pakistan
• The foreign company is incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a branch office in Jammu and Kashmir, North East region, or Andaman and Nicobar Islands
• The principal business of the applicant is in the defense, telecom, private security or information and broadcasting sector
• The foreign company is a NGO, NPO, or an agency associated with a foreign government

Step 4: Registration with State Police Authorities

This step is applicable only if the foreign company opening the branch office is incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau. Such companies must seek additional approval from the police authorities of the state in which the branch office will conduct its business. The AD category-1 bank will proceed their approval application to the Ministry of Home Affairs.

Step 5: Receive RBI/AO approval letter

Once the FNC-1 application is submitted, it gets verified by the approving authority. Upon successful verification, a UIN number is assigned to the branch office along with an approval letter valid for 30 days from the issue date. Within these 30 days, registration of branch office with ROC must be completed.

Step 6: Filing Branch Office Registration Application with the ROC

ROC branch office registration form filed in FC-1 is an online web-based form available on the MCA website. The form is filed with the details of the parent company, its business activities, registered address, branch office address in India, and a few supporting documents. Upon successful registration, the ROC issues a registration certificate to the branch office with a validity of 3 years from the issue date.

Step 7: Business Commencement

After the registration process gets completed, the branch office can begin its business activities promptly. If it fails to do so within 6 months, its registration and approval may get cancelled. However, an extension of this date may be requested in unprecedented circumstances.

Documents Required for Registration of Branch Office in India

Documents complete the application for branch office registration. They serve as evidence for all the information provided by the applicant. The requisite documents can be categorized into the documents of the foreign company, the resident authorised applicant, and the registered address of the branch office in India. You can refer to the complete list below.

Documents From the Foreign Parent Company:

1. Certificate of Incorporation in the Country of Origin
2. Memorandum of Association
3. Articles of Association
4. Audited Financial Statements for Last 5 Years
5. Banker’s Report from the origin country
6. List of all Shareholders
7. List of all Directors and their KYC documents
8. Net worth certificate attested by a Certified Public Accountant

Documents From the Resident Authorised Applicant:

1. 5 Passport-Size Coloured Photograph
2. 5 copies of national identity card, if applicable
3. 5 Copies of Passport
4. Address Proof (Utility Bills / Banks Statement less than 2 months)
5. Power of Attorney / Board Resolution Authorising the Applicant
6. Copy of business visa with immigration stamp

Documents of Registered Address in India:

1. Proof of Office Address (Utility Bills / Rent Agreement / Property Tax Receipt)
2. No Objection Certificate from the Office Owner

Other Forms and Declarations:

1. FNC-1 Application form
2. Board resolution approving the decision of starting a branch office
3. Declaration regarding net worth and source of funds
4. Declaration regarding business activity and location of branch office
5. If the foreign company opening the branch office is unable to meet the minimum net worth criteria, a letter of comfort from its holding company will be required. The holding company must meet the net worth criteria in such cases.

ROC Compliances for Branch Office

BizFoc: Your Branch Office Registration Partner

At BizFoc, we specialize in the registration of branch offices of foreign companies in India, offering a seamless and efficient process tailored to meet the unique needs of your business. Our expert team ensures comprehensive compliance with all regulatory requirements, providing end-to-end support from documentation to final approval. With our deep understanding of Indian corporate laws and a commitment to excellence, BizFoc is your trusted partner in expanding your global footprint into one of the world's most dynamic markets.

Let us handle the complexities of branch office registration so you can focus on growing your business with confidence.

Conclusion

Branch Office Registration is a perfect means to expand your business in India. With its enhanced ease of doing business, favorable FDI policies, reasonable tax structure, and an overall business-friendly environment, a branch office in India can potentially yield high returns and long-term growth opportunities. Besides, you can freely repatriate your profits back to the native country by paying minimal taxes. Also, the compliance requirements and liability burden are negligible as branch offices in India operate with the legal identity of their foreign parent.

Frequently Asked Questions about Branch Office Registration