Liaison Office Registration in India - Eligibility, Process, and Documents

Liaison Office Registration allows a foreign company to set up a Liaison Office in India distinctly for its Liaison Activities. These include communication with relevant Indian Parties, and regulatory authorities, conducting market research, promoting products among Indian customers, facilitating import and export activities in India, representing the company among Indian stakeholders, and fostering collaborations. However, they are prohibited from conducting any commercial activity on behalf of their parent company. The FEMA regulations list the permitted activities for a liaison office in India.

At Bizfoc, we assist foreign companies in setting up their Liaison Offices through an easy and hassle-free process. Our experts handle all the requirements for Liaison Office Registration in India, including those put forth by the RBI and ROC. For more information, consult us now!

What is the Liaison Office?

Liaison Office meaning can be understood in the way it represents a foreign company in India. The representation is not commercial. The liaison office acts as a communication channel between the foreign parent company and its Indian counterparts in the public and private sectors, fostering collaboration between them. It also promotes the products of the foreign company and facilitates its import/export activities in India. Foreign Companies can also set up liaison offices to analyze the market scope before actually beginning their business operations through a branch office or subsidiary company in India. Usually, liaison offices are not taxed since their activities are non-commercial in nature. However, if they conduct any commercial activity within the scope of FEMA-permitted activities, they shall be subject to taxation under the Income Tax Act.

Eligibility for Liaison Office Registration in India

Here’s a list of Liaison Office Registration in India eligibility criteria:

• Net Worth: The foreign parent company must have a minimum net worth of $50,000 and the same must be evident in its audited financial statements.
• Profitability: The foreign company must record consistent profitability in the last 3 financial years.
• Name of the Liaison Office: Since the liaison office represents its foreign parent company in India, it is established with the same name. However, the name must be unique and distinct from the names of other Indian companies, LLPs, and registered trademarks.
• A Registered Office: The registered address of the liaison office must be situated within the Indian Territory.
• Non-Commercial Activity: The Liaison Office can only conduct non-commercial activities permitted under the FEMA guidelines. A List of these activities include:
  • Representing in India the parent company/group compa­nies.
  • Promoting export/import from/to India.
  • Promoting technical/financial collaborations be­tween parent/group companies and companies in India.
  • Acting as a communication channel between the parent company and Indian companies.

Process of Liaison Office Registration in India

The process of liaison office registration in India broadly has two steps involved. Firstly, the parent company is required to seek RBI or AD bank’s approval. As soon as the approval is granted, the company must set up its liaison office within the next 6 months. Further, within 1 month of setting up the liaison office, the company must also seek Liaison Office registration in India under the Companies Act. Besides, a few local registrations from the state police, GST department, and the DGFT might be required as per the applicability. The details are explained below.

Step 1: Legalize and Attest Documents

Before filing any application for Liaison Office Registration in India, it is necessary to make sure that the documents are prepared in the prescribed format. Further, since a few of them such as the parent company’s incorporation documents, board resolution, authorized signatory’s documents, and banker’s report have a foreign origin and execution, they must be legalized and attested by appropriate authorities before submission.

Step 2: Determine the FDI Approval Route

Another important prerequisite to applying for liaison office registration in India is determining the route of FDI. Since the Liaison Office does not operate as a distinct entity, but as an extension of its foreign parent company, all its expenses and funding needs are met through FDI received from the parent company itself. The RBI allows 100% FDI under the automatic route for most of the industrial sectors. However, a few strategic sectors have their FDI limits capped to a maximum limit under the government or RBI approval route. It is essential to determine the FDI approval route beforehand for a quick and hassle-free approval process.

Step 3: File Approval Application to the AD Bank

If 100% FDI is allowed under the automatic route, the concerned liaison office can be opened with the AD Bank’s approval. No separate approval will be required from the RBI. The applicant company shall file an FNC form to the AD Category 1 bank along with the prescribed documents. The form will be filled out and digitally signed by the authorized signatory of the company.

Step 4: Seek RBI Approval in Certain Cases

However, in certain cases, the AD bank will transfer the application further to the RBI for detailed scrutiny and approval. These include:

• The applicant is a citizen of or is registered/incorporated in Pakistan.
• The applicant is a citizen of or is registered/incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau and the application is for opening a liaison office in Jammu and Kashmir, North East region, and Andaman and Nicobar Islands.
• The principal business of the applicant falls in the four sectors namely Defence, Telecom, Private Security, and Information and Broadcasting.
• The applicant is a Non-Government Organisation, Non-Profit Organization, Body/ Agency/ Department of a foreign government.

