Introduction

A Liaison Office Registration establishes a representative office in India for a foreign company. This office facilitates a better understanding of the Indian business environment, conducts market research, and exchanges vital information with potential customers or vendors. Furthermore, a Liaison Office can represent the parent company in India, promote imports or exports, support technical or financial collaborations, and serve as a communication channel between the parent company and Indian businesses. However, it’s important to note that a Liaison Office cannot engage in commercial activities, with all expenses covered by the parent company. Should it generate income, that income will be taxed under the Income Tax Act of 1961. As the Liaison Office is not considered a separate legal entity, it is taxed at the rate applicable to foreign companies, currently set at 40% of the total income.

Minimum Requirements for Liaison Office Registration

To successfully obtain Liaison Office Registration, the following criteria must be met:

 

The foreign company's net worth must be at least $50,000.

 

The foreign company must have recorded profits for the last three financial years.

 

The name of the Liaison Office must correspond with that of the parent company.

 

The Liaison Office must refrain from conducting income-generating activities.

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Documents Required for Liaison Office Registration
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Documentation plays a critical role in the registration process, categorized into those required by the AD Bank and those for the Registrar of Companies (ROC). Here’s a comprehensive list:

Documents Required for RBI/AD Bank Approval:

 

Duly filled Form FNC-1.

 

Letter from the Principal Officer of the parent company.

 

Letter of Comfort from the parent company supporting the Liaison Office's operations.

 

Legalized Certificate of Incorporation, MOA, and AOA of the parent company.

 

Audited Balance Sheet for the last three financial years.

 

Banker’s Report from the parent company’s banker in its country of origin.

 

Company Resolution to open a bank account in India.

 

Declaration of FDI eligibility and source of funds.

 

Proof of Authorization of Indian Representative (Board Resolution/Letter of Authorization).

Additional Documents Required for ROC Registration:

 

RBI’s/AD Bank’s Approval Certificate.

 

Legalized Certificate of Incorporation, MOA, and AOA.

 

Proof of Registered Address of the office (utility bills/rent agreement).

 

KYC of all shareholders holding more than 10% shares in the parent company.

 

Notarized list of company directors.

Liaison Office Registration Process with BizMantra
 

Apply for Digital Signature Certificate (DSC):The registration process begins with obtaining a Digital Signature Certificate (DSC) for the authorized signatory. All applications to the ROC must be digitally signed. At BizMantra, we assist you in obtaining the DSC.

 

Filing Application for AD Bank’s Approval:Once the DSC is secured, the next step is applying for AD Bank approval, necessary for opening a Liaison Office in India. BizMantra helps you submit Form FNC to the AD Category-I Bank. If 100% FDI is allowed, AD Bank approval is sufficient; otherwise, RBI approval may be required.

 

Verification of KYC:After filing the application, the AD Bank sends a request for KYC verification to the parent company’s banker in its home country. This step is essential for approval.

 

RBI Approval (if applicable):If 100% FDI is not allowed or the company operates in sensitive sectors (telecom, defense, etc.), or belongs to countries like Pakistan or China, RBI approval is necessary. BizMantra ensures that your application is processed swiftly.

 

ROC Registration:Once RBI or AD Bank approval is obtained, you must register with the ROC within 30 days by filing Form FC-1. BizMantra manages the entire filing process for a smooth registration.

 

Certificate of Incorporation, PAN, TAN & Bank Account:After successful ROC registration, the Liaison Office receives a Certificate of Incorporation, PAN, and TAN. BizMantra will assist you in opening a bank account in India.

 

Police Registration (if applicable):Foreign companies from specific countries (Pakistan, Afghanistan, China, etc.) must register with the State Police. BizMantra ensures all required documentation is in place for this step.