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Establishment Of BO By Foreign Entities

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Establishment Of BO By Foreign Entities

A body corporate, incorporated outside India (including a firm or other association of individuals) who intends to open up a Liaison Office (LO) / Branch Office (BO) in India shall have to obtain permission from the Reserve Bank under provisions of FEMA Act,1999.

Foreign Entities desirous of opening a BO/LO/PO can move an application in “Form FNC” along with all the required enclosures and documents to Reserve Bank of India.

Reserve Bank of India, considers the application moved by foreign entities under the following two routes:

Reserve Bank Route-Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route.

Government Route- Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route.

The following additional criteria are also considered by the Reserve Bank while sanctioning Liaison/Branch Offices of foreign entities:

Track Record

For Branch Office- a Profit making track record- 5(Five) Financial years in the home country

For Liaison Office- a Profit making track record- 3(Three) Financial years in the home country

Net Worth- duly certified by a Certified Public Accountant or any Registered Accounts Practitioner of that country

The Branch / Liaison offices established with the Reserve Bank's approval will be allotted a Unique Identification Number (UIN).

The BOs / LOs shall also obtain Permanent Account Number (PAN) from the Income Tax Authorities on setting up the offices in India.

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