Step 5: Receive Approval Letter and UIN

Before granting the approval letter, the RBI alots a UIN or Unique Identification Number to the liaison office for conducting its operations. Once the UIN is allotted, the AD bank grants the approval letter which shall be valid for the next six months only. The foreign company must set up the liaison office within this time frame or witness the cancellation of the approval letter.

Step 6: Register with the State Police (if required)

If the foreign company belongs to Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau, it shall have to register its liaison office with the concerned State Police Authorities as well. A copy of the RBI / AD approval letter shall be marked by the AD Category-I bank to the Ministry of Home Affair in such cases.

Step 7: Apply for Liaison Office in India with ROC

Within 30 days of setting up the liaison office, the foreign company must apply for Liaison office registration in India with the ROC (Registrar of Companies). For this, an application must be filed in the FC-1 form with the RBI / AD bank’s approval letter and a few other documents. The documents having a foreign origin and execution must be legalized at this stage as well.

Step 8: Get PAN, TAN, and Bank Account Number

Once the Liaison office registration in India is complete, the foreign company must apply for its PAN and TAN to ensure compliance with the Income Tax Act. Besides, a separate bank account must be opened for the liaison office in India to receive FDI and inward remittances from the parent company. A few other registrations like IEC and GST must also be obtained for the liaison office, subject to their eligibility.

Documents Required for Liaison Office Registration in India

File the complete application for Liaison Office Registration in India with the following set of documents:

Documents Required for Liaison Office RBI / AD Approval:

• Parent Company’s Certificate of Incorporation
• Parent Company’s Memorandum and Articles of Association
• Audited Financial Statements Showing Parent Company’s Net Worth in Last 3 FY
• Report from Parent Company’s Banker
• Board Resolution by the Parent Company authorizing Liaison Office Registration
• Letter of Comfort from the Holding Company (if the Parent Company does not have the required net worth)

Documents Required Liaison Office Registration in India:

• RBI / AD Approval Letter
• Parent Company’s Certificate of Incorporation
• Parent Company’s Memorandum and Articles of Association
• List of Directors
• KYC details of Shareholders holding more than 10% shares in the Parent Company
• Proof of Registered Address (Utility Bills less than 2 months old)
• Letter of Authorization appointing the Authorized Signatory

Documents Required from the Authorized Signatory

• Colored Photographs
• Passport
• Stamped Business visa
• National Identity Card issued in the country of origin
• Address Proof (Bank Statement/ Electricity / Water Bill / Phone Bill less than 2 months old)

Important Forms and Declarations:

• FNC Application
• Declaration specifying the source and permitted limits of FDI
• Declaration stating the nature and location of activity

Note: Document Legalization and Attestation Procedure
From the above list, the documents that have a foreign origin and execution must be legalized and attested before submission. The process makes the documents acceptable to the Indian authorities.

To legalize the documents, it must be first determined as to whether the origin country to which the parent company belongs is a member of the Commonwealth Group or a party to the Hague Convention. In the former case, legalization can be done by a public notary of the origin country, whereas in the latter case, the same would be done through the Apostille Office. If neither is the case, legalization can be done by the Indian Embassy in the origin country. Following the legalization procedure, the documents must be attested in India after arrival through a business visa.

Compliance

An operational Liaison Office must meet the annual compliances set forth by FEMA and Companies Act, 2013. These include the filing of annual returns, financial statements, activity certificate, and FLA. Refer to the table below for the exact due dates. At Bizfoc, we not only ensure a hassle-free liaison office registration in India but also help meet its compliance regularly to avoid penalties and adverse legal consequences.

ROC Annual Filings:

FEMA / RBI Filings:

Why BizFoc

Liaison office registration in India is crucial for your business's success and compliance. Maintaining proper documentation and reporting in a timely manner is crucial to ensuring compliance with all regulatory requirements. Mitigating risks and streamlining operations can be achieved by regularly reviewing compliance obligations and seeking expert advice. By following these steps, you will not only establish a compliant and efficient liaison office, you will also support your long-term business goals in India.

Conclusion

At Bizfoc, we offer seamless liaison office registration and compliance services. Our expert team provides customized solutions and ensures strict adherence to RBI regulations, helping you avoid any legal pitfalls during the procedure for liaison office registration in India. With transparent processes and dedicated support, we streamline the liaison office setup process, making it easy for you to focus on your core business operations and growth in the Indian market.

Frequently Asked Questions (FAQs)