Registration of (LLP) Limited Liability Partnership With Foreign Directors

Narendra Kumar

27 Jan, 2021

Due to increase in investment opportunities in India and been a developing country, people from both domestic as well as foreign countries are investing in Indian market like never before. People are getting huge return due to which newer business forms are popping up like registration of Limited Liability Partnership and One person company etc.

As foreign investment has also been increased in India and foreigners are investing  huge amount to start business in India so they want to have full control of that particular business.  But , government for governance purposes wants to make someone  liable for any violation while carrying on the business. So, in almost all business forms one person should be resident in India.

Let’s talk about the rules and regulation for registration of Limited Liability Partnership with foreign directors.

What do you mean by registration of Limited Liability Partnership (LLP)?

Limited Liability Partnership is governed by Limited Liability Partnership Act 2008 in India. Limited Liability Partnership or LLP is a newer  form of business model which has both the characteristics of partnership as well as Joint stock company.

In case of LLP all the members are called as  designated partners as provided in Section – 7 of LLP Act 2008 and LLP need to comply primarily with rules and regulation of Limited Liability Partnership Act 2008 , FEMA Act and Income tax act 1961.

Basic conditions for Registration of Limited Liability Partnership (LLP)

• What is the minimum and maximum number of designated partners which are required to incorporate an LLP?

The minimum number of LLP required to start an LLP is 2 and there is no upper limit for incorporating an LLP. However, at least one designated partner should be resident in India.

• Whether foreign company or LLP can reserve name of its main company (name of his foreign company or foreign LLP in foreign country) in India? 

A foreign company or foreign LLP can reserve its existing name (i.e original name as in the country of incorporation) provided it did’t resemble the name of already existing LLP or company in India.

• What are the basic cautions to be taken while choosing  a name ?

The name of the LLP should be unique and should comply with the LLP Name guidelines of MCA.

However, it should not be same , similar , identical to the existing company or LLP in India. It should not be similar to registered trademark. Also, it should not be offensive.

• Do foreign LLP need to have a place of business in India ?

Every foreign LLP need to have a place of business in India and file Form-27 (Registration of particulars by Foreign Limited Liability Partnership) from where it will carry out the business activities.

• What is the procedure for registration of LLP?

The concept of LLP came up in 2008 but registration of LLP with foreign director required to be approved from the government which was time consuming and lengthy process. But later on that condition was removed and 100% FDI was approved under automatic route of business where   100% FDI is allowed. This made incorporation of LLP with foreign partners quite easy.

Procedure for registration of Limited Liability Partnership (LLP)

Requirement of Digital Signature and Designated Partner Identification Number (DPIN)

Digital Signature Certificate is a tool to authenticate any online form or soft copy of document to give assent to it. Therefore , all the proposed designated partner need to obtain DPIN before applying for incorporation of LLP. DPIN can be obtained by applying to certifying agent who has necessary authority to issue DSC by paying necessary fees.

Every proposed designated partner also required to have an identification number issued by Ministry of Corporate Affairs of India. It is unique identification number obtain with the help of DSC giving a specific number to every proposed partner . It is necessary to have DPIN for incorporation of LLP.

However, there is no mandatory requirement to apply and obtain DPIN or DIN for Designated Partners of FLLP in case of foreign LLP but the DSC of the authorized representative is mandatory.

Name Approval

The designated partner after obtaining DSC and DPIN shall apply for name for the LLP. The name of LLP should be unique and should not resemble the name of already exiting LLP to avoid any confusion in the mind of general public and other authorities. Also , every LLP formed , the name of LLP should always end with suffix “LLP” .

Incorporation of LLP

After approval of name by government the next step to be taken by the designated partner is to prepare proper documentation for filing of     eForm –2  FiLLiP with MCA . After approval of form the LLP would be incorporated.

Following documents are required to be filed along with form FiLLiP:

1. Consent of partners
2. Address  proof of registered office of LLP
3. PAN card of designated partners
4. Utility bill of proposed registered office of LLP
5. NOC  from landlord
6. List of main object of an LLP
7.  NOC of foreign body corporate for usage of name (In case of foreign entities intending to incorporate LLPs in India)
8. Copy of Rental agreement
9. Details of LLP/company in which partner are members or directors in India or abroad.

LLP Agreement

After incorporation of LLP, the partners shall execute LLP agreement with the consent and keeping in mind the interest of all the designated partners and is to be filled with the ROC in e-form 3 within 30 days of incorporation of LLP.

What are the rules and regulation to keep in mind while incorporating a foreign LLP?

A foreign LLP need to follow following compliances while incorporating an Limited Liability Partnership:

1. A foreign LLP need to have more than two designated partners , moreover it is mandatory for all the foreign LLP to have atleast one resident designated partner in India.

•  100% FDI^[1] is permitted in case of foreign LLP therefore they are not required to take government permission. However , they can operate in sector/ businesses in which 100% FDI is approved.

Conclusion

With the measure taken by the Government and Government authorities it is clear that there intention is to boost the economy by making compliance’s and other rules and regulation easy for easier entry of the foreign investment. Along with that government also want to have some control those who are coming in India market. As they might exploits the resources of the country . Hence , necessary rule are made both in FEMA, Limited Liability Partnership Act 2008 as well as in Company Act 2013.

Read our article:Limited Liability Partnership Registration Procedure in India: A Complete Guide