“Foreign Company” as a body corporate incorporated outside India, and includes a Firm or other association of individuals can setup a liaison Office in India.

Any Person resident outside India want to do the business from India through open a liaison office (“LO”) in India subject to some legal formalities with AD Bank. No person resident outside India shall without prior approval of the RBI open a liaison office (“LO”) or Representative office by whatever name called except as some Direct Establishment allowed which are laid down in the RBI Regulations.

Yes, under advice to Reserve Bank subject to the bank account is re-designated as a BO account.

There is slight difference between these two:

Yes, Conditions for liaison office (“LO”) are given under RBI Guideline:

• A profit-making track record during the immediately preceding 3 financial years in the home country and net-worth shall not be less than USD 50,000 or its equivalent.

• But, if a person resident outside India that is not financially sound and are subsidiaries of other companies may submit a Letter of Comfort from their parent company subject to the condition that parent company fulfilling the prescribed criterion of net worth and profit.

The answer is yes. Foreign Insurance companies: Only after obtaining approval from the Insurance Regulatory and Development Authority (IRDA) in India Foreign Banks: Only after obtaining approval from the Department of Banking Regulation (DBR), RBI in India

AD Category-I bank concerned may extend the validity period of approval for a period of 3 years from the date of expiry of the original approval / extension granted by AD Bank, subject to directions issued by the RBI in this regard.

Yes, person resident outside India for opening of a Liaison Office in India shall require prior approval of RBI in following cases:-

• the applicant is a citizen of or is registered/incorporated in Pakistan;

• the applicant is a citizen of or is registered/incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a BO/LO/PO in Jammu and Kashmir, North East region and Andaman and Nicobar Islands;

• The principal business of the applicant falls in the four sectors namely Defence, Telecom, Private Security and Information and Broadcasting. In the case of proposal for opening a PO relating to defence sector, no separate reference or approval of Government of India shall be required if the said non-resident applicant has been awarded a contract by/ entered into an agreement with Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings. There shall be no requirement of any approval from RBI also only for such cases;

• The applicant is a Non-Government Organisation (NGO), a Non-Profit Organisation, or a Body/ Agency/ Department of a foreign government.

Such applications may be forwarded by the AD Category-I bank to the General Manager, Reserve Bank of India, Central Office Cell, Foreign Exchange Department, 6, Sansad Marg, New Delhi-110 001 who shall process the applications in consultation with the Government of India.

Closure of LO (Liaison Office) and remittance of winding can be done by a Professional who is good at liaisoning with the Govt Dept. Compliance Calendar have multiple experiences in closing Liaison Offices.

Step-1: Application to AD Bank along with supporting documents

• Company need to approach the designated AD Category - I bank with an Application Requests for closure of the LO (Liaison Office) and for remittance of winding-up;

• Following documents need to be furnish along with an Application:

• Copy of the RBI Granted permission/ approval letter from the sectoral regulator(s) for establishing the Liaison office;
• Latest Audited Balance Sheet of the Parent company along with Auditor’s certificate-

1. indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets;
2. confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and

• confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India.

Step-2: Parent Company Confirmation

• Confirmation from the applicant or parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance;

Step-3: NOC from ROC

• A ROC report needs to be taken from the Registrar of Companies in which jurisdiction liaison office is situated in relation to compliance with the provisions of the Companies Act, 2013, in case of closure of the LO (Liaison Office) in India;

Step-3: Other details and documents

• Any other document/s, specified by the RBI while granting approval. The designated AD Category - I banks has to ensure that the LO (Liaison Office) had filed their respective Annual Activity Certificates with the Reserve Bank for the previous years, in respect of the existing office;
• Confirmation about the same may be required from the Central Office of the Reserve Bank.

Step-4: Remittance of funds while winding up Procedure

• The designated AD Category - I bank may permit the remittance subject to the directions issued by the RBI in this regard from time to time and payment of applicable taxes in India, if any;

Step-5: Intimation to the RBI

• Closure of Liaison Office shall be reported by the designated AD Category - I bank to the RBI (the Central Office for BOs);
• A declaration needs to submit stating that all the necessary documents submitted by the Liaison office have been scrutinized and found to be in order.
• If the documents are not found in order or cases are not covered under delegated powers, the AD Category - I bank may forward the application to the Reserve Bank, with their observations, for necessary action; and
• All the documents relating to the Liaison Office operations may be retained by the AD Category - I bank for verification by the internal auditors of the AD / inspecting officers of the Reserve Bank.

Compliance Calendar facilitate opening and closure of foreign entity through liaison office (“LO”) having place of business in India including handholding support to foreign entities through the entire compliance cycle, from making up mind to day-to-day decision-making to aftercare for post Registration compliances including approval if any required from time to time. You can reach out to us at info@ccoffice.in or connect at 9988424211.