The trade and business sector in India has been on the rise since the past few years, and the economic growth has been on the incline. Naturally, seeing the market scenario the companies of another country would like to set up their operations in the nation as well on behalf of the parent company. The liaison office is basically nothing but a branch which connects the parent company to the one set up in another country. Seeing the growth of the country, the foreign companies and investors are always on a lookout on investing and establishing a business presence in the country.
Liaison offices are also sometimes established to get a thorough perspective as to how the country’s FDI caps would affect their business. However, compared to other business structures, the liaison offices would make sure that the legal, financial and administrative commitments of the foreign companies are low so that they can establish only a light footprint in India.
How to set up a liaison office?
For the promotion of the parent company’s business activities, foreign companies can set up a new liaison office to fulfil the role of a communication channel.
The company has to go through the process of setting up a liaison office. It is mandatory for the company to submit Memorandum, MOA, AOA, certificate of incorporation, and the copy of the parent company’s recent and latest audited balance sheet.
It is also vital for the liaison office to avail a Permanent Account Number from the income tax Department. There also is a requirement for Unique Identification Number as well which has to be obtained from the RBI.
It is mandatory that the within the duration of 30 days of establishing the company, the liaison office has to register with ROC (Registrar of Companies) through an online portal. So that way, online liaison office can be set up, and the process is complete.
Activities that can be engaged by a liaison office
- The liaison office will primarily do the task of representing the overseas head company in India and go about the operations.
- It will act as a communication channel and establish the technical and financial cooperation between the Indian and foreign companies.
- It can promote the import and export aspects between the countries.
- The primary and main task, however, is to establish the market opportunities and facilitate the communication between the interested parties in India and the foreign head company.
To set up a liaison office, the foreign company first has to meet specific criteria and conditions for the establishment. If the LO wants to open more than one account in India, then only through prior permission of RBI can be opened. The approval process may take a certain amount of time. The average wait period can be between 20 to 24 weeks.
All the requirements of the law and rules should be abided and fulfilled for the establishment of the liaison office in India. That is why it is advised that proper research should be done regarding all the rules, requirement and the procedures for the establishment of a Liaison office in India.