Updated : July 12, 2024LLP Registration for NRI & Foreign Nationals
Overview : Witnessing the rapid growth of India, more foreign nationals or NRIs are seeing it as a desirable investment option. Among several ways to enter the Indian market or invest in the emerging Indian market, relaxation in FDI in LLP in India has made the in India feasible for the NRIs and Indian Nationals. Dive deeper into different aspects of LLP registration including FDI in LLP registration procedure for foreign nationals along with advantages of FDI in LLP Procedure.
India has been among the most attractive investment options for foreign nationals for its diverse characteristics. It is a huge market for a diverse range of products/services or other innovations due to its dense population following different religious practices. Along with earlier mentioned core characteristics, another important resource, manpower here has become more skilled thanks to the Indian Government’s Skill India Program in which various training programs are being conducted to cater to the skilled workforce requirement of various sectors growing locally in India.
Such initiatives & significant economic growth in recent times are attracting more foreign nations as well as corporations. Among various routes to enter the Indian business landscape, LLP Incorporation with FDI is one of the most feasible ones.
The Indian Government is making all possible efforts to ease Foreign Investment in Indian businesses. In the same phase, it has now permitted 100% Foreign Direct Investment (FDI) in Limited Liability Partnership (LLP) under the automatic route. Uncover the different dimensions of LLP Registrations for NRIs and Foreign Nationals in this written piece.
What is LLP?
An LLP is one of its kind of hybrid business structure in India that was introduced through the Limited Liability Partnership Act, 2008. Within a short time, after its introduction, it became popular among small businesses due to its low registration cost and lesser compliance requirement as compared to a private limited company.
Since an LLP offers combined benefits of both; a private limited company and a partnership firm, it is a widely preferred option by non-resident Indians and Foreign Nationals too. LLP registration offers a business a distinct legal entity separate from its members/partners; thus it can own properties, come into legal contracts, sue, or can be sued in its own name. Moreover, it also provides protection to the personal assets of the partners against any sort of legal or financial liability associated with the LLP. Many more advantages are associated with an LLP formation. NRIs and Foreign Nationals/Corporations looking to target the Indian market widely prefer Limited Liability Partnerships.
Potential Options Available for NRIs & Foreign Nationals to Enter the Indian Market
Among several ways to enter the Indian Market, NRIs, and Foreign Nationals can opt for any of the below-described steps to enter the Indian market;
1. Company Incorporation
Incorporation of private limited companies or investing in a company is one of the most effective strategies for the NRIs and Foreign Nationals to enter the Indian market. Private limited companies have been highly popular among Foreign Nationals as this business structure allows 100% FDI under the automatic route in India.
2. Opening branch office
Opening a branch office in India requires undergoing certain formalities mainly seeking approval from RBI which makes it a cumbersome process in comparison to the incorporation of a private limited company. Additionally, only well-established businesses that have maintained their good track of record in terms of finance, are allowed to open a branch office in India. Therefore, it has not been among the highly preferred ways for the NRIs and Foreign Nationals to make their India entry.
3. LLP Registration
Earlier, before November 2015, investment in LLP by NRIs or Foreign Nationals required approval from the government. Due to this, LLP registration used to be a challenging, intimidating, and thus, an expensive process.
Due to this, most NRIs/Foreign nationals used to prefer company registration over LLP Registration by NRIs and Foreign Nationals. However, the relaxation given in FDI norms in November 2015, made the LLP Registration for NRIs and Foreign Nationals an easier, hassle-free, and pocket-friendly way to invest in the Indian market. In simple words, relaxation in the limit of FDI in LLP has indeed made it the first choice among NRIs and Foreign Nationals to invest in the industries active in India.
Advantages of LLP Registration Procedure for NRI & Foreign Nationals/Businesses
There are various advantages of the LLP Registration Procedure for NRIs and Foreign Nationals in India. Some key advantages are described below;
- Limited Liability: Partners in an LLP do not have any personal accountability for the debts and other financial liabilities of the company. In simple words, this characteristic of an LLP safeguards the personal assets of the partners.
- No Minimum Capital: LLPs are free from the minimum capital requirement, which allows NRIs and other Foreign Nationals to simply start a business in India in the absence of any sort of financial restrictions.
