Branch Office Registration in India
Overview on Branch Office Registration
A foreign company may establish a branch office in India to expand its business operations, subject to obtaining prior approval from the Reserve Bank of India (RBI) or the relevant sectoral regulator, as applicable. In addition to regulatory approval, the foreign company must register its branch office with the Registrar of Companies (ROC) under the Companies Act, 2013. Branch office registration in India is initially valid for three years and can be renewed indefinitely in successive blocks of three years.
To set up a branch office, the foreign company must have a minimum net worth of USD 100,000 and a proven profit-making track record for the preceding five consecutive years. These requirements ensure that the branch office has strong growth potential and is backed by a financially stable parent company capable of meeting its obligations. At BizCatalyst Technologies, we understand the legal and procedural complexities involved in establishing a branch office in India. Our experts offer end-to-end support covering approvals, documentation, registration, and post-registration compliances.
What is a Branch Office?
A branch office is set up by a foreign company to extend its business operations beyond national boundaries. It operates under the same name, brand, and legal identity as its foreign parent and is not incorporated as a separate legal entity in India. To establish a branch office in India, a foreign company must obtain prior approval from the Reserve Bank of India (RBI) and comply with the provisions of FEMA as well as the Companies Act, 2013.
After receiving RBI approval, the branch office is required to register with the Registrar of Companies (ROC) to formalize its presence in India. It is important to note that a branch office can undertake only those activities permitted by the RBI and is initially granted approval for a period of three years. This validity can be extended by renewing the registration, subject to compliance with applicable regulations.
Branch Office Registration Requirements in India
A foreign company may establish a branch office in India only after meeting certain prescribed conditions related to financial strength, profitability, and the nature of business activities permitted by the Reserve Bank of India (RBI). Financial soundness ensures that the foreign parent is capable of meeting the liabilities of its Indian branch, while a proven profitability record indicates growth potential in the Indian market. Further, the activities carried out by the branch office must strictly align with those permitted under FEMA and RBI regulations and mirror the business of the parent company. The detailed requirements for branch office registration are outlined below:
Foreign Incorporation:
The foreign parent company must be duly incorporated in its country of origin and should possess valid documentary evidence such as the Certificate of Incorporation, Memorandum of Association, and Articles of Association. It is important to note that foreign partnership firms and proprietary concerns are not eligible to establish a branch office in India.
Net Worth Requirement:
As per the Companies Act, net worth is calculated as the aggregate of paid-up capital and free reserves. To establish a branch office in India, the foreign company must have a minimum net worth of USD 100,000 or its equivalent, as reflected in its audited financial statements. If the foreign company does not meet this requirement, it may submit a Letter of Comfort from its holding company, provided the holding company satisfies the minimum net worth criteria.
Name of the Branch Office:
The branch office must operate under the same name as its foreign parent company. Since it is not incorporated as a separate legal entity in India, it does not have an independent legal identity and must carry on business under the parent company’s name and brand.
Profit-Making Track Record:
The foreign company must have a continuous profit-making track record for the five financial years immediately preceding the application for branch office registration. This profitability must be clearly demonstrated through audited financial statements.
Permitted Business Activities:
The branch office is allowed to undertake only those activities that are identical to the business activities of the foreign parent and fall within the scope of activities permitted by the RBI. The branch office cannot expand beyond the objectives of the parent company. Permitted activities include:
Export of goods
Import of goods
Airline or shipping activities
Consultancy services
Professional services
Research in the same field as the parent company
Promoting technical or financial collaborations between the foreign company and Indian entities
Representing the brand and business interests of the foreign parent company
IT and software services
Providing technical support for products of the parent company
Compliance with these requirements ensures smooth approval and lawful operation of a branch office in India.
Foreign Branch Office Registration Procedure
The step-by-step procedure for registering a foreign branch office in India is outlined below:
Step 1: Documentation and Legalisation
The process starts with obtaining prior approval from the Reserve Bank of India (RBI). After receiving RBI approval, an application for branch office registration is submitted to the Registrar of Companies (ROC) for an initial period of three years. Both stages require comprehensive supporting documents, and proper preparation and legalisation are essential to ensure a smooth and timely registration.
Step 2: Filing Form FNC-1 with the AD Bank
Once the documentation is complete, an application in Form FNC-1 is filed with an Authorized Dealer (AD) Category–I Bank. In most cases, the AD Bank verifies the application and forwards it to the RBI for allotment of a Unique Identification Number (UIN). In certain cases, the RBI may directly review the application in consultation with the Central Government.
Step 3: Situations Requiring Direct RBI Approval
Prior approval from the RBI is mandatory if:
The foreign company is incorporated in Pakistan
The foreign company is incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau and intends to establish a branch office in Jammu & Kashmir, the North-East region, or the Andaman & Nicobar Islands
The principal business activity falls under defense, telecom, private security, or information and broadcasting
The foreign entity is a Non-Governmental Organization (NGO), Non-Profit Organization (NPO), or is associated with a foreign government
Step 4: Clearance from State Police Authorities (Special Cases)
This step applies only to companies incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau. Such entities must obtain clearance from the relevant state police authorities where the branch office will operate. The AD Category–I Bank forwards the application to the Ministry of Home Affairs for necessary approvals.
Step 5: Receipt of RBI/AD Bank Approval Letter
After verification of the FNC-1 application, the approving authority issues an approval letter and assigns a UIN to the branch office. This approval letter is valid for 30 days, during which the branch office must complete its registration with the ROC.
