Investment in proprietary concern/ Partnership firm/ LLP

To increase the funding of firm/ proprietary concern in India, RBI has liberalized the regulation for investment in capital of firm/ proprietary concern by person resident outside India.

 

The regulation also gives permission to a firm or a proprietary concern to make payment to a NRI or a PIO who has made investment.

 

Further, a firm or a proprietary concern in India may make payment to or for the credit of a NRI or a PIO the sum invested by such person in that firm or the proprietary concern or the income accruing to such person by way of profit on such investment.

Frequently asked questions

Can an NRI make Investment in Partnership Firm/ Proprietary Concern in India?


A NRI / PIO resident outside India can contribute to the capital of a firm or a proprietary concern in India on non-repatriation basis subject to certain restrictions. The amount is invested by inward remittance or out of an a/c maintained with an AD Bank by NRI/ PIO in accordance with the relevant Regulations.




Are there any restrictions on such investments?


A NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any agricultural/plantation activity or real estate business or engaged in Print Media.




Can a NRI invest in a LLP in India?


Yes, NRI is permitted to make FDI in an Indian LLP subject to certain conditions as prescribed by FDI policy.




Who can form a LLP in India?


A person resident outside India or an entity incorporated outside India shall be eligible investor for the purpose of FDI in LLPs. However, the following persons shall not be eligible to invest in LLPs:

  • A citizen/ entity of Pakistan and Bangladesh or
  • FII or
  • FVCI or
  • QFI or
  • RFPI




What are the eligibility criteria of LLP for accepting foreign investment?


FDI is permitted under the automatic route in LLPs operating in sectors/ activities where 100% FDI is allowed, through the automatic route and there are no FDI linked performance conditions. FDI in LLP is subject to the compliance of LLP Act, 2008 Downstream investments by an Indian Company or LLP having foreign investment will be permitted to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under automatic route and there are no FDI- linked performance conditions. Onus shall be on the Indian Company/ LLP accepting downstream investment to ensure compliance with the above conditions.




Can a non-resident other than NRI / PIO make investments in Partnership Firm/ Proprietary Concern in India?


A person resident outside India other than NRIs/ PIO may make an application and seek prior approval of RBI for making investment in partnership firm/ proprietary concern in India. The application will be decided in consultation with the Government of India.




Can NRI / PIO repatriate outside India the investment made in partnership firm/ proprietary concern?


NRIs / PIO may seek prior permission of RBI for investment in sole proprietorship concerns / partnership firms with repatriation benefits.




Can a firm or a proprietary concern make payment to a NRI or a PIO who has made investment?


A firm or proprietary concern in India may make payment to or for the credit of a NRI or PIO the sum invested by such person in that firm or the proprietary concern or the income accruing to such person by way of profit on such investment.





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