LLP registration in India by an NRI

Earlier, NRIs and Foreign Nationals looking to start a business in India did it through the automatic route of 100% foreign direct investment (FDI) in a private limited company. Subsequently, the Indian government permitted a 100% FDI in a Limited Liability Partnership (LLP) via the automatic route. This made it easier for NRIs and foreign nationals to invest in Indian businesses. Today, we will look at the process of LLP registration in India for NRIs and foreign nationals.

Before November 2015, an NRI or a foreign national needed to seek approval from the Indian government to invest in an LLP in India. Hence, the process was long and expensive. This was another reason behind the preference of a private limited company for FDIs. However, with the relaxation of the rules in November 2015, LLPs became the ideal option for FDIs in India. Today, the government permits a 100% FDI in an LLP in India via the automatic route. While the government has restricted the sectors for these investments, there are no other deterring factors.

Minimum Requirements for LLP registration by an NRI:

• Shareholders: Minimum 2 shareholders are required for the incorporation of LLP.
• Designated Partners: Minimum 2 designated Partners are needed of them at least 1 should be a Indian resident.
• An office address in India.
• In order to register a Limited Liability Partnership (LLP) by an NRI, the identity proof, address proof as well as documents regarding Indian origin are required.
• Each one of these documents is required to be attested through the Indian embassy or notary public.

PROCESS FOR LLP REGISTRATION IN INDIA FOR NRIS AND FOREIGN NATIONALS

In India, you need at least two people to register an LLP. One of them should be an Indian citizen and resident in India. 

Here are the steps for LLP registration in India for NRIs and foreign nationals:

Obtain Digital Signature Certificate (DSC)

All proposed designated partners of the LLP must have a DSC. NRIs and foreign nationals need to attach a notarized or apostilled copy of their Passport and proof of address along with the DSC application.

Apply for a Designated Partner Identification Number (DPIN)

All designated partners in an LLP need a DPIN. Thay can apply for the DPIN together with the application for incorporation of the LLP  in form Fillip.

Seek approval for the name of the LLP

You must apply for reserving the name of the LLP. You must make this application to the Ministry of Corporate Affairs (MCA) in form RUN-LLP. Also, you can apply for up to four names as per your preference. (two names each attempt). The proposed names must follow the guidelines as per the LLP Act, 2008. Further, you must ensure that the name is unique and not similar to any other LLP name by making a check on the MCA website.

Incorporate the LLP

Once you receive approval for a name, you must submit the application for incorporation of the LLP within 3 months. You will have to submit the required documents ie. Subscribers’ sheet along with the consent of the partners, NOC and proof of Registered Office and details of interest of designated partners in other entities in form Fillip.  Once the application is approved, the MCA provides a certificate of incorporation and you can commence business.

File the LLP Agreement

Within 30 days of incorporation of the LLP, you must ensure that all partners sign the LLP agreement and file it with the MCA. Unless you file the LLP agreement, the incorporation process is incomplete. Also, failure to comply results in heavy fines.

PRIVATE LIMITED COMPANY REGISTRATION IN INDIA BY AN NRI

In case of the ‘Non-resident Indian’ (NRI), and Overseas Citizens of India (OCI), the Private Limited Company registration in India could be considered as the ideal kind of business that could be registered in India.

Reasons for choosing Private Limited Company registration in India by an NRI or OCI

• A Private limited company can be started with as less as two shareholders.
• Private limited companies are seen as particularly ideal for non-Resident Indians due to the nature of its legal and capital requirements.
• Compliance of a private limited company is much simpler compared to that of a Public limited company.
• There is no requirement of prior approval from the Government or the Reserve Bank of India for directing foreign investments into a private limited company.

Pre requisites for Private Limited Company registration in India

• 2 directors
• 2 shareholders
• An office address in India. (one of the directors must be an Indian Resident)
• For becoming a director of an Indian Company one should obtain Directors Identification Number (DIN) and Digital Signature Certificate (DSC).  Most of the forms filed with the Registrar of Companies (ROC) must be signed with the DSC.
• In order to register a Private Limited Company or Public Limited Company by an NRI, the identity proof, address proof as well as documents regarding Indian origin are required. Every one of these documents is required to be attested through the Indian embassy or notary public.

FEMA Regulations for NRI and OCI for Company registration in India

• To ease investment in India, the government permitted NRIs as accepted entities for investment as per the Regulations notified under Foreign Exchange Management Act, 1999.
• NRIs as per current FDI/FEMA legislation in India includes persons who are resident outside India but are citizens of India or are persons of Indian origin.
• NRIs can invest in India either by purchasing shares of an Indian company or investing in the capital of any existing entity or by registering a new business in the country.
• The FEMA regulations for NRIs an OCI wanting to invest and register a company in India are described in Schedule 4 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.