Step 6: Filing Branch Office Registration with the ROC
Branch office registration is completed by filing Form FC-1, an online form available on the MCA portal. The form includes details of the foreign parent company, nature of business, registered office address, Indian branch office address, and supporting documents. Upon successful verification, the ROC issues a Certificate of Registration valid for three years.
Step 7: Commencement of Business Operations
After registration, the branch office may begin its permitted business activities in India. If the branch office does not commence operations within six months of registration, the approval may be cancelled. In exceptional cases, an extension may be sought from the concerned authority.
Documents Required for Registration of Branch Office in India
Documents are essential for completing a branch office registration application, as they support and verify all information provided by the applicant. These documents are broadly classified into three categories: documents of the foreign parent company, documents of the resident authorized representative, and documents relating to the registered office address of the branch office in India. The detailed list is outlined below.
Documents from the Foreign Parent Company
Certificate of Incorporation issued in the country of origin
Memorandum of Association
Articles of Association
Audited financial statements for the last five financial years
Banker’s report from the country of origin
List of all shareholders
List of all directors along with their KYC documents
Net worth certificate duly attested by a Certified Public Accountant
Documents from the Resident Authorised Applicant
Five passport-size coloured photographs
Five copies of national identity card (if applicable)
Five copies of passport
Address proof (utility bill or bank statement not older than two months)
Power of Attorney or Board Resolution authorising the applicant
Copy of business visa with immigration stamp
Documents for Registered Office Address in India
Proof of office address (utility bill, rent agreement, or property tax receipt)
No Objection Certificate (NOC) from the owner of the premises
Other Forms and Declarations
Form FNC-1
Board resolution approving the establishment of the branch office in India
Declaration regarding net worth and source of funds
Declaration regarding proposed business activities and location of the branch office
If the foreign company does not meet the minimum net worth requirement, a Letter of Comfort from its holding company must be submitted. In such cases, the holding company must independently satisfy the prescribed net worth criteria.
ROC Compliances for Branch Office
Compliance
- Statutory Audit Under Companies Act, 2013
- Annual Return in FC-4
- Annual Financial Statements in FC-3
- Annual Activity Certificate (AAC)
- FLA Returns
- ITR
- Annual Tax Audit Report
Deadline
- 30th September every year
- Electrical and Electronics
- 30th September every year
- 30th September every year
- 15th July every year
- 30th October every year (30th November, if tax audit is applicable)
- Must be prepared by 30th September, if annual income exceeds Rs. 1 crore
Time Taken for One Person Company Registration in India
The duration of One Person Company Registration in India is 7-10 working days. Name is generally approved in 2-3 working days and company incorporation is approved in 3-4 working days. Breakdown of time taken by us:
- Name Reservation Application – Within 4 hours!
- Digital Signature Process – 1 working day
- Company Incorporation Application – 2 working days
Benefits for One Person Company Registration in India
OPC registration offers several unique advantages that can significantly benefit entrepreneurs and small business owners. Here are some key benefits:
- 100% Profit Entitlement:Â As the sole owner of the OPC, you are entitled to 100% of the profits generated by the company. This ensures that all earnings directly benefit you without the need to share with partners or investors.
- Limited Liability:Â OPC registration provides limited liability protection to its sole owner. This means your personal assets are safeguarded from any business debts or liabilities, reducing personal financial risk.
- Low Taxation:Â OPCs often enjoy lower tax rates compared to other business structures. The income tax rates applicable to OPCs are generally favorable, which can result in significant tax savings.
- Continued Existence Through Nominee:Â OPCs are required to appoint a nominee during registration. In the event of the owner’s incapacity or demise, the nominee can take over the company’s operations, ensuring continuity and stability of the business.
- Separate Management Authority (Board of Directors):Â Even as a single-owner entity, an OPC can appoint directors to manage its operations. This allows for the separation of ownership and management, providing a structured approach to running the business efficiently.
Post Incorporation Compliances by One Person Company
Even after the OPC registration process is complete, certain compliances are required to start the company legitimately. These compliances, termed as the post-incorporation compliances have to be completed within a specific duration starting from the incorporation date. Let’s have a look at what these compliances are and what are the due dates.
- INC 22:Â Filed within 30 days of incorporation, this form is used to intimate the ROC of a permanent registered office address chosen for the OPC. It is applicable only if the shareholder has failed to provide a specific registered office address during incorporation and went ahead with a temporary postal address for the time being.
- ADT 1:Â After OPC registration, it is mandatory to appoint the first auditor. This is done in the first Board of Directors meeting held within 30 days of OPC incorporation. Also, within the same time-frame, ADT-1 form is filed to the ROC for intimating details of the appointed auditor.
- Opening a Bank Account: If the OPC’s bank account has not been opened during the incorporation process (application available in the SPICE Plus Form), it must be opened within the next 30 days. All business transactions of the OPC and its capital amount deposition requires a separate bank account in the OPC’s name.
- Shareholder’s Certificate: A Shareholder Certificate must be issued to the shareholder under the OPC’s letterhead within 60 days of OPC registration. It serves as proof of capital deposited by the shareholder in the company’s bank account. The share certificate must be stamped and a proper stamp duty must be paid on it.
- INC 20A:Â Before starting its business activities, the OPC must file a Declaration of Commencing Business to the Registrar of ROC. This is done in the INC 20 A form within 6 months from incorporation. Starting business activities without submitting this declaration shall be considered illegitimate.
