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  • To which authority the application for establishing Branch office/ Liaison Office/ Project office is required to be submitted?

    Generally, the application for establishing BO / LO/ PO in India may be submitted by the non-resident entity in the prescribed form to Authorised Dealer Bank (AD Bank) identified by the applicant along with the prescribed documents.

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  • Under which scenarios, the applicant is required to approach the RBI for approval?

    Under the following scenarios, prior approval of RBI shall be required:

    • The principal business of the applicant falls in the four sectors namely defence, telecom, private security and information and broadcasting. However, no prior approval of the RBI shall be required, if government approval or license/permission by the concerned ministry/ regulator has already been granted
    • The applicant is a Non-Government Organization (NGO), Non-Profit Organization, body/ agency/ Department of a foreign government

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  • What financial criteria are required to be fulfilled for setting-up a BO/LO (Branch Office or Liaison Office) in India?

    The non-resident entity applying for a BO/LO in India should have a financially sound track record as below:

    • For BO: A profit making track record during the immediately preceding five financial years in the home country and net worth of not less than US$100,000 or its equivalent
    • For LO: A profit making track record during the immediately preceding three financial years in the home country and net worth of not less than US$50,000 or its equivalent

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  • Whether a LO, BO and PO (Liaison, Branch or Project) can acquire property for its operations?

     

    • The BO / PO of a foreign entity, excluding an LO, shall be permitted to acquire property for their own use and to carry out permitted/incidental activities except for leasing or renting out the property. Please note that entities from China, Hong Kong and Macau shall require prior approval of the RBI to acquire immovable property in India for a BO/PO
    • BOs/LOs/POs shall have general permission to carry out permitted/ incidental activities from leased property subject to lease period not exceeding five years

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  • With respect to the compliances to be undertaken by (Project Office) PO viz. maintaining of bank account at entity level, filing of AACs, complying with submission of closure documentations on completion of the project and maintaining of books of accounts, can the same be undertaken at entity level instead of at specific project level?

    With respect the aforesaid compliances, the same will have to be undertaken at specific project level and not at the entity level.

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  • What are the requirements in connection with closure of LO/BO/PO (Liaison, Branch or Project)?

    Requests for closure of the LO/BO/PO and allowing the remittance of winding up proceeds of LO/BO/PO may be submitted to the AD (Authorized Dealer) Bank along with the prescribed documents.

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  • What are the key pre-requisites for setting up Indian subsidiary in India?

    • Minimum two directors – mandatory one resident director but not required to be a citizen of India
    • Minimum two shareholders – shareholders may be either corporates or individuals or resident or non-residents
      • No minimum capital threshold, however, should have atleast two shares, if the proposed company will be limited by shares
    • Physical space to be identified as a registered office

    In case of a newly incorporated company, the requirement will apply proportionately at the end of the financial year in which it is incorporated.

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  • What are the steps to incorporate an Indian subsidiary?

    • Drafting of Charter documents [Memorandum of Association (MoA) and Articles of Association (AoA)]
    • Certification of incorporation (CoI) – An application in the prescribed form is to be made to the MCA for obtaining the CoI including Directors’ Identification Number for directors, Permanent Account Number and Tax deduction Account Number for the company

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  • For how many days is a reserved name valid for a company proposed to be set up?

    An approved name is valid for a period of

    • 20 days from the date of approval (in case name is being reserved for a new company) or
    • 60 days from the date of approval (in case of change of name of an existing company)

    For more information, click here.

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  • In case of overseas shareholders and directors, are the documents required to be notarized and apostilled for incorporation of a company?

    Where the shareholder or a director to be appointed in the proposed company is a company incorporated outside India (for example, in China/ Chinese national residing in China), the MoA (Memorandum of Association), AoA (Articles of Association), proof of identity as well as address proof is required to be notarized before the Notary (Public) in China and the certificate of the Notary (Public) shall be attested by the Indian Embassy in China.

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