FOREIGN DIRECT INVESTMENT (FDI) IN LIMITED LIABILITY PARTNERSHIP (LLP)

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 16/04/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 123

LLP's can accept direct investment from foreign investors, subject to certain riders. Following persons shall not eligible to invest in LLPs:

1. a citizen/entity of Pakistan and Bangladesh or
2. a SEBI registered Foreign Institutional Investor (FII) or
3. a SEBI registered Foreign Venture Capital Investor (FVCI) or
4. a SEBI registered Qualified Foreign Investor (QFI) or
5. a Foreign Portfolio Investor registered in accordance with Securities and Exchange Board of India(Foreign Portfolio Investors) Regulations, 2014 (RFPI).

ELIGIBILITY OF LLP FOR ACCEPTING FOREIGN INVESTMENT

LLPs in all sectors where 100% FDI is permitted would be eligible to get FDI. However such investments would need prior government approval. 

PRICING

Any transfer of capital contribution / profit share from a resident to a non-resident would be for a consideration equal to or more than the fair price of the capital contribution or the profit share of the partnership.

Further, any transfer of capital contribution/profit share from a non-resident to a resident would be for a consideration which is less than or equal to the fair price of the capital contribution / profit share of the partnership.

REPORTING REQUIREMENTS

The LLP which have received foreign investment in terms of FIPB approval shall comply with the reporting requirement in respect of FDI within 30 or 60 days, as applicable from the date of receipt of the amount of consideration.

DOWNSTREAM INVESTMENTS

Further, an Indian Company with foreign investment can make a downstream investment in a LLP only if both the company and the partnership operate in the sectors where 100% FDI is allowed under the automatic route.

For detailed Circular, please find the link below:
A.P. (DIR Series) Circular No. 123