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Limited Liability Partnership (“LLP”) is a hybrid entity with advantage of a company and operational flexibility of a partnership. The concept was introduced by the Ministry of Corporate Affairs through Limited Liability Partnership Act, 2008 on 9th January, 2009.
Setting up of LLP in India has various advantages. Some of the significant advantages are as follows:
FOREIGN DIRECT INVESTMENT IN LLP Foreign investment is permitted under the automatic route in LLP operating in sectors/activities where 100% Foreign Direct Investment (FDI) is allowed through the automatic route and there are no FDI-linked performance conditions. As of now, payment by an eligible foreign investor towards capital contribution/profit share of LLPs is allowed only by way of cash consideration in terms of the Foreign Exchange Management Act, 1999.
In addition to the above, LLPs receiving FDI are also allowed to make downstream investment in other limited liability company or LLP in those sectors where 100% FDI is permitted through automatic route.
REPORTING REQUIREMENTS
Though, External Commercial Borrowings are not allowed in LLP in India, however, FDI norms relating to LLP are considerably liberalised as compared to investment in Indian companies.
Thanks for the update
Sir,We are a listed company in India try to set a JV in manufacturing sector with a MNC. We wish take the LLP route as there will be no DDT and Withhoding tax on dividends to be paid to foreign investors.We propose to raise some loan funds in India also.Due you foresee any issues for LLP vs limited company.Shiva
We have a LLP which has received FDI in 2016. Necessary reporting was done through AD and we received the UIN.Firm however has made losses and is non operational since more than 1 year.We wish to close down the LLP. The Foreign Investor is also closing down their operations.What is the process required to be followed for the same and how do we intimate the RBI. Bank account has also been closed
Hi Hemant,The LLP will be closed down as per the procedure provided in the Limited Liability Partnership Act, 2008 and Rules made thereunder. Further, the LLP would be required to intimate RBI as per the provisions of the Foreign Exchange Management Act, 1999.If you need any assistance in this regard, kindly feel free to revert.
Sir, We are opening an LLP for agricultural produce. 3 partners are Resident. 4th one non resident. His capital contribution to LLP what are the legal formalities that firm should comply to accept the same? As an LLP can we accept Forign Grants? What are the legal side of the same?