Foreign nationals who want to invest for a business in India have earlier done through a private limited company, as it allowed for 100% FDI under automatic route for many of the sectors. Now to allow NRIs and Foreign Nationals to freely invest in businesses in India and improve foreign investment, The government has now allowed 100% FDI in LLP under the automatic route.
Limited liability partnership is one of the new forms of business entity in India governed through the LLP Act, 2008. Earlier, investment in LLP by NRI or Foreign national required Government approval. It has made the process a long, cumbersome and expensive process. Thus company registration was preferred over LLP registration by NRIs and Foreign Nationals. As there is relaxation of FDI norms so the LLP registration can be done easily by NRIs and Foreign Nationals.
100% FDI in LLP is now allowed for businesses operating in sectors/activities where 100% FDI is allowed through the automatic route.
DSC must be obtained for the proposed partners of the LLP. It is necessary for obtaining the Designated Partners Identification Number (DPIN). For this purpose, the NRI or foreign national must submit the signed DSC application along with a notarized copy of passport and Address proof.
After obtaining DPINs an application for reservation of name of LLP can be made to the MCA. The application for a name can obtain up to six names that are acceptable as per the LLP Act, 2008. The name should be unique as per the norm of the LLP Act and must not be similar to an existing company or LLP name.
On the basis of Name approval provided by the Government, now the partners can submit an application for incorporation of LLP to the Government along with the necessary documents including the subscribers’ sheet. After acceptance of an application, MCA will provide a certificate for incorporation.
Now LLP agreement must be signed and filed by the Partners within 30 days. In case the LLP agreement is not filed then it may lead to the heavy penalty which accrues on a daily basis.
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