- By ADMIN
- Posted 25 May, 2019
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Foreign Direct Investment in LLP
CA.Selvaraj Selvakumar
This Article would help to people to understand the subject that an LLP can get Foreign Direct Investment and its related compliances under Foreign Exchange Management Act.
Residential Status of LLP
Combined reading of Sec 2(11) of Companies Act, 2013 and Sec 3(1) of Limited Liability Act, 2008, LLP is a body corporate which is formed and incorporated under the laws of India, it is considered to be person resident in India.
Route of Investment
As per FDI Policy 2016, FDI is permitted under AUTOMATIC route in LLP(s) operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions.
- Eligible Investors
- a person resident outside India or
- an entity incorporated outside India
But the following persons are not eligible to invest in India
a citizen / entity of Pakistan and Bangladesh;
a SEBI registered FII
a SEBI registered Foreign Venture Capital Investor (FVCI)
a SEBI registered Qualified Foreign Investor (QFI)
a Foregin Portfolio Investor register in accordance with the SEBI (Foreign Portfolio Investors) Regulations, 2014 (RFPI)
Eligible Investments
Contribution to capital of an LLP would be an eligible investment under the scheme. Investment by way of ‘Profit share’ will fall under the category of reinvestment of earnings.
Pricing
|
S.No |
Particulars |
Pricing |
|
|
a |
FDI by way of Acquisition |
Either by way of capital contribution or by way of acquisition / transfer of profit shares would have to be more than or equal to the fair price as worked out with any valuation norm which internationally accepted / adopted as per market practice. |
|
|
b |
Transfer of capital contribution / profit share |
Resident to Non-Resident |
For consideration equal to or more than the fair price arrived |
|
Non-Resident to Resident |
For consideration less than or equal to the fair price arrived |
||
Mode of Payment for an eligible investor
-
Only by way of cash (not in kind)
-
By way of inward remittance through banking channels; or
-
By debit to NRE / FCNR(B) account of the person concerned, maintained with an AD Category – I bank.
Reporting requirements for LLP.
|
S.No |
Event |
Particulars |
Name of the FORM |
Period in which to be reported |
|
1 |
On receipt of money |
Details of receipt of amount of consideration for capital contribution |
Form FDI-LLP(I) + FIRC +KYC & Valuation Certificate |
Within 30 days of receipt of consideration |
|
2 |
On taking back the investment / transfer of share capital. |
Details of disinvestment / transfer of capital contribution |
Form FDI-LLP (II) |
Within 60 days from the date of receipt of funds. |
|
3 |
End of every year |
Reporting of Foreign Direct Investment |
FLA Return (Annual Return on Foreign Liabilities and Assets) |
On or before 15th day of July of each year. |
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