- Flexible Management: This form of business structure offers flexibility, allowing partners to run the company as per their ideology without interference from any outside party(s).
- Compliance Ease: LLPs need to follow relatively fewer compliance obligations as compared to other business structures, thus making it easier to run and manage this form of business structure.
- Tax Exemption: Since LLPs are deemed as partnership firms, they are exempted from corporate income tax. However, the partners are each subject to individual taxes.
Minimum Requirements for LLP Registration of NRIs and Foreign Nationals
Certain minimum requirements also need to be taken care of while opting for LLP Registration by an NRI. Those minimum requirements’ list are written down;
- Minimum 2 partners
- Minimum 2 Designated Directors (at least one of them should be an Indian Resident.)
- A Registered Office in India
- Identity Proof, Address Proof & Other documents of NRIs/Foreign Nationals looking to register LLP
- Attestation of All Required Documents that need to be submitted during Registration Process
- Some additional requirements include a Valid Mobile Number & Email ID, Passport-sized Photograph, Digital Signature and self-attested copies of Passport and Address Proof
If an NRI or Foreign Entity possesses these requisite documents, they can proceed further in the process of LLP Registration for NRIs and Foreign Nationals in India.
Documents Required for LLP Registration for NRIs & Foreign Nationals
Certain documents’ requirements need to be fulfilled to register an LLP for NRIs and Foreign Nationals successfully. The following documents are required for LLP Registration in India;
- Valid Proof of Identity i.e. Passport for each partner of the LLP
- Valid Address Proof including any Utility Bills or a Rental Agreement for each partner
- Valid Address Proof of the LLP’s Registered Office Address
- NOC from the Registered Office Premises Owner
- PAN Card of each Partner
- LLP Agreement
- Consent of Partners confirming their willingness to participate in LLP & adhering to LLP Agreement’s Terms & Conditions
Checking availability of these listed documents before going for LLP Registration ensures smooth and timely completion of LLP Registration for NRIs and Foreign Entities.
LLP Registration Procedure for Foreign Nationals & NRIs
The LLP Registration procedure for foreign nationals/businesses or NRIs involves following the below listed steps. Those steps go as;
1. Digital Signature Certificate (DSC)
The first step in the procedure of LLP Registration for NRIs & Foreign Nationals is to obtain a digital signature certificate for the proposed partners of the LLP. In order to obtain a DSC, the NRIs/Foreign Nationals are required to submit the signed DSC application with a notarized copy of their Passport and Address Proof including a Driver’s License (DL), Resident Card, and more.
2. Designated Partner Identification Number (DPIN)
The partners in LLP must have DPIN. It can be used with the Director Identification Number which is used in the incorporation of a company.
3. Name Approval
If two DPINs are available, an application for reservation of the name of the LLP can be made to the Ministry of Corporate Affairs (MCA). Six names can be proposed in the application as per the LLP Act, 2008.
The proposed name (s)must adhere to the predefined guidelines and must not be similar to any existing company/LLP name. Upon getting acceptance of any name, the incorporation application can be filed within 60 days.
4. Incorporation of LLP
After obtaining approval for the chosen LLP Name from the Government of India, an application for LLP Registration for NRIs and Foreign Nationals is required to be submitted to the MCA. The application for LLP Registration must also contain the requisite documents supporting the application. After thorough scrutiny of the application on different parameters, the Ministry issues a certificate of incorporation if it finds the information and documents submitted are valid and legitimate.
5. Filing of LLP Agreement
After obtaining the certificate of LLP Registration for NRIs and Foreign Nationals, the next step is to execute and file an LLP agreement with MCA within 30 days of receiving the certificate of incorporation.
Conclusion
Among several options available for NRIs and Foreign Nationals to enter the Indian market, LLP Registration for NRIs and Foreign Nationals is the most preferred way. After the relaxation in the limit of FDI in LLP in November 2015, the LLP Registration Procedure for NRIs and Foreign Nationals has become an easier, less-complicated, and cost-effective process. Due to such features, more and more NRIs and Foreign Nationals are making their way to the Indian market to reap the benefits of this emerging market.
Seeking professional assistance is always advisable to get LLP Registration for NRIs and Foreign Nationals done efficiently.
