We all know that all companies registered in India have their registered offices. These offices are the principal place of business and all official communications for your business are sent on this address. However, with growth and expansion the need for opening a new branch of business also arises. This branch office can be anywhere in India, it does not necessarily have to be in the same geographical location as the registered office. MCA governs Private Limited Company Registration in India Hence, if you decide on opening a new branch of business, then you’ll have to follow an MCA defined process to update your company’s information on the portal. Through this article, you will get a detailed idea on the procedure for opening branch offices by domestic company as well as the procedure for opening a branch office in India by foreign company.
Procedure for opening branch offices by domestic company
If a company registered in India, wants to open another branch in India itself, they need to follow the below steps for opening a branch office.
Board Resolution for opening branch office
In order to obtain branch office registration, all Directors of the company must approve. You can obtain this approval through passing a board resolution for opening a branch office. Hence, a company must call a board meeting on a pre-decided date by giving notice to all the directors. Board of directors must pass a resolution to open a branch office. Lastly, the BOD must authorize a director to carry on all the related activities. And then a company can hire/own a place in any city or state in India as per the resolution.
Also Read: Can Home Address be Office Address for Business?
Shop & Establishment registration
The registration of a branch office is not mandatory under the MCA but you need to register it with local authorities to carry on business activities legally. Hence, a branch can be registered under shop & establishment act. You need to register it with the local municipality of the branch office.
A company must update the information related to opening a branch office with other ministries where it is registered. This includes GST Registration, IEC registration, industrial licenses, professional tax, etc. It is necessary to avoid the consequences of not complying.
Starting a business
After completion of all legal formalities, you can carry out the business activities at a branch office. A company can only carry on such business activities at a branch office which is mentioned in the main object in the MOA.
Procedure for opening branch office in India by foreign company
With the boom of the developing Indian economy, many foreigners move ahead to open their branch offices in India. Here’s the step by step guide on the procedure for opening a branch office in India by foreign company.
Filing application with RBI
Form FNC is applicable to file an application for opening a branch office in India by a foreign company. For opening a new branch of business you need to submit this application with the Reserve Bank of India (RBI) through the authorized dealer (AD) bank. In this procedure for opening branch office in India by foreign company, AD bank plays an important role as every information to them is disseminated through them to the RBI. In certain industries, you will need prior RBI approval to be able to file your FNC application.
KYC verification from parent company banker
Once you file the FNC form with the AD bank, they will send the documents for verification to the registered bank of the foreign company. The digital signature of the authorized signatory and the DIN of Indian Directors is a must for opening a new branch office. Once you submit all documents, you have to wait for the ROC approval.
PAN and TAN registrations
Once you receive the approval, obtaining a permanent account number, a tax deduction account number and a current account for your new branch office is a must. These are basic registrations required to carry trade in India.
Registration with State Police
The last step in the procedure for opening a new branch office for foreign company in India is to register your new office address with the state police. You need to attach your RBI and ROC approvals along with the applications for this registration.
Points to consider while opening a new branch of business
Need for a new branch office
One must consider whether there is really a need for opening a new branch office or not. It depends on the nature of the business. For e.g., if there is a retail business then it is needed to expand a business. But if the business provides online consultancy then it is quite not required.
Cost and taxes
The cost involved in opening a new branch office must be projected in advance to take firm decisions. Further, one must know how it will affect in terms of taxes and additional compliance.
One must analyze the market where the company is planning to start the branch office. It must consider the factors such as area, existing competitors, the need for the product or service, culture of the society, etc.
The location of an office plays an important role. The location must be preferred considering accessibility, competition, availability of staff.
A company can open as many branches as required and expand its business. For opening a branch office for a domestic company there is no need to inform MCA. However, it is mandatory to do so when there is a change in the registered office address of a company.
Pro Tips for opening a new branch office
- Branch Office Registration is a separate registration process;
- The MCA portal does not have any form for opening a new branch office for any Pvt Ltd Company;
- The name of company will remain same in the branch office as well;
- All branch offices must have a notice board with the name and registered office address of the principal place of business.
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