Legal requirements for opening a US based company in India

291 votes

Opening a Branch in India
Options and Requirements for Foreign Investors Opening a Branch in India
There are certain conditions for opening a branch in India for a foreign company. A branch can be opened for specific purposes, and there are some requirements and conditions for opening a branch office in India.

.Branch in India - Purposes
Foreign companies, including USA companies, are allowed to set up Branch Offices in India for the following purposes:
Export/Import of goods
Rendering professional or consultancy services
Carrying out research work, in which the parent company is engaged.
Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
Representing the parent company in India and acting as buying/selling agents in India.
Rendering services in Information Technology and development of software in India.
Rendering technical support to the products supplied by the parent/ group companies.
Foreign airline/shipping company
Foreign Banks
 A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).

.Requirements and Conditions of a Branch Office

The name of Indian Branch office shall be same as parent company.
The Branch office does not have any ownership, it is just extension of the exiting company in the foreign country.
All the expenses of the BRANCH office are met by the head office, if it does not have the revenue from Indian operations.
The foreign parent company looking to start a Branch office in India shall have a profitable track record during immediately preceding five years in the home country.
The Net Worth i.e. 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 shall be not less then or equal to USD 100,000.
A branch office is is suitable for foreign companies looking to setup a temporary office in India and not interested or not planning to have long term plans for the Indian operations; except banking, shipping and airlines etc. mentioned above.

.Documents required for forming a Branch Office in India

Currently as per the RBI Requirement the application for the branch office and BRANCH office is submitted through the Authorized dealer. The authorized dealer means the various institution having banking licenses.

The following filings are required to open a branch office in India:

Form FNC 1 (Three copies)
Letter from the principal officer of the Parent company to RBI.
Letter of authority from the parent company in favor of Local Representative.
Letter of authority/ Resolution from parent company for setting up BRANCH office in India.
Comfort letter from the parent company intending to support the operation in India.
Two copies of the English version of the Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the parent company duly attested by the Indian embassy or notary public in the country of registration.
Certification of Incorporation - Translated & Duly Notarized and properly authenticated.
The Latest audited Balance sheet and annual accounts of parent company duly Translated notarized for past Three years and properly authenticated
Name, Address, email ID and telephone number of the authorized person in Home Country.
Details of Bankers of the Organization the Country of Origin along with the bank account number
Commitment from the Organization to the effect that it will be open to report / opinion sought from its banker by the Government of India / Reserve Bank of India
Expected funding level for operations in India.
Details Relating to address of the proposed local office, number of persons likely to be employed, number of Foreigners among such employees and address of the head of the Local office, if decided
Details of Activity carried out in Home Country by the applicant organization in brief about the product and services of company in Brief.

Bankers Certificate
Latest Proof of identity of all the Directors - Properly Certified by Banker in Home Country and duly authenticated
Latest Proof of address all of Directors - Properly Certified by Banker in Home Country and duly authenticated
Details of the Individuals / Company holding more 10% of Equity
Structure of the Organization and its Shareholding pattern
Complete KYC of Shareholders holding more than 10% Equity in the Applicant Company
Resolution for Opening up Bank Account with the Banker
Duly Signed Bank Account Opening Form for Indian Bank

 The application for BRANCH office Licenses is approved by the RBI, but as per the recent changes the applications for BRANCH office are routed through the Authorized Dealers (AD). Due to this the timeline for setting up the BRANCH office has increased tremendously. Further the documentation required for the same has also increased to a great extent.

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LawRato LawRato

693 votes

1) Registered office and physical office can be maintained in 2 different locations but the registered office needs to have someone to respond to any communications directed for the company. 2) If you are a startup, Bangalore is any day a better option. 3) There is a statutory requirement to have one Indian director if you intend to maintain an Indian office through a pvt. ltd. co. We will be able to advice you further after looking into your specific requirement.

Advocate Abheek Saha LawRato