FDI in India through LLP

LLP (Limited liability Partnership)

  • Partnership in which some or all partners (depending on the jurisdiction) have limited liabilities.
  • ¬†one partner is not responsible or liable for another partner’s misconduct or negligence.
  • Unlike corporate shareholders, the partners have the right to manage the business directly
  • Distinct Entity LLP is a separate entity distinct from its¬†partners

100% FDI is permitted through automatic route suject to following Conditions.

  • FDI is permitted under the automatic route in LLPs operating in sectors / activities where 100% FDI is allowed through the automatic route and there are no FDI linked performance conditions. For ascertaining such sectors, reference shall be made to Annex B to Schedule 1 of these Regulations
  • An Indian company or an LLP, having foreign investment, will be permitted to make downstream investment in another company or LLP engaged in sectors in which 100% FDI is allowed under the automatic route and there are no FDI linked performance conditions. Onus shall be on the Indian company / LLP accepting downstream investment to ensure compliance with the above conditions.
  • FDI in LLP is subject to the compliance of the conditions of Limited Liability Partnership Act, 2008.
  • A company having foreign investment can be converted into an LLP under the automatic route only if it is engaged in a sector where foreign investment up to 100 percent is permitted under automatic route and there are no FDI linked performance conditions.

Registration Formation

  • Requirement of DSC: NRI must submit signed DSC form along with copy of Passport and Address Proof.
  • Requirement of designated partner identification no. (DPIN): obtain after DSC.
  • Name Approval
  • Incorporation of LLP: Application submited to govt.
  • LLP agreement Filling: within 30 days of incorporation
  • One of the Designated Partners must be resident

Other Benefits

No need of auditor or conduct board meeting if annual turnover less than Rs. 40 lakhs and capital less than Rs. 25 lakhs

RBI Recently issued Notification no. 385/2017 Extract of Notification

“A person resident outside India (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than an entity in Pakistan or Bangladesh), not being a Foreign Portfolio Investor or Foreign Institutional Investor or Foreign Venture Capital Investor registered in accordance with SEBI guidelines, may contribute foreign capital either by way of capital contribution or by way of acquisition / transfer of profit shares in the capital structure of an LLP.”

MLG COMMENTS

  • Foreign Companies or a foreign nationals can be appointed as Designated Partner in LLP
  • Residency test need not to be satisfied by the individuals
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