Earlier, NRI’s and Foreign Nationals looking to start a business in India did it through the automatic route of 100% foreign direct investment (FDI) in a private limited company. However, the compliance requirements of the company structure was a deterring factor. Subsequently, the Indian government permitted a 100% FDI in a Limited Liability Partnership (LLP) via the automatic route. This made it easier for NRIs and foreign nationals to invest in Indian businesses. Today, we will look at the process of LLP registration in India for NRIs and foreign nationals.
LLPs were introduced in India via the LLP Act, 2008. With a lower cost of incorporation and lesser compliance requirements, LLPs soon became popular among businesses as opposed to private limited companies.
The landscape of NRIs and foreign nationals investing in India
From the time India opened its doors to FDIs, most NRIs and foreign nationals have preferred incorporating a private limited company or investing in one. The primary reason was the permission for 100% FDI under the automatic route.
In many other countries, foreign investors are permitted to open a branch office and gain access to the country’s markets. However, in India, most NRIs and foreign nationals didn’t prefer this route. The reasons were plenty – difficulty in getting approval from the RBI, an excellent financial record, etc.
Before November 2015, an NRI or a foreign national needed to seek approval from the Indian government to invest in an LLP in India. Hence, the process was long and expensive. This was another reason behind the preference of a private limited company for FDIs. However, with the relaxation of the rules in November 2015, LLPs became the ideal option for FDIs in India. Today, the government permits a 100% FDI in an LLP in India via the automatic route. While the government has restricted the sectors for these investments, there are no other deterring factors.
LLP Registration in India for NRIs and Foreign Nationals
In India, you need at least two people to register an LLP. One of them should be an Indian citizen and resident in India. Here are the steps for LLP registration in India for NRIs and foreign nationals:
Obtain Digital Signature Certificate (DSC)
All proposed designated partners of the LLP must have a DSC. NRIs and foreign nationals need to attach a notarized or apostilled copy of their Passport and proof of address along with the DSC application.
Apply for a Designated Partner Identification Number (DPIN)
All designated partners in an LLP need a DPIN. Thay can apply for the DPIN together with the application for incorporation of the LLP in form Fillip.
Seek approval for the name of the LLP
You must apply for reserving the name of the LLP. You must make this application to the Ministry of Corporate Affairs (MCA) in form RUN-LLP. Also, you can apply for up to four names as per your preference. (two names each attempt). The proposed names must follow the guidelines as per the LLP Act, 2008. Further, you must ensure that the name is unique and not similar to any other LLP name by making a check on the MCA website.
Incorporate the LLP
Once you receive approval for a name, you must submit the application for incorporation of the LLP within 3 months. You will have to submit the required documents ie. Subscribers’ sheet along with the consent of the partners, NOC and proof of Registered Office and details of interest of designated partners in other entities in form Fillip. Once the application is approved, the MCA provides a certificate of incorporation and you can commence business.
File the LLP Agreement
Within 30 days of incorporation of the LLP, you must ensure that all partners sign the LLP agreement and file it with the MCA. Unless you file the LLP agreement, the incorporation process is incomplete. Also, failure to comply results in heavy fines.
As you can see, the process for LLP registration in India for NRIs and foreign nationals is simple and similar to that for Indian citizens. There are certain compliance requirements that even NRIs and foreign nationals need to meet post-incorporation of the LLP. This is one of the most popular options for non-resident or foreign investors. We hope that the article gave a good overview of the process of LLP registration in India. If you need assistance registering your Limited Liability Partnership as a foreign national or NRI, then please drop us a line. Our team will assist you with the same.