Foreign Investment in LLP in India

Key Terms related to Foreign Investment in LLP in India

Key terms related to Foreign Investment in LLP in India are mentioned below:

“Investment” (for purpose of LLP) shall mean capital contribution or acquisition/ transfer of profit shares.

‘Limited Liability Partnership (LLP)’ is a partnership formed and registered under the Limited Liability Partnership Act, 2008

Foreign Investment in LLP in India

Foreign Investment was permitted in an LLP with effect from May 20, 2011.

A person resident outside India (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than an entity incorporated in Pakistan or Bangladesh), not being a Foreign Portfolio Investor (FPI) or a Foreign Venture Capital Investor (FVCI), is permitted to contribute to the capital of an LLP operating in sectors/ activities where foreign investment up to 100 percent is permitted under automatic route and there are no FDI linked performance conditions.

Investment by way of ‘profit share’ will fall under the category of reinvestment of earnings.

Investment in an LLP is subject to the conditions prescribed in the Limited Liability Partnership Act, 2008.

A company having foreign investment, engaged in a sector where foreign investment up to 100 percent is permitted under the automatic route and there are no FDI linked performance conditions, can be converted into an LLP under the automatic route.

An LLP having foreign investment, engaged in a sector where foreign investment up to 100 percent is permitted under the automatic route and there are no FDI linked performance conditions, can be converted into a company under the automatic route.

Mode of Payment

Payment by an investor towards capital contribution of an LLP should be made by way of an inward remittance through banking channels or out of funds held in NRE or FCNR(B) account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.

Remittance of Disinvestment Proceeds

The disinvestment proceeds can be remitted outside India or may be credited to NRE or FCNR(B) account of the person concerned.

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