Foreign companies planning to set up their business operations in India need to start a liason office. The main purpose of starting a liason office is to explore possible business opportunities in India by gathering relevant business information.This helps the companies to develop a business strategy to tap the existing business potential in India. A liason office also acts as a marketing channel to provide business information about the parent company and their products to the prospective clientele in India.
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Currently as per the RBI Requirement the application for the Liaison office and Liaison office is submitted through the Authorized dealer. The authorized dealer means the various institution having banking licenses. The applicant of the Branch/Liaison 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.
NOTE - The above list is not exhaustive and may differ depending upon the requirement from the Authorised Dealer.
Foreign Company can open Liaison office in India due to several reasons; Companies incorporated outside India and engaged in to test and understand the Indian market, as it does not allow the companies to do business but just to be in the market and understand the Indian market or carry out the Research & Development activities or to understand the problem of existing clients of the company and serve them better activities are allowed to set up Liaison office in India with specific approval of the Reserve Bank. Such Liaison office s are permitted to represent the parent / group companies and undertake the following activities in India subject to few Conditions:
The application for Liaison office Licenses is approved by the RBI, but as per the recent changes the applications for Liaison office are routed through the Authorized Dealers (AD). Due to this the timeline for setting up the Liaison office has increased tremendously. Further the documentation required for the same has also increased to a great extent.
The application for establishing Liaison office in India should be forwarded by the foreign entity through a designated AD Category – I bank to the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Fort, Mumbai-400 001, along with the prescribed documents including:
These applications are considered on a case-to-case basis. The RBI generally gives permission in a time span of about 2 to 4 weeks. The application must include required document.
Every Liaison office registered with RBI shall get itself registered with the Ministry of Corporate Affairs; the foreign company is also required to obtain a Certificate of establishment of place of business in India from the Registrar of Companies (ROC. On such registration a CIN i.e. Corporate Identity Number is allotted by the Registrar of Companies. Which required following document including:
These applications are considered on a case-to-case basis. The RBI generally gives permission in a time span of about 2 to 4 weeks. The application must include required document.