Foreign Liaison Office Registration
What is a Foreign Liaison Office Registration?
The liaison office means representative office. India is a country with a vast opportunity. People here provide a great market to open you company and build profit out of it. That is when foreign liaison offices come into play. If you want to make a mark of yourself in this industry then you might opt for representing a foreign country in India.
The foreign liaison company has an extreme benefit of not being taxable to the government of India because it is just a representation of the foreign company. It is not a branch thus no transactions can be performed but only can be limited to promotion of the company in India.
The permissions got by the foreign liaison company
The Reserve Bank of India is the one which issues all the permissions to the representative company based in foreign countries. It has to face various restrictions and only the following activities can be performed approved by the Reserve Bank of India. They are –
- It acts as a medium to represent the main company based on foreign country in India.
- Advertisement of the parent company in order to make people aware of its work can be done.
- Promotion of the company for the import and export works to and from India can be done
- Can act as a buffer between other Indian companies and the parent company.
- It can act as a direct link or a communicating medium.
Apart from the above mentioned activities of promoting and representing no other works can be done as issued by the Reserve Bank of India. The activities which cannot be performed by the foreign liaison companies are stated below –
- No manufacturing of any products can be done.
- No transaction of money can take place.
- Trading cannot be done.
- Import and export of items cannot be made.
- Quotations cannot be provided by the liaison company.
- Any deal cannot be cracked on behalf of the parent company.
- No contracts can be signed by the representative company.
Features or works of the foreign liaison company
- No monitory transactions can take place.
- It is not subjected to pay any kind of tax of Indian government.
- It can file for annual income tax return but does not have to pay it.
- It cannot borrow or lend in the name of the foreign company.
- It cannot go into any business contract directly but can only act as a communicating link.
- All the expenses of the foreign liaison company are taken care of by the parent company itself.
How to setup a foreign liaison company
A foreign liaison company is a business and like all other business getting established in India, it needs permission from the Reserve Bank of India (RBI).All the permissions granted to it and the restrictions imposed upon it is issued by RBI. Thus, certain documents need to be submitted to the bank.
The things the Reserve Bank of India needs to check before granting the foreign liaison company to establish in India are –
- A background knowledge of the parent company is checked to restrict frauds
- The motives of the representative company are checked.
- Background check of the members and directors of the parent company is checked.
- The country to which the company is associated to is checked.
To apply for the permit certain documents must be submitted to RBI along with the application form. They are –
- The form FNC-1 must be submitted. There should be three copies of it along with proper signature of the candidate and the dignitaries.
- The principal officer of the parent company should submit a letter of approval to the Reserve Bank of India.
- A letter favouring the local representing should also be submitted by the authorities.
- The latest audited balance sheet of the company should be submitted.
- Two copies of articles associated with the company should be submitted. The articles should be in English or translated in it.
Apart from the above mentioned documents other documents might also be needed by RBI. Thus to establish a foreign liaison company one should think about all the pros and cons of it.
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