New Delhi, Delhi -- (SBWIRE) -- 10/11/2010 -- It 's been more than 1 year since when the LLP Act 2008 was notified but still there is no policy for allowing foreign investment in such a flexible form of business , which offers tremendous operational advantages. Since the introduction of LLP, lot of non residents are looking to form LLP to carry on their business but in absence of the policy , they were left stranded.

Now, the Department of Industrial Policy & Promotion (DIPP) has issued the much awaited discussion paper on allowing Foreign Direct Investment (FDI) into LLP. After receiving comments on the said discussion paper , DIPP will proceed to issue the regulatory framework for allowing FDI in this newly introduced form of business. The discussion paper is open for public comments till 31st October 2010.

The discussion paper throws light on important aspect related to LLP like ownership, valuation, control, international scenario, downstream investment, comparison of LLP with other forms of business.

Some of the questions on which DIPP has asked for public comments are mentioned

a) Should FDI be permitted in LLPs at all?

b) Can it be argued that given its limited attractiveness for large investments, allowing FDI in LLPs will not significantly accelerate FDI into the country while disproportionately increasing the regulatory burden? Does the present uncertainty on how this business model will proceed, as well its yet unestablished case law, magnify these concerns?

c) Will treating LLPs akin to companies under FDI policy demand the stipulation of certain features of the LLP agreement? Should this include unambiguous specification of profit /loss sharing percentage; clear specification of the power to appoint Designated Partners; congruence of legal and economic ownership; timely notification of changes including conversion from and to companies/partnerships?

d) Should FDI policy treat LLPs akin to companies? In such a case, how should the issues relating to ownership, valuation, control, downstream investment and non-cash contributions, raised in Section 5 above, be addressed? Should this be only through the government route?

e) What additional regulatory safeguards are required to enfold LLPs into FDI policy? Are amendments to any existing regulations required? Should the responsibility for periodic monitoring of compliance with FDI stipulations be allotted to a particular agency?

To read the full discussion paper, check out http://www.llponline.in
.
You can also send your comments on aforesaid issues to info@llponline.in

About LLPonline.in
LLPonline.in is designed to facilitate and ease the process of forming the newly introduced form of business organization in India i.e. Limited Liability Partnership, by providing the required information and support. With our in-depth knowledge and innovative skills, we have developed customized solutions and products that best suits all your business set-up needs.

For further details please contact:
Mr. Ankit Singhi
Direct No : +91 11 40622208
Board No : +91 11 40622200
Email : ankit@indiacp.com

Ms. Shipra Wadhwa
Direct No : +91 11 40622248
Email : shipra@indiacp.com

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New Delhi, Delhi -- (SBWIRE) -- 10/11/2010 -- Department of Industrial Policy & Promotion (DIPP) has issued the much awaited discussion paper on allowing Foreign Direct Investment (FDI) into LLP. Currently there is no policy in respect of the FDI in LLP and this discussion paper will pave the way for regulatory framework for allowing FDI in this newly introduced form of business.
The discussion paper is open for public comments till 31st October 2010.

Under the discussion paper, DIPP have asked for the comments of public at large on the below given questions

a) Should FDI be permitted in LLPs at all? Can it be argued that given its limited attractiveness for large investments, allowing FDI in LLPs will not significantly accelerate FDI into the country while disproportionately increasing the regulatory burden? Does the present uncertainty on how this business model will proceed, as well its yet unestablished case law, magnify these concerns?

b) What should be the definition of 'person resident in India'? The definition provided in the LLP Act or the definition provided in FEMA?

c) Given the complexity of some of the issues raised in Section 5, would it be preferable to adopt a calibrated approach to the induction of FDI in LLPs? Initially, should FDI in LLPs be restricted to sectors without caps, conditionalities or entry route restrictions? Should FDI be allowed upto 100% in these sectors or should there necessarily be an Indian partner ? Should such approval be confined to the government route?

d) Should LLPs be mandated not to make downstream investments and should foreign owned or controlled Indian companies be barred from investing downstream in LLPs? Should investment by FII/FVCI or ECBs be prohibited for LLPs?

e) Following the Foreign Exchange Management ( Investment in Firm or Proprietary Concern in India ) Regulations 2000, should it be mandated that foreign participation in the capital structure of LLPs should be on a percentage basis, received only by way of cash consideration by inward remittances through normal banking channels, or by debit to the NRE/FCNR account of the person concerned maintained by an authorised dealer? Should it also be mandated that foreign investments in LLPs engaged in agricultural/plantation activity or real estate are prohibited?

