Branch Offices in India

INTRODUCTION OF BRANCH OFFICE As the name suggest the BRANCH office is setup by a foreign company in India to carry out the BRANCH activity for its business. The foreign company can have any revenue from the Indian Branch office only from the activity allowed by the Reserve Bank of India; It has to meet all its expenses of Indian office through remittances from the Head office or through the revenue generated from the Indian operation permitted by the Reserve Bank of India. BRANCH office is suitable for a foreign company to test and understand the Indian market with a very strict control by the Reserve Bank of India, as it does allow the companies to do business but just to do the activity which are mentioned in the application of Branch office, Any additional activity to be carried by the Branch office shall be illegal. Branch office can carry additional business activities only with the prior approval from the Reserve Bank of India. The application for BRANCH office Licenses is approved by the RBI, but as per the recent changes the applications for BRANCH office are routed through the Authorized Dealers (AD). Due to this the timeline for setting up the BRANCH office has increased tremendously. Further the documentation required for the same has also increased to a great extent. GENERAL FEATURES OF BRANCH OFFICE The name of Indian BRANCH office shall be same as parent company. The governing body for the BRANCH office License is Reserve Bank of India. It is suitable for foreign Companies looking to setup a temporary office in India and not interested or not planning to have long term plans for the Indian operations. The BRANCH office does not have any ownership, it is just extension of the exiting company in the foreign country. All the expenses of the BRANCH office are met by the head office, if it does not have the revenue from Indian operations. ACTIVITIES ALLOWED TO BRANCH OFFICE IN INDIA Export/Import of goods Rendering professional or consultancy services. Carrying out research work, in which the parent company is engaged. Promoting technical or financial collaborations between Indian companies and parent or overseas group company. Representing the parent company in India and acting as buying/selling agent in India. Rendering services in Information Technology and development of software in India. Rendering technical support to the products supplied by parent/group companies. Foreign Airline/shipping Company. CONDITION FOR SETTING UP BRANCH OFFICE The company looking to start a Branch office in India shall have a profitable track record during immediately preceding five years in the home country. The Net Worth i.e total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name shall be not less then or equal to USD 1,00,000/- . DOCUMENTS REQUIRED FOR BRANCH OFFICE SETUP Currently as per the RBI Requirement the application for the branch office and BRANCH office is submitted through the Authorized dealer. The authorized dealer means the various institution having banking licenses. The applicant of the Branch/BRANCH office has to opt for the any of the Authorized Dealer, it is always preferable for the company to opt for the same authorized dealer as it is dealing in the home country. Form FNC – 1 – Three copies* Letter from the principal officer of the Parent company to RBI. * Letter of authority from the parent company in favor of Local Representative. Letter of authority/ Resolution from parent company for setting up BRANCH office in India. Comfort letter from the parent company intending to support the operation in India. Two copies of the English version of the Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the parent company duly attested by the Indian embassy or notary public in the country of registration. Certification of Incorporation - Translated & Duly Notarised and Certified by Indian Consulate The Latest audited Balance sheet and annual accounts of parent company duly Translated notarized for past Three years. & Certified by Indian Consulate & Directors Name, Address, email ID and telephone number of the authorized person in Home Country. Details of Bankers of the Organization the Country of Origin along with the bank account number Commitment from the Organization to the effect that it will be open to report / opinion sought from its banker by the Government of India / Reserve Bank of India Expected funding level for operations in India. Details Relating to address of the proposed local office, number of persons likely to be employed, number of Foreigners among such employees and address of the head of the Local office, if decided Details of Activity carried out in Home Country by the applicant organisation in brief about the product and services of company in Brief. Bankers Certificate Latest Proof of identity of all the Directors - Certified by Consulate and Banker in Home Country Latest Proof of address all of Directors - Certified by Consulate and Banker in Home Country Details of the Individuals / Company holding more 10% of Equity Structure of the Organization w.r.t Shareholding pattern Complete KYC of Shareholders holding more than 10% Equity in the Applicant Company 1. 2. 3. 4. 5. 6. Resolution for Opening up Bank Account with the Banker Duly Signed Bank Account Opening Form for Indian Bank NOTE - THE ABOVE LIST IS NOT EXHAUSTIVE AND MAY DIFFER DEPENDING UPON THE REQUIREMENT FROM THE AUTHORISED DEALER. BRIEF SUMMERY OF STEPS TO GET RBI LICENSES Selection of Authorized Dealer by Client, As the same AD will have the bank account of the Company. Working on the documentation required for BRANCH office. Submission of documents to the AD. Scrutiny of documents by the AD Providing clarification and additional documents to AD Submission of final application to RBI by the AD. Follow up and getting the Licenses from AD. PROCEDURE AFTER GETTING THE RBI LICENSE Every BRANCH office registered with RBI shall get itself registered with the Ministry of Corporate Affairs, It is a registration by the BRANCH office as a establishment of foreign company in India. On such registration a CIN i.e Corporate Identity Number is allotted by the Registrar of Companies. The following documents shall be filled with the Registrar of Companies :- Form 44 Charter, statutes or memorandum and articles of association or other Instrument constituting or defining the constitution of the company(In the manner provided under Rule 16, 17 of the Companies (Central Government's) General Rules and Forms, 1956) If the above documents are not in english then the translated version of the documents. Director(s) details – individuals Director(s) details - bodies corporate Reserve bank of India approval letter Secretary(s) details Power of attorney or board resolution in favor of the authorised representative(s) OTHER BUSINESS LICENSES APPLICABLE TO BRANCH OFFICE Permanent account number – pan number Tax deduction number – tan number Shop & establishment Registration Service Tax Registration – if the Branch provides any services in India VAT & CST Registration – If the Branch carries out trading activities in India ANNUAL ACTIVITY TO BE CARRIED OUT BY BRANCH OFFICE Maintenance of Books of Account Getting Annual Accounts audited Filling of Annual Activity Certificate with RBI Filling of Annual Return and Balance sheet with Registrar of Companies Intimating any change in constitution of Foreign Company to RBI & ROC Intimating any change in Directors of Foreign Company to RBI & ROC Intimating each and every change in the BRANCH office to RBI & ROC No additional place of business can be started unless approval is taken from RBI. CLOSURE OF BRANCH OFFICE Generally the BRANCH office licenses is given for three years, if at any time the Company plans to close the BRANCH office setup in India it shall file the necessary documents with the Authorized Dealer, and the application for the closure shall be forwarded by the Authorised Dealer. Copy of the Reserve Bank's permission/ approval from the sectoral regulator(s) for establishing the BO / LO. Auditor’s certificate- i) indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets; ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un- repatriated to India. No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s. Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance. A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India. Any other document/s, specified by the Reserve Bank while granting approval.