Setting Up a Branch Office: Essential Documents and Procedures

Expanding a business often involves setting up offices in new locations. Many companies prefer opening branch offices to extend their reach. However, setting up a branch office in India requires following specific procedures and collecting essential documents. Additionally, businesses need to comply with regulations under the Foreign Exchange Management Act (FEMA) if the branch is part of a foreign company.

This guide will walk you through the branch office registration documents and process, along with related information on liaison office registration and project office registration.

What is a Branch Office?

A branch office is an extension of the parent company that operates in a different location. It carries out the same activities as the main office, such as sales, marketing, and customer service, but without an independent legal identity. For foreign companies, it’s a way to expand into India while keeping the same branding.

Branch Office Registration Documents and Process

Setting up a branch office in India involves obtaining approval from the Reserve Bank of India (RBI) and meeting specific compliance requirements under FEMA. Below is the step-by-step process and the required documents:

Documents Required for Branch Office Registration:

1. Application Form (Form FNC):
   The parent company must submit this form to the RBI through an Authorized Dealer Bank.
2. Certificate of Incorporation:
   A notarized and apostilled copy of the company’s incorporation certificate.
3. Memorandum of Association (MOA) & Articles of Association (AOA):
   These documents outline the objectives and governance structure of the parent company.
4. Financial Statements:
   Audited financial statements of the parent company for the last 5 years.
5. Board Resolution:
   A resolution from the company’s board approving the setup of the branch office.
6. Power of Attorney:
   A document authorizing a person in India to act on behalf of the company.
7. Details of Directors and Authorized Representatives:
   Provide identity and address proofs of key officials, such as the company directors.
8. Proof of Office Address in India:
   Lease agreement or utility bills for the office location in India.

Branch Office Registration Process:

1. Submission of Application:
   The application is submitted to an Authorized Dealer (AD) Bank, which forwards it to the RBI.
2. RBI Approval:
   After reviewing the application, the RBI issues approval within 2-4 weeks if all conditions are met.
3. FEMA Compliance:
   The company must comply with FEMA guidelines, ensuring the branch operates within approved business activities.
4. Tax Registration:
   Once approval is obtained, the company must register the branch for Goods and Services Tax (GST), Income Tax, and other local taxes.
5. Opening a Bank Account:
   A local bank account must be opened for branch operations.
6. Annual Reporting:
   The branch office needs to submit financial reports and audited statements to the RBI annually.

FEMA Compliance for Companies

Foreign companies setting up a branch, liaison, or project office in India must comply with the Foreign Exchange Management Act (FEMA). The RBI governs these offices to ensure they only engage in permitted activities. Here are some key compliance points:

• Permitted Activities for Branch Offices:

• Import/export of goods
• Consulting services
• Research and development
• Technical support services
• Restrictions:
  Branch offices are not allowed to undertake manufacturing activities directly.
• Reporting Requirements:
  Branch offices must submit Activity Status Reports and audited financials annually to the RBI and the AD bank.

Liaison Office Registration Documents and Process

A liaison office acts as a representative of the parent company, facilitating communication and market research. It does not conduct commercial activities.

Documents Required for Liaison Office Registration:

1. Application Form (Form FNC) through an AD Bank.
2. Incorporation Certificate of the parent company, notarized and apostilled.
3. MOA & AOA of the parent company.
4. Financial Statements of the parent company for the last 5 years.
5. Board Resolution approving the liaison office setup.
6. Power of Attorney in favor of the authorized representative in India.
7. Details of Directors and office address proof.

Liaison Office Registration Process:

1. Apply through AD Bank and get RBI approval.
2. Register with the Registrar of Companies (ROC) within 30 days of approval.
3. Obtain PAN, GST, and other registrations required for tax purposes.
4. Annual Compliance:
   Submit activity reports and financials to the RBI regularly.

Project Office Registration Documents and Process

A project office is set up for specific projects awarded to the foreign company. The project office only operates for the duration of the project and is closed after completion.

Documents Required for Project Office Registration:

1. Project Contract:
   A copy of the contract with an Indian company awarding the project.
2. Incorporation Certificate of the foreign company.
3. Board Resolution authorizing the project office setup.
4. Banker’s Certificate from the Indian company’s bank confirming the project award.
5. Power of Attorney in favor of the project office’s authorized representative.
6. Office Address Proof for the project location.

Project Office Registration Process:

1. Apply to RBI through an AD Bank for approval.
2. Register with ROC within 30 days of approval.
3. Obtain necessary tax registrations such as PAN and GST.
4. Closure of Project Office:
   After the project ends, the office must submit final accounts and close operations under RBI guidelines.

Branch Office vs Liaison Office vs Project Office

Conclusion

Setting up a branch office, liaison office, or project office in India requires careful planning and strict compliance with RBI and FEMA regulations. Each type of office serves a different purpose, and understanding the differences will help businesses make the right choice.

By following the correct branch office registration documents and process, foreign companies can expand their operations smoothly. Whether it’s a branch for sales activities, a liaison office for communication, or a project office for a specific assignment, businesses must ensure they meet the RBI’s and FEMA’s requirements to avoid any legal hurdles.