A Limited Liability Partnership (LLP) is a business structure which is a legal entity like a private limited company or a partnership firm. It is regulated by the Limited Liability Partnership Act, 2008. It is a unique structure which has the characteristics pertaining to a company as well as a partnership. Just like a Company, an LLP is a legal entity separate from its partners and thus can sue and be sued in its own name, has perpetual succession. There is no minimum capital requirement to form an LLP. In comparison to a company, an LLP requires minimal expenses for its formation and has low compliance requirements. An LLP also has the characteristics of a partnership in terms of the liability of the partners, which only extends to the contribution made by such partners in the assets of the partnership firm and does not extend to the personal assets of such partners. Scroll down to check LLP Registration for NRIs and Foreign Nationals.
An LLP must have at least two directors and one of them must be a citizen of India and residing in India.
There are largely three ways through which a foreign business can enter the Indian market, namely:
- Incorporation of a company. Up until 2015, this was the most preferred way for a foreign business to enter the Indian market, as Foreign Direct Investments are allowed up to 100% without any prior approval from the government. This was easier, cheaper, quicker, and cost efficient for NRIs and foreign nationals to enter the Indian market by registering their company in India as a subsidiary of a foreign entity.
- Registration as an LLP. Up until 2015, an LLP registration by NRIs or foreign nationals required prior approval from the Government of India.
- Registration of liaison office, branch office, and project office with the prior approval of the Government of India and the Reserve Bank of India. This was often a cumbersome and expensive process involving many compliances.
Prior to 2015, foreign nationals and NRIs looking to enter the Indian market and invest in India opted to do so by incorporating a private limited company in India. However, in November 2015, the Government of India, with a view to increasing foreign investments in India, relaxed the norms regulating the automatic route of 100% Foreign Direct Investment and there are no Foreign Direct Investment related performance requirements. NRIs and foreign nationals are now free to start or invest in an LLP due to the relaxations granted to NRIs and foreign nationals.
Requirements for LLP Registration for NRIs and Foreign Nationals
To apply for LLP Registration for NRIs and Foreign Nationals in India, there are certain pre-requisites that need to be complied with:
- There must be at least a minimum of two designated directors and one of them should be an Indian citizen residing in India.
- There must be at least a minimum of two shareholders
- A registered office in India
- For an NRI looking to register the LLP, a valid proof of identity, proof d address and other relevant documents provide proof as to the NRI’s Indian origin.
- All the relevant documents which are to be submitted during the registration process must be attested by a notary or the Indian Embassy.
- Other requirements include having a valid mobile number and Email ID, passport-sized photograph, digital signature and self-attested copies of passport and address proof.
LLP Registration for NRIs and Foreign Nationals – Procedure
The LLP Registration for NRIs and Foreign Nationals involves the below-mentioned steps:
- Obtaining the Digital Signature Certificate
All the proposed partners of the LLP are required to have a valid digital signature and obtain a valid Digital Signature Certificate. To obtain a Digital Signature Certificate, the NRIs and Foreign Nationals must submit the signed Digital Signature Certificate application, along with copies of a valid passport and address proof, to the Certifying Authority. This step can take up to one to three days. A valid Digital Signature Certificate is imperative to obtain the Digital Partner Identification Number.
- Obtaining the Digital Partner Identification Number
Once the proposed partners have obtained a valid Digital Signature Certificate, they can apply to obtain a valid Digital Partner Identification Number, which is a necessary requirement for the incorporation of the LLP. This step can take up to one to two days.
- Approval of the name of the LLP
Once the Digital Partner Identification Number for the proposed partners has been obtained, an application must be made to the Ministry of Corporate Affairs to reserve the name of the LLP. The name should be in tune with the guidelines in this regard laid down by the Ministry of Corporate Affairs. The name must be unique and distinct and must not be identical or similar to the name of an existing LLP. The application can contain up to six proposed names for the LLP as per the provisions of the Limited Liability Partnership Act, 2008. Once a name has been approved by the Government of India, an application for incorporation of the LLP can be filed within 60 days of such approval. This step can take up to one to seven days.
- Incorporation of the LLP
Once the name of the LLP has been approved by the Government of India, an application for incorporation of the LLP along with the requisite documents, can be made to the Ministry of Corporate Affairs. After assessing the applicant and if it is found sufficient, a certificate of incorporation is granted by the Ministry of Corporate Affairs. This step can take up to one to seven days.
- Filing of the LLP Agreement
Once the certificate of LLP Registration for NRIs and Foreign Nationals is received, the LLP agreement must be signed and filed with the Ministry of Corporate Affairs within 30 days of receipt of the certificate of incorporation.
Conclusion
Post-2015, LLP Registration for NRIs and foreign nationals has become the most cost-efficient and the quickest route for foreign businesses to enter the Indian market. An NRI[1] or a foreign national looking to invest in India can choose the LLP route by keeping in mind the necessary legal and policy compliances. Investing or registering one’s LLP is more beneficial than the incorporation of a company owing to the countless benefits that an LLP has over a company right from the incorporation stage to expenses or compliances involved.
Read Our Article: How to Apply for LLP Registration in India
