Authorized representative in Kerala

Opening a representative office in India
A foreign company branch operating in India can be done for specific business activities. Initiating in India a business that will be integrated as a representative office, means the foreign company representatives should get from the Foreign Exchange Department and Mumbai RBI an approval. The RBI will check the applicant company activity and the foreign legal entity should submit essential documents.

Activities of a representative branch office in India
Opening in India a representative branch office to perform its operations means the foreign business entity applicant should perform as per the applicable national legislation and may perform any of the following:

• Research work, in the parent company field of activity
• Trading ( export or import of products and goods )or consultancy services
• Selling or buying agents, shipping and airline activities or banking related business activities
• Developing financial or technical operations with Indian companies in collaboration
• Providing services in the software and IT sector.

Foreign companies can set up a representative office to perform manufacturing activities. However, it is essential to perform via an Indian company the business operations. The representative office cannot diversify the operation beyond that is already received RBI approval.

Eligibility requirements to open a representative office in India
Opening in India a representative office means there is a need to register the new legal entity as per the Companies Act and should also comply with the Foreign Exchange Management Act 1999 provisions. The representative office investors in India should provide their abroad company’s financial records showing the annual profits of the company for the past five years. The net worth of the company should have a value of at least $100,000 and the audited balance sheet must prove the status of the company.

Registration requirements
The procedure to open in India a representative office may last for several weeks. The RBI will grant within 4 weeks the permission if they meet all the requirements. The foreign company should include with its application the following information:

• History in detail of the business activities to be performed by the parent company.
• Proposed operations list to be performed through the representative office in India.
• Key reasons to conduct in India the business activities through a representative office.

Required incorporation documents to open in India a representative office
The procedure of forming in India a representative office requires the investors to submit company documents, apart from the standard forms as requested in India by the competent authorities. The documents required are:

• The abroad parent company representative should address to the RBI in a letter.
• Provide a letter appointing a local representative.
• The parent company in the letter should say it will support its representative office in developing the local operations
• Submit incorporation documents of the company as two copies with attested by the Indian embassy in the country the parent company has its location.
• A certified and translated copy of the incorporation certificate of the company.
• A notarized and translated copy of the latest annual accounts and balance sheet.
• Authorized person home country contact information
• Funding estimate to be used in the representative branch

The other details that are regarded as relevant information to be offered include the number of employees to work in the representative office in India, the foreign employee’s number, and information on the company’s directors (their address and identity).

Another very important requirement to open a representative office in India is to give the parent company details on the entities/ persons holding the company shares over 10%, the company structure and the structure of the shareholding.

Can representative offices own property in India?
Opening a representative office in India allows the company to buy a property and the respective assets should be employed to perform associated operations and the company’s activities. However, foreign companies are not allowed to buy property for renting.

The representative offices originating in countries such as Bangladesh, Pakistan, Iran, Sri Lanka, China, Bhutan, and Afghanistan, are not permitted to acquire a property.

The investors should also give English translation of the statutory documents of the company with the application for the representative office registration in India. It is also essential to provide the net value of the company that cannot be less than USD 100,000.

Other procedures to open in India a representative branch
The investors should know that once legally incorporated implies other procedures must be done. This new company should get a permanent account number and also do the registration for tax purposes. The company may apply to register for GST and for tax deduction number.

The representative office should comply legally with the procedures of accounting that need to be fulfilled in a financial year. The representative office in this period should maintain the books of accounts and also should audit the annual accounts of the company. The representative branch should also file with the RBI an annual activity certificate.
Financial documents should be obtained for the representative office and they should deposit with the Registrar of Companies the annual return and the balance sheet. However, if there are any changes with regards to the representative office, the RBI and RoC should be notified. This is also applicable to the parent company in case there is a change in the directors of the company or there is a modification in any of the provisions in the establishing documents.

Investors can set up in India a representative office in the SEZ (the Special Economic Zones). Opening a representative office in these regions means there will be restrictions to carry out the business activities. The representative offices cannot develop retail activities. However, as they operate in an SEZ in India, the company can perform its functions under specific conditions and there is no need for RBI approval.

The applicant should be submitted by the foreign entities and the applicant with the required set of documents to open in India a representative office.

For further details contact us at associatesageorge@gmail.com

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