Thursday, May 15, 2014

Foreign Direct Investment (FDI) in Limited Liability Partnership (LLP)



  • LLP formed and registered under the LLP Act, 2008 shall be eligible to accept FDI
  • A person or an entity resident outside India shall be eligible except :
  • A citizen/ entity of Pakistan and Bangladesh ,
  • Foreign Institutional Investor (FII),
  • Foreign Venture Capital Investor (FVCI)
  • Qualified Foreign Investor (QFI) or
  • Foreign Portfolio Investor (FPI)
  • An LLP, existing or new, operating in sectors/ activities where 100% FDI is allowed under the automatic route would be eligible to receive FDI.
  • An LLP engaged in the following sectors/ activities shall not be eligible to accept FDI:
  • Sectors subject to FDI-linked performance related conditions (for example minimum capitalisation norms applicable to ‘Non- banking Finance Companies’ or ‘Development of Townships, Housing, Construction- development projects’, etc.); or
  • Agricultural/plantation activity & print media;
  • Any FDI in a LLP, directly or indirectly, shall require prior Government/FIPB approval.
  • Pricing: FDI in an LLP permitted more than or equal to the fair price as worked out with any valuation norm which is internationally accepted/ adopted as per market practice.
  • An Indian company, having foreign investment (direct or indirect, irrespective of percentage of such foreign investment), will be permitted to make downstream investment in an LLP only if both, the company as well as the LLP, are operating in sectors where 100% FDI is allowed under the automatic route and there are no FDI- linked performance related conditions.
  • An LLP with FDI will not be eligible to make any downstream investments in any entity in India.
  • A designated partner would also have to satisfy the definition of “person resident in India” under Foreign Exchange Management Act, 1999.
  • LLPs shall not be permitted to avail External Commercial Borrowings (ECBs).

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