Branch Office Registration
A foreign company can register a Branch Office by obtaining permission from the Reserve Bank of India (RBI) and subsequently registering it with the Registrar of Companies. We help you to get all approvals or registration for the Branch Office.
Branch Office of a Foreign Company
India is among the world’s largest consumer markets and top global economy. The fact that India is a fast-paced developing economy makes it an attractive destination for corporates all around the globe to invest and have commercial ventures in India. Hence, we see a growing number of foreign corporates have their branch office registration in India. The purpose of opening such a branch is to expand their business interests in India.
The Reserve Bank of India is the approval authority for registration of branch office. The establishment of the branch office is regulated under Section 6(6) of the Foreign Exchange and Management Act 1999. In addition, the RBI master direction prescribes the rules regarding governance, competitive authorities, and reporting requirements.
Eligibility Crietaria for Setting up a Branch office
- The net worth of the foreign parent company should be above $ 1,00,000;
- The company must have a profitability track record of the past five years;
- The company is engaged in above mentioned Prescribed Activities of the Branch Office in India;
- It can conduct import & export of goods;
- Provide professional and consultant services;
- To conduct research activity in all those spheres where the parent company is already actively involved;
- Boosting technical/financial collaboration on behalf of the parent company;
- Working as a representative of a parent company in India and performing work of a buying/selling agent;
- Delivering IT services and developing software in India;
- Indulging in the service of technical support for the products supplied by the parent company;
- To work as an approved representative for a foreign shipping or airline company in India.
Process for Branch Office Registration in India
A digital signature is the equivalent of physical or paper signature under the information technology act. As per new process all applications to the registrar of companies are filed in digital format which need to be authenticated by the digital signature of the proposed shareholders and directors as the case may be. The filing process starts with the issue of digital signature for all the promoters.
Branch office application for a foreign company is filed in FNC. The application is filed to the Reserve Bank of India via AD Bank (Authorised Dealer Category 1 prescribed by RBI). The AD bank has an important role since all the communication to the RBI is dispelled through them.
The AD bank needs prior approval in special cases mentioned by the RBI. The entities whose principal business activity falls in sectors where 100% FDI is allowed get the automatic route. The cases where prior approval is needed by the bank :
1. The applicant company is registered/incorporated, or an applicant is a citizen of Pakistan,Afghanistan, Iran, China, Bangladesh, Sri Lanka, Hong Kong, or Macau, and the application is for opening a BO/LO/PO in North East region, Jammu and Kashmir, and Andaman and Nicobar Islands;
2. The principal business activity falls in the four sectors, namely Telecom, Private Security, Defence and Information and Broadcasting;
3. The applicant is an NGO.
A request about the scrutiny of documents is sent to the foreign company’s banker. This process of sending a request for verification is also called swift-based verification. Once the documents are confirmed by the foreign banker, the application is preceded for approval purposes. The RBI/AD can also ask for the additional documents as the case may be.
The income tax department of India issues a unique 10 digit number, known as PAN number. Once the PAN number is obtained, the branch office is eligible to open its bank account. And it is necessary for every taxpayer to obtain a Tax Deduction Account Number to obey all the TDS norms.
Finally, the branch office needs to register it with the state police (In the office of the superintendent of Police). The application must be accompanied by the RBI approval and KYC of all authorised persons in India and the foreign company.
On obtaining Bank Account and cheque book, the need arises for a copy of the check to apply GST registration and Import Export Code.
List of Documents for Branch Office Registration
Exact and accurate documentation plays a crucial role in the process of Branch Office registration. Therefore, documents have to be latest and eligible.
Documents Required From Parent Company
- 5 copies of passport
- 5 passport size photographs
- A copy of Business Visa with Immigration Stamp of arrival on it
- 5 copies of the National Identity Card
- Latest Address Proof (Electricity Bill/ Phone Bill/ Water Bill/ Bank Statement)
- Power of Attorney in the name of AR
- Board Resolution appointing the AR