🌍 What is a Liaison Office?
A Liaison Office (LO), also called a Representative Office, is a popular method for foreign companies to establish a presence in India without undertaking commercial activities. It serves as a communication channel between the foreign head office and Indian stakeholders, and can be used to:
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Promote export/import between India and the parent country
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Represent the parent company in India
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Coordinate with Indian companies or government agencies
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Explore opportunities for business or technical collaboration
⚠️ Important Note: A liaison office cannot generate income, enter contracts for business, or conduct trading or manufacturing activities in India.
✅ Eligibility Criteria for Opening a Liaison Office
To set up a liaison office, the parent foreign company must:
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Have a profit-making track record for at least 3 years
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Maintain a net worth of at least USD 50,000, verified by its latest audited balance sheet
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Operate in a sector where 100% Foreign Direct Investment (FDI) is permitted under the automatic route. Otherwise, it must seek prior approval from the Reserve Bank of India (RBI)
If the parent company does not meet the net worth requirement, it may still proceed by submitting a Letter of Comfort from its holding company or parent entity.
🛠️ Step-by-Step Procedure to Set Up a Liaison Office in India
Step 1: Define Your Purpose Clearly
Determine whether your business goals align with the permitted functions of an LO. If your intention includes generating revenue, entering into contracts, or rendering services, a branch or subsidiary is a more appropriate structure.
Step 2: Prepare the Required Documents
Below is a list of standard documentation required:
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Parent company’s Certificate of Incorporation
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Memorandum and Articles of Association (MOA/AOA)
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Board resolution for opening the liaison office
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Audited financial statements for the past three years
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Letter of Comfort, if applicable
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Details and ID/address proof of the designated representative in India
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Proof of address for the proposed LO premises (e.g., lease agreement)
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Power of Attorney authorizing an Indian representative
All documents must be notarized and apostilled/legalized in the country of origin.
Step 3: Submit Application via AD Category-I Bank
Applications for liaison offices are submitted in Form FNC to the Reserve Bank of India (RBI) through an Authorized Dealer (AD) Category-I Bank.
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The AD Bank conducts due diligence and forwards the application to RBI
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On successful review, RBI issues a Unique Identification Number (UIN)
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Approval is typically valid for 3 years (2 years for NBFCs and construction-related sectors)
Processing usually takes 6–8 weeks.
Step 4: Post-Approval Registrations
Once RBI approval is received:
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Register with the Registrar of Companies (RoC) by filing Form FC-1
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Obtain PAN and TAN from the Income Tax Department
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Open a bank account in India for receiving remittances from the parent company
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Lease office premises (ownership not permitted)
📋 Annual Compliance Requirements
Although a liaison office does not generate income, it must comply with Indian regulations:
| Requirement | Description |
|---|---|
| Annual Activity Certificate (AAC) | File with RBI and DGIT by 30th September each year |
| Income Tax Filing | File nil income tax returns annually, even if no business is transacted |
| ROC Compliance | Annual filing of Form FC-3 and financials under the Companies Act |
| Audit | Maintain and audit books of account |
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