SCHEDULE 4 OF FOREIGN EXCHANGE MANAGEMENT (TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) REGULATIONS, 2017 IN DETAILS BELOW:

Schedule 4

[See Regulation 5(4)]

Investment on non-repatriation basis

A. Purchase or Sale of Capital Instruments or convertible notes of an Indian company or Units or contribution to the capital of an LLP by Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on Non-Repatriation basis 

1. Purchase/ sale of capital instruments or convertible notes or units or contribution to the capital of an LLP 

(1) A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI), including a company, a trust and a partnership firm incorporated outside India and owned and controlled by NRIs or OCIs, may purchase/ contribute, as the case may be, on non-repatriation basis the following: 

• Any capital instrument issued by a company without any limit either on the stock exchange or outside it. 
• Units issued by an investment vehicle without any limit, either on the stock exchange or outside it. 
• The capital of a Limited Liability Partnership without any limit. 
• Convertible notes issued by a startup company in accordance with these Regulations. 

(2) The investment detailed at sub-para 1 above will be deemed to be domestic investment at par with the investment made by residents 

2. Prohibition on purchase of capital instruments of certain companies. 

Notwithstanding anything contained in paragraph 1, an NRI or an OCI including a company, a trust and a partnership firm incorporated outside India and owned and controlled by NRIs or OCIs, shall not make any investment, under this Schedule, in capital instruments or units of a Nidhi company or a company engaged in agricultural/ plantation activities or real estate business or construction of farm houses or dealing in Transfer of Development Rights. 

Explanation: Real estate business will have the same meaning as laid down in regulation.

3. Mode of Payment 

The amount of consideration shall be paid as inward remittance from abroad through banking channels or out of funds held in NRE/ FCNR(B)/ NRO account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. 

4. Sale/ maturity proceeds.

1. The sale/ maturity proceeds (net of applicable taxes) of capital instruments purchased or disinvestment proceeds of a LLP shall be credited only to the NRO account of the investor, irrespective of the type of account from which the consideration was paid; 

2. The amount invested in capital instruments of an Indian company or the consideration for contribution to the capital of a LLP and the capital appreciation thereon shall not be allowed to be repatriated abroad.

B. Investment in a firm or a proprietary concern 

1. Contribution to capital of a firm or a proprietary concern

 An NRI or an OCI may invest, on a non-repatriation basis, by way of contribution to the capital of a firm or a proprietary concern in India provided such firm or proprietary concern is not engaged in any agricultural/ plantation activity or print media or real estate business. Explanation: Real estate business will have the same meaning as laid down in regulation 16. 

2. Mode of payment 

The amount of consideration shall be paid as inward remittance from abroad through banking channels or out of funds held in NRE/ FCNR(B)/ NRO account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. 

3. Sale/ maturity proceeds 

1. The disinvestment proceeds shall be credited only to the NRO account of the person concerned, irrespective of the type of account from which the consideration was paid; 

2. The amount invested for contribution to the capital of a firm or a proprietary concern and the capital appreciation thereon shall not be allowed to be repatriated abroad.

Process of Company registration in India by an NRI or OCI

Registration of a Private Limited company in India is complete an online process. Recently the MCA has replaced the earlier SPICe form with a new web form called SPICe+ (SPICe Plus). Hence, Incorporating a Private Limited Company is even easier now.

Now you can Incorporate a Private Limited Company, with a Single application for Name reservation, Incorporation, DIN allotment, Mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra), and Opening of Bank Account.

SPICe+ is divided in two parts

1. Part A: Apply for the name reservation of the company in Part A of the form Spice+. it can be used for taking the name approval of the proposed Company and also for filing Company registration in one go.

2. Part B: In Part B of the Form Spice+, apply for the following services.

• Incorporation
• DIN allotment
• Mandatory issue of PAN
• Mandatory issue of TAN
• Mandatory issue of EPFO registration
• Mandatory issue of ESIC registration
• Mandatory issue of Profession Tax registration(Maharashtra)
• Mandatory Opening of Bank Account for the Company and
• Allotment of GSTIN (if so applied for)

You may either choose to submit Part-A to reserve a name first and then submit Part B for incorporation & other services or you can File Part A and B together at one go for incorporating a new company 

Documents required for Company registration in India by Non Resident Indians (NRI)

Nationality	NRI	OCI
Proof of Nationality	PAN Card	PAN CardPAN Card Undertaking
Identity Proof	Passport	Passport
Residence Proof	Electricity BillBank StatementDriving License	Electricity BillBank StatementDriving License
Registered office Proof	Electricity billGas BillWater BillPostpaid Telephone or Mobile BillNOC from the owner of the premise	Electricity billGas BillWater BillPostpaid Telephone or Mobile BillNOC from the owner of the premise
In Case of Signing from India	–	Business Visa or OCI Card
In Case of Signing from outside India	All the documents need to be apostilled and notarized including MOA, AOA, Director’s Identity and Address Proof, PAN Undertaking from Appropriate Authority.	All the documents need to be apostilled and notarized including MOA, AOA, Director’s Identity and Address Proof, PAN Undertaking from Appropriate Authority.