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Foreign companies, including firms or associations of individuals incorporated outside India, can establish either a Liaison Office (LO) or a Branch Office (BO) in India. However, they must obtain permission from the Reserve Bank of India (RBI) under the provisions of the Foreign Exchange Management Act (FEMA).
In summary, foreign entities seeking to set up offices in India need RBI approval, and they can choose between LOs and BOs based on their specific business needs.
RBI’s Criteria for Setting up Liaison/Branch Offices of Foreign Entities in India
When the Reserve Bank of India (RBI) considers sanctioning Liaison/Branch Offices of foreign entities, it evaluates the following criteria:
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Track Record:
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For Branch Office: A profit-making track record during the immediately preceding five financial years in the home country.
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For Liaison Office: A profit-making track record during the immediately preceding three financial years in the home country.
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Net Worth:
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For Branch Office: Net worth of not less than USD 100,000 or its equivalent.
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For Liaison Office: Net worth of not less than USD 50,000 or its equivalent.
These criteria help ensure the financial stability and credibility of foreign entities seeking to establish offices in India.
Calculation of Net Worth
Net worth means the total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a CPA or any Registered Accounts Practitioner by whatever name should be.
We at JLNR & Co, provide services in setting up branch/liaison office in India. Please write to support@jlnrco.com or call on +91 76766 15955
Other forms of business entity that can be formed by a foreign company in India
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Subsidiary Company Registration in Bangalore
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Limited Liability Partnerships (LLPs)
In case you need our services, please write to support@jlnrco.com or call +91 76766 15955
Are you not looking for a Setup Branch / Liaison Office? Click below to find other forms of entity registration:
