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Starting Business
  1. Liason office

    A liaison office is the most basic form of business presence that a foreign company can have in India. Permission to open a liaison office in India is granted by RBI, the apex exchange control authority. Liaison offices are normally established by foreign companies to promote their business interests by spreading awareness of their product(s) and exploring opportunities for business and investment in India. Foreign insurance companies have a general permission to establish a liaison office in India provided they have obtained permission from the Insurance Regulatory Development Authority of India and they comply with certain prescribed conditions.

     

  2. Scope of activities

    Under the current exchange control regulations, a liaison office is permitted to:

    • Represent the parent/group companies in India ;
    • Promote exports and imports from/to India;
    • Promote technical /financial collaborations between parent/group companies and companies in India ;
    • Act as a communication channel between parent/group companies and companies in India.

     

    Typically, a liaison office is not permitted to :

     

    • Earn any income;
    • Undertake any industrial, trading or commercial activity;
    • Enter into any agreement on behalf of the head office;
    • Borrow or lend money for any commercial activity;
    • Charge any fee or commission or otherwise earn any income, in respect of liaison activities carried on in India.

     

  3. Approval process

    An application in the prescribed form has to be submitted to RBI for establishing a liaison office in India. The lead time for processing a liaison office approval typically ranges from three to four weeks, unless the application is referred to the administrative ministry concerned within the Government of India for its comments, which may lead to an increase in the processing time.

     

  4. Remittance facilities

    As stated above, a liaison office cannot earn any income in India (except for interest on surplus funds lying in its local bank account subject to certain conditions). Therefore, all expenses of the liaison office have to be met out of inward remittances from the head office. Any balance in the liaison office account can typically be repatriated, only at the time of closure of the liaison office.

     

  5. Taxation

    As stated above, liaison offices are not permitted to carry on any industrial, trading or commercial activities, nor to earn any income in India. However, sec 139(1) requires all companies to furnish a return of income. Hence, liaison offices would also be required to file their return of income in India.

     

  6. Exit options

    Closure of a liaison office normally involves a time frame of five to six weeks. An application enclosing the prescribed documentation is required to be made to the requisite regional office of RBI.

     

  7. Entry requirements for doing business in India

     

  8. Public Limited Company

     

    A company that can offer shares to the public is termed as a public limited company. The Companies Act 1956 mandates a list of criteria that have to be met by the public limited companies before they start their business operations in India. A few of these criteria are listed below:


    • It should have at least seven shareholders.
    • A public company is allowed to start its activities only after procuring the ‘Certificate of Commencement of Business’. The ‘Certificate of Incorporation’ alone will not suffice the purpose.
    • The company should release a prospectus or issue a statement to sell its securities.
    • It must have at least three directors in its board.
    • The company should conduct statutory meeting from time to time.

    A private limited company is not owned by any governmental body, and it does not offer public shares. The number of shareholders for a private limited company is restricted to a maximum 50, whereas the minimum required is 2. The shareholders, however, do not have the power to transfer or trade their shares publicly.

 
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New Delhi – 110 002
Ph: 011- 23288018, 43539041
Email ID:- info@suranaca.com
Website: http://suranaca.com
 
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