LLP Registration With Foreign Directors

Last Updated at: May 29, 2020
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llp registration
In March, 2020, the Ministry of Corporate Affairs (MCA) launched a new scheme to provide one-time amnesty to non-compliant LLPs in the wake of the COVID-19 outbreak. Under the LLP Settlement Scheme, 2020, defaulting LLPs have been allowed a one-time waiver of penalties if they complete their delayed filing of certain statutory documents by 30th September 2020. No proceedings and prosecution will be initiated by the Registrar till then.

 

NRIs and Foreign Nationals starting or investing in a business in India have mainly done through a private limited company, as it allowed the LLP registration for 100% Foreign Direct Investment (FDI) under the automatic route for many of the sectors. Though the cost for the incorporation of a private limited company is relatively low compared, the effort required to maintain compliance was an inhibiting factor. Foreign national as partner in LLP is easy to make. 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. Let’s see the Registration of a Limited Liability Partnership With Foreign Directors which involves the LLP directors.

LLP Registration

Limited Liability Partnership (LLP) is one of the newest forms of business entity in India introduced through the Limited Liability Partnership Act, 2008. LLP registration started in India in 2008 and has quickly become popular amongst small businesses owing to the low registration cost and lesser compliance requirement when compared to a private limited company.

Register an LLP Online now

Registration of LLP

Before November 2015, investment in LLP by NRI or Foreign National required Government approval. This made LLP incorporation involving NRIs and/or Foreign Nationals – a long, cumbersome and expensive process. Thus company registration was preferred over LLP registration by NRIs and Foreign Nationals. With the relaxation of FDI norms in November 2015, LLP registration can be done easily by NRIs and Foreign Nationals, making it an ideal investment vehicle for establishing a small business in India with foreign direct investment.

FDI in LLP

Post changes to FDI regulations on 10th, November 2015, 100% FDI in LLP is now permitted under the automatic route. 100% FDI in LLP is allowed for businesses operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions. Besides, LLPs will also be allowed to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under the automatic route and there are no FDI-linked performance conditions. Therefore, FDI in LLP is now allowed and NRIs or Foreign Nationals can start or invest in an LLP.

LLP Registration Procedure for NRIs and Foreign Nationals

A minimum of two people are required to register an LLP in India. It is recommended that at least one of the Partner of the LLP be both an Indian Citizen and Indian Resident – similar to the requirement for registration of the company in India. The procedure for LLP registration involves five major steps namely: Digital Signature, Designated Partner Identification Number, Name Approval, Incorporation and LLP Agreement Filing.

Digital Signature Certificate

Digital Signature Certificate (DSC) must be obtained for the proposed Partners of the LLP. DSC is necessary for obtaining a Designated Partner Identification Number (DPIN). To obtain DSC, the NRI or Foreign National must submit the signed DSC application along with a notarized copy of Passport and Address Proof (Driver’s License, Residence Card and more).

Designated Partner Identification Number

Partners in an LLP require Designated Partner Identification Number (DPIN) and it can be obtained once DSC is obtained for the Partner. DPIN can be used with the Director Identification Number (DIN) used in the incorporation of a company.

Name Approval for LLP

Once two DPINs are available, an application for reservation of name of LLP can be made to the Ministry of Corporate Affairs (MCA). The application for name can contain up to six names that are acceptable as per the LLP Act, 2008. The name must be unique, as per norm of the LLP Act and must not be similar to an existing company or LLP name. If anyone of the name is approved, then incorporation application can be filed within 60 days to complete the incorporation.

Incorporation of LLP

Based on the name approval provided by the Government, the Partners of the LLP can apply for incorporation of LLP to the Government along with the necessary documents including the subscribers’ sheet. If the application is acceptable, MCA would provide an incorporation certificate for the LLP and business can commence.

LLP Agreement Filing

On incorporation of the LLP, LLP Agreement must be signed and filed by the Partners within 30 days. Failure to file LLP agreement on-time could result in a heavy penalty that accrues daily. Hence, it is important to quickly file the LLP agreement and complete the LLP incorporation process.

