Branch Office means a place of business of the parent company from which company can extends its business. A branch office can be opened in the geographical boundaries of the country as well as outside the boundaries of the country.
How can companies go for branch office in India
The Permitted activities for a branch office in India of a foreign entity should be in conciliation with the activities of the parent company. The branch office should be engaged in the activity in which the parent company is engaged.
- 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.
- Representing a foreign airline/shipping company.
Procedure for opening a Branch Office in India by a foreign company?
In India Branch Office comes under the legal ambit of Companies Act, 2013 and Foreign Exchange Management Act, 1999. Opening of branch office in India can be done by two routes:
- Approval route by taking approval of RBI when the principle business of the foreign company falls under sectors where 100% FDI is permissible.
- Government Route when the sectors do not permit 100% FDI investment. The RBI considers the application in consultation with the Ministry of Finance of India.
Pre- Requisite of opening branch office
- Parent Company should have a profit making track record during the immediately preceding five financial years in the home country.
- Net Worth of the Parent Company must not be less than USD 100,000 or its equivalent.
- Form FNC
- Copy of the principal documents of the parent company attested by the Notary Public and translation thereof (if any).
- Audited Balance sheet or certified copy of the accounts of the applicant company for the last three years.
- Bankers’ Report from the applicant’s banker in the host country showing banking relations with the bank.
- Power of Attorney in favour of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC.
- Letter of Comfort
- financial background of the company in the form of latest Audited Balance Sheet / Account Statement
- Details of the Bankers in the Home country
- Authority Letter or Board Resolution for setting branch office in India.
- Place of registered office in India and authorized person responsible for handling business in India.
- MOA/AOA of the Branch office.
- Registered office In India
- Certificate of Incorporation in India
- Post incorporation legal requirements
- Any other documents
Branch office has resulted in the most effective way for operating business in India as it is the most convenient, pocket friendly and speedy way of setting business in India.
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