Branch or Liaison Office of a Foreign Company
A body corporate incorporated outside India (including a firm or other association of individuals), can open a Liaison Office (LO) / Branch Office (BO) in India. The companies have to obtain permission from Reserve Bank of India under provisions of Foreign Exchange Management Act (FEMA)
The basic criteria considered by the Reserve Bank while sanctioning Liaison/Branch Offices of foreign entities are-
- For Branch Office — a profit making track record during the immediately preceding five financial years in the home country.
- For Liaison Office — a profit making track record during the immediately preceding three financial years in the home country.
The net worth means total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name should be.
- For Branch Office — not less than USD 100,000 or its equivalent.
- For Liaison Office — not less than USD 50,000 or its equivalent.
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