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LLP Registration With Foreign Directors

2898
In March, 2020, the Ministry of Corporate Affairs (MCA) launched a new scheme to provide one-time amnesty to non-compliant LLPs in the wake of the COVID-19 outbreak. Under the LLP Settlement Scheme, 2020, defaulting LLPs have been allowed a one-time waiver of penalties if they complete their delayed filing of certain statutory documents by 30th September 2020. No proceedings and prosecution will be initiated by the Registrar till then.

 

NRIs and Foreign Nationals starting or investing in a business in India have mainly done through a private limited company, as it allowed the LLP registration for 100% Foreign Direct Investment (FDI) under the automatic route for many of the sectors. Though the cost for the incorporation of a private limited company is relatively low compared, the effort required to maintain compliance was an inhibiting factor. Foreign national as partner in LLP is easy to make. 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. Let’s see the Registration of a Limited Liability Partnership With Foreign Directors which involves the LLP directors.

LLP Registration

Limited Liability Partnership (LLP) is one of the newest forms of business entity in India introduced through the Limited Liability Partnership Act, 2008. LLP registration started in India in 2008 and has quickly become popular amongst small businesses owing to the low registration cost and lesser compliance requirement when compared to a private limited company.

Register an LLP Online now

Registration of LLP

Before November 2015, investment in LLP by NRI or Foreign National required Government approval. This made LLP incorporation involving NRIs and/or Foreign Nationals – a long, cumbersome and expensive process. Thus company registration was preferred over LLP registration by NRIs and Foreign Nationals. With the relaxation of FDI norms in November 2015, LLP registration can be done easily by NRIs and Foreign Nationals, making it an ideal investment vehicle for establishing a small business in India with foreign direct investment.

FDI in LLP

Post changes to FDI regulations on 10th, November 2015, 100% FDI in LLP is now permitted under the automatic route. 100% FDI in LLP is allowed for businesses operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions. Besides, LLPs will also be allowed to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under the automatic route and there are no FDI-linked performance conditions. Therefore, FDI in LLP is now allowed and NRIs or Foreign Nationals can start or invest in an LLP.

LLP Registration Procedure for NRIs and Foreign Nationals

A minimum of two people are required to register an LLP in India. It is recommended that at least one of the Partner of the LLP be both an Indian Citizen and Indian Resident – similar to the requirement for registration of the company in India. The procedure for LLP registration involves five major steps namely: Digital Signature, Designated Partner Identification Number, Name Approval, Incorporation and LLP Agreement Filing.

Digital Signature Certificate

Digital Signature Certificate (DSC) must be obtained for the proposed Partners of the LLP. DSC is necessary for obtaining a Designated Partner Identification Number (DPIN). To obtain DSC, the NRI or Foreign National must submit the signed DSC application along with a notarized copy of Passport and Address Proof (Driver’s License, Residence Card and more).

Designated Partner Identification Number

Partners in an LLP require Designated Partner Identification Number (DPIN) and it can be obtained once DSC is obtained for the Partner. DPIN can be used with the Director Identification Number (DIN) used in the incorporation of a company.

Name Approval for LLP

Once two DPINs are available, an application for reservation of name of LLP can be made to the Ministry of Corporate Affairs (MCA). The application for name can contain up to six names that are acceptable as per the LLP Act, 2008. The name must be unique, as per norm of the LLP Act and must not be similar to an existing company or LLP name. If anyone of the name is approved, then incorporation application can be filed within 60 days to complete the incorporation.

Incorporation of LLP

Based on the name approval provided by the Government, the Partners of the LLP can apply for incorporation of LLP to the Government along with the necessary documents including the subscribers’ sheet. If the application is acceptable, MCA would provide an incorporation certificate for the LLP and business can commence.

LLP Agreement Filing

On incorporation of the LLP, LLP Agreement must be signed and filed by the Partners within 30 days. Failure to file LLP agreement on-time could result in a heavy penalty that accrues daily. Hence, it is important to quickly file the LLP agreement and complete the LLP incorporation process.

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A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.