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Limited Liability Partnership (LLP) In India

LLP in India | Forming a Limited Liability Partnership in India | Establishing LLP in India | How to Form Limited Liability Partnership | How to Open LLP in India | Opening
Limited Liability Partnership in India | How to form LLP in India | Type of Companies in India | Corporate Laws of India | Forming Branch in India
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Opening a Limited Liability Partnership in India (LLP)

LLP in India for Foreign Investors Doing Business in India

Foreign Investors Establishing Branch in India

Foreign investors planning to open an LLP in India are required to seek governmental approval before investing in India. Some approvals are automatic, - RBI Approvals - though application is required for those approvals. Special Permission - FIPB Approvals - could be obtained to invest over and above the regular percentage allowed. See our FDI in India Sector wise Guide for more information on various conditions of investing in India. Also see Withholding Tax Rates For Foreign Companies Doing Business In India Under The Tax Treaties &  the Joint Ventures in India

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Limited Liability Partnership (LLP)

A law to allow "Limited Liability Partnership" (LLP) in India has been enacted by the Parliament of India recently. (Limited Liability Partnership (LLP) Act of 2008).

LLP is an alternative corporate business entity that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually-arrived agreement, as is the case in a partnership firm.

This format would be quite useful for small and medium enterprises in general and for the enterprises in services sector in particular, including professionals and knowledge based enterprises.

As proposed in the Bill, LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP.

Further, no partner would be liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partnerís wrongful business decisions or misconduct.

The salient features of the LLP Act of 2008 are as follows:-

(i) The LLP will be an alternative corporate business vehicle that would give the benefits of limited liability but would allow its members the flexibility of organizing their internal structure as a partnership based on an agreement.

(ii) The proposed Bill does not restrict the benefit of LLP structure to certain classes of professionals only and would be available for use by any enterprise which fulfills the requirements of the Act.

(iii) While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or un-authorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partnerís wrongful business decisions or misconduct.

(iv) LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike a ordinary partnership firm where the maximum number of partners can not exceed 20.

(iv) An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of affairs. Since tax matters of all entities in India are addressed in the Income Tax Act, 1961, the taxation of LLPs shall be addressed in that Act.

(v) Provisions have been made in the Bill for corporate actions like mergers, amalgamations etc.

(vii) While enabling provisions in respect of winding up and dissolutions of LLPs have been made in the Bill, detailed provisions in this regard would be provided by way of rules under the Act.
 

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IT  is mandatory for foreign investors to obtain governmental approval before opening a branch in India or forming a joint venture in India. In some sectors certain restrictions may apply.
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For a foreign Investor in India it is very important to choose a right kind of business or corporate entity which best suits its purposes and takes care of liability issues and tax planning issues. Foreign Companies planning to do business in India should pay special attention to Entry Strategies in India for Foreign Investors and corporate structuring to save taxes to the best extent allowed by laws and international tax treaties.

It is also mandatory for foreign investors or foreign shareholders, both individuals and corporate shareholders, to seek Government Approvals for Investing in India  In some special cases Foreign Investment Promotion Board, FIPB Approval for Foreign Investment in India is required. In other cases Reserve Bank of India, RBI Approvals for Foreign Investment in India is required. The sectors where RBI Approval for foreign investors is available under automatic route can be found at FDI in India Sector wise Guide.

There are various steps required to establish a business in India, before and after incorporation, as mentioned hereinafter. See also the Procedure for Formation of Company in India.

A Company in India can have foreign directors provided some conditions are fulfilled. The directors of an Indian company, both Indian and foreigner directors, are required to obtain Director Identification Number - DIN and Digital Signature Certificate - DSC

Also see Annual Corporate Filings in India for corporate maintenance requirements in  India.

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See also Doing Business with India Free Guide | FDI in India Sector wise Guide | Formation of Subsidiary in India | Starting a Business in India | Opening Branch in India | Incorporating company in India | Procedure for Formation of Company in India | Government Approvals for Investing in India | Entry Strategies in India for Foreign Investors | FIPB Approval for Foreign Investment in India  |  RBI Approvals for FDI in India | FDI in Small Scale Sector in India Further Liberalized Tax Rates in India Withholding Tax Rates For Foreign Companies Doing Business In India Under The Tax Treaties | Annual Corporate Filings in India | Joint Ventures in India | Outsourcing to India | Legal Outsourcing

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Services Offered by Us

Madaan & Co. has helped foreign companies in setting up there operations in India and other countries. A careful tax planning is required before opening a subsidiary, branch, joint venture, project office or liaison office in India. We can help you in corporate planning, corporate structuring and setting up in India and other countries. We have also helped US law firms in handling their India related legal work. We can help your law firm or company in setting up in India and other countries. Click here to Contact us

 

Contact us for:

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Our lawyers include those admitted to bar in the United States of America and India. They have undertaken legal maters in the USA, India and Europe. They understand the multi-cultural  and the multi-jurisdictional aspects of international business in this age of globalization. They include those educated at Harvard Law School, Harvard University in the USA and premier universities in India. They believe in high moral and legal ethics.

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Madaan & Co.
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E-mail:  click here
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