Expansion of your business venture is one of the motives behind opening a branch office. Through branch office in India, foreign companies can conduct full fledge operations in India. However, the branch office is not allowed to carry manufacturing activities unless stated otherwise. There are certain strings attached with the formation of a branch office in India. Foreign companies are allowed to open branch offices in India for the following purpose:
- Import & Export of goods
- Consultancy services
- Research related work
- Working as a buying/selling agent for the parent company
- Rendering IT service in India
- Foreign shipping company
- Foreign banks
- The name of an Indian branch office shall be same as the parent company.
- The branch office doesn’t have any ownership; it is an extension of an existing foreign country.
- Expenses being met by head office (In case it does not have the revenue from Indian operations)
- The parent company must have a profitability record of immediately preceding five years.
As per RBI guidelines, an application needs to be submitted for the branch office by the RBI authorised dealer. Authorised dealer refers to the institutions having the license for the same.
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Following filings needs to be done for registering branch office in India:
- Form FNC-1
- Letter from parent company to RBI
- Letter of authority to setup a branch office in India
- NOC from the parent company
- Certificate of incorporation, Articles of association & memorandum of association duly attested by the Indian embassy or notary in country of origin
- Latest audited accounts statement & balance sheet for past 3 years
- Name, address, contact info. Of authorised person in home country
- Expected funding level operations in India
- Proposed branch office address details
- Details of activity being carried out in Home country.
- Bankers certificate
- Latest identity/address proof of all the directors
- Organisational structure & its shareholding pattern
- Complete KYC of shareholders holding more than 10% equity in applicant country
- Duly signed account application form for Indian Bank.
POST INCORPORATION REQUIREMENTS
- Get yourself registered with the income tax authorities and obtain PAN Number
- GST Registration if applicable
- Obtain Director Identification Number (DIN)
- Obtain Tax Identification Number (TAN)
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Cases in which prior approval of RBI is needed
Any application from a person outside India, for establishing their branch office in India shall require prior approval of RBI in following cases:
- When registered person/incorporation is from Pakistan
- When registered person/incorporation is from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a liaison or branch office in Jammu and Kashmir, North East region and Andaman and Nicobar Islands;
- Principle business of the applicant is in following sectors; defence, telecom, security or Information & broadcasting
- The applicant is a NGO/NPO of a foreign government
- A banking company outside India, if they have obtained approval under banking regulations act, 1949
- A banking company outside India, if they have obtained approval under Insurance regulatory & development act, 1999