e) Should FDI policy treat LLPs akin to companies? In such a case, how should the issues relating to ownership, valuation, control, downstream investment and non-cash contributions, raised in Section 5 above, be addressed? Should this be only through the government route?

f) Will treating LLPs akin to companies under FDI policy demand the stipulation of certain features of the LLP agreement? Should this include unambiguous specification of profit /loss sharing percentage; clear specification of the power to appoint Designated Partners; congruence of legal and economic ownership; timely notification of changes including conversion from and to companies/partnerships? Should it be mandated that LLPs cannot have corporate bodies other than companies registered under the companies Act as partners? Is inclusion and coverage of such issues in FDI policy warranted? Would the consequent increase in the regulatory burden be justifiable?

g) What additional regulatory safeguards are required to enfold LLPs into FDI policy? Are amendments to any existing regulations required? Should the responsibility for periodic monitoring of compliance with FDI stipulations be allotted to a particular agency?

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Corporate Professionals is a group best illustrated for providing widest spectrum of corporate services at one stop. They are recognized as a destination where all paths in hunt for corporate solutions end. The group has been involved in delivering services ranging in Corporate Restructuring, Corporate Compliance and Due Diligence, Investment Banking, FEMA Advisory, Corporate Taxation, Securities Laws Advisory etc.

For further details please contact:
Mr. Ankit Singhi
Direct No : +91 11 40622208
Board No : +91 11 40622200
Email : ankit@indiacp.com

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

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New Delhi, Delhi -- (SBWIRE) -- 11/12/2009 -- The government has decided to clarify the foreign investment rules under the new limited liability partnership (LLP) framework. An official confirmed to FE that the ministry of corporate affairs has urged the department of industrial policy & promotion to work out the necessary guidelines as foreign investors are asking for clarity. The haste follows clearance of the tax treatment for LLPs in Budget 2009-10.

"There is need for the government to introduce FDI norms for foreign investors who want to invest in LLPs. There are changes required in sector-specific norms. There is need for amendments to legislation covering professionals, like the Chartered Accountant Act, Company Secretary Act and Advocate Act, as they will need to recognise LLPs,"said Rajan Gupta, a partner with corporate law firm FoxMandal Little.

Recognising the potential of the framework, industry chamber Ficci has asked for LLP legislation to be aligned with other economic legislation, as well as for appropriate amendments to be made to FDI guidelines and the Foreign Exchange Management Act.

According to the ministry official, "Foreign investors want clarity on the FDI norms. They want to know how much foreign investment can be channeled into an LLP depending upon the different sectors." Since most of the seed capital for new ventures will come from abroad, the foreign investment guidelines are important, the official added.

The official said that LLPs would soon become an important route for many international investors in areas such as accounting, auditing and taxation services, and therefore are expected to attract large foreign investments to India. The LLP framework overcomes difficulties faced by global investors in building business relations and offers the advantage of limited liability wherein one partner will not be held accountable for the actions of another partner.

Experts are of the view that any changes will have to be made in sector-specific FDI norms. For instance, foreign firms cannot currently carry out audits in India. But a foreign investor would be able to invest in an LLP that provides auditing services provided the necessary changes are made to the Chartered Accountant Act.

The government, therefore, needs to specify the sectors where FDI would be allowed. At present, partnership firms are not allowed to carry out banking or insurance business, either. The government also needs to make clear what the FDI cap would be and how it would be computed.

There are at present 63 LLPs listed with the registrar of companies. However, with the new tax structure unveiled in the Budget and once FDI guidelines are announced, that number is expected to rise manifold

Company Secretaries allowed to form LLP
The Institue of Company Secretaries of India has allowed Company Secretaries in practice to become a partner of LLP , for the purpose of rendering non attestation services. To know check out , LLP by Professionals under quick links.

Different Tax regime for LLP in Budget
The Union minister of Corporate Affairs has indicated that he budget may announce a different tax regime for recently introduced new form of business structure i.e. Limited Liability Partnership. The budget may have tax provisions for new business entities registered as LLP but may skip them for companies & partnerships converted into LLP.

Conversion rules under LLP Rules 2009 made effective
The Minsitry of Corporate Affairs has notified the rules 32, 33 and 38 to 40 of LLP Rules 2009 relating to conversion of existing business into LLP w.e.f May 31, 2009 by its notification no SO 1324(E) dated May 22, 2009.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm