Introduction
Liaison
office means a place of business to act as a channel of communication between
the head office and entities in India. Since the liaison office cannot
earn any income, it does not need to pay corporate tax in India. Tax returns, annual
audited accounts and an activity report will however have to be calculated and
presented before the regulatory authority.
Features of Liaison Office
- A liaison office cannot carry business of its own or import goods of its own.
- A liaison office can not raise invoices of behalf of parent company.
- All sales proceeds generated by the liaison office must be directly paid to the parent company through proper banking channels.
- A liaison office cannot incriminate any commission from Indian customer for providing any liaison services.
- All expenses incurred by the liaison office must be met by the inward remittances from parent company; as a result, the Liaison office needs to open a special QA22C account that only permits inflows from abroad.
Main activities of liaison office
- Representing parent company in India.
- Promoting Import/Export in India.
- Promoting technical / financial collaborations between the parent companies and companies in India
- Acting as a communication channel between the parent company and Indian companies.
The Reserve
Bank of India, the apex bank grants permission to open a Liaison office. The
entire process, can take anywhere from a few weeks to a few months depending on
the industry and India’s relations with the nationality of the parent company.
Approval is generally granted for a period of one to three years, upon expiry
of which the foreign company can apply for a renewal.
Documents to be submitted to the RBI for permission to set up a
Liaison Office:
1. Three copies of Form FNC1
obtained from the RBI need to be signed, sealed and delivered back to the RBI.
2. English
version of the certificate of incorporation / Registration or Memorandum &
Articles of Association attested by Indian Embassy/ Notary Public in the
country of Registration.
3. Latest Audited Balance Sheet
of the applicant entity.
4. Letter
from the Director / CEO of the Company to the Reserve Bank of India stating its
intention to set up a Liaison office in India. (English) (On the Company
letterhead).
5. Bankers
report from the Company’s banker showing the number of years the company has
had banking relations with the bank.
6. Letter of authority from the
parent company in favor of the local representative.
7. Details
of activities / services proposed to be undertaken / rendered by the proposed
Liaison office in India.
8. Residence proof and passport
copies of the authorized personnel.9. A covering letter to open the bank account in India.
Once the
above documents are duly notarized, signed and submitted to the RBI, the apex
board will send the relevant papers to the ministry of external affairs,
ministry of finance and the Home ministry for their approval. Once permission
to establish a liaison office is granted by these three ministries, an approval
letter will be sent to the company, allowing the foreign entity to operate as a
Liaison Office in India.
Post Incorporation Procedure:
Once the foreign
entity has received the no objection certificate from the RBI, tax and customs
registration procedures can commence. The Liaison office will then have to
apply for a permanent Account Number (PAN) and Tax deduction and Collection
Account Number (TAN) as well as register with the Customs department. Visa’s
for foreign staff will also need to sought at this time and company bank
accounts can also be opened hereafter.
File with
Registrar of Companies the following documents within 30 days of establishment
of place of business-1. Form 44 of the Companies (Central Govt.’s) General Rules & Forms, 1956.
2. Demand draft of Rs 5000/- as filling fee.
3. RBI permission to establish Liaison office in India
4. Notarized
or consularised copy of the certificate of incorporation and MOA and AOA of the
Foreign Company. (English Translation of these documents required if they are
in any other language.)
5. Notarized
or consularised copy of the Power of Attorney in favor of a person resident in
India, authorizing him to accept on behalf of a company service of process and
any notices or other documents required to be served on the company.
6. A list of
directors of the Company notarized or consularised, containing particulars
regarding name & surname in full, his usual residential address,
nationality, business occupation and if he has no business occupation but holds
any other directorships, particulars of that directorship or of some one of
those directorships.
7. A list of
secretary(s) of the Company notarized or consularized, containing
particulars regarding name & surname in full, his usual residential
address.
8. Notarized
or consularized copy of the extracts of Board Resolutions of the Foreign
Company
9.
Documentary Proof of Establishment of office (E.g.: – Rent agreement, lease
deed etc.)
10. Certified True Copy of Certificate of change in object/name etc. of the Foreign Company.
10. Certified True Copy of Certificate of change in object/name etc. of the Foreign Company.
Liaison Office in India
ReplyDeleteLiaison office provides a communication channel, representing the parent company overseas to its prospective customer base in India, with an aim of asserting a better role playing towards expansion of sales and improving its customer base. Normal time to form a Liaison Office is 45 working days period
Call : 9810139673, 8287022022
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