We all know that NRIs are Non- Residential Indians. Foreign Direct Investment (FDI) is at a peak since many Indian nationals move abroad, and at a later stage in life, invest in Indian companies. LLP Registration is one of the most preferable modes of business for foreign nationals and NRIs to invest in. The reason behind this being, the fact that LLPs are a hybrid form of business, a mix of the features of a partnership firm and private limited company. Through this blog, we will understand the process and benefits of LLP registration for NRIs and Foreign Nationals.
Benefits of LLP registration for NRIs and Foreigners
Limited Liability Protection
Limited Liability is one of the most important reasons why people opt for LLP registration. Especially considering non-residential Indians, it will be a lot easier for them to invest in a company from so far away, when they know that their liabilities are limited.
Ease in Management
There is no Board of Directors in a Limited Liability Partnership. As a result of this, there is an ease in the management. The partners get to manage their business without much of an outside influence.
Minimum Capital Requirement
The MCA does not provide for any minimum capital requirement limit for LLP registration. Hence, the capital can be as less as an amount required to start an operational business. This ensures that the partners’ money is also protected before the business starts.
The Ministry of Corporate Affairs has a set of post registration compliances for LLP and PLCs both. The compliances for LLP are way too easy and cost effective when compared to that of the PLCs. Hence, this time savvy option becomes the best option for foreign nationals.
Limited Liability Partnerships are exempted from the corporate taxes, since they are taxed as a partnership. Hence, only the income of partners of an LLP are chargeable on an individual basis. This again proves to be beneficial to NRIs who might not want to pay such high taxes.
According to the Foreign Exchange Management Act (FEMA), Foreign National individuals are allowed to make a foreign direct investment (FDI) in LLps registered in India. Moreover, they are even allowed to invest up to 100% of the entire Limited Liability partnership’s capital.
Registration Process on MCA
LLP registration in India can be done online, through the Ministry of Corporate Affairs portal. The following are the three mandatory steps involved in the LLP registration process:
Reserve a LLP Name
The first step when you want to register LLP in India is to choose a unique name. Having a unique name is important because then it ensures that your LLP name is not violating the rights of any other business owner and/or trademark owners. You get a chance to submit the form for reserving a name, with two options of unique names. If your application is rejected, you can re-submit it.
Submit Form FiLLIP
FiLLIP stands for the Form for incorporation of Limited Liability Partnership. To get LLP registration, you need to submit the necessary details of all Designated Partners, the business activity etc in this form and attach the documents such as Address Proof, Identification Proof, etc. The partners need to sign this FiLLIP with their Digital Signature Certificate (DSC). Documents such as subscribers’ sheets are also supposed to be filed along with the other documents.
Submit Limited Liability Partnership Deed
Once you receive the approval of the LLP incorporation from the Ministry of Corporate Affairs (MCA) you need to submit the registered LLP Deed or LLP Agreement as duly executed by all the designated partners. This deed is similar to the Partnership Agreement and has the profit sharing ratio, capital structure, roles and responsibilities of each partner. LLP Deeds are the most useful to avoid any future conflicts in the Limited Liability Partnership firm.
Other requirements for LLP registration
Designated Partners Identification Number
The DPIN/DIN is one of the most important pre-requisite of starting an LLP. Each person desirous of being a partner in LLP has to have a DIN/DPIN assigned. This is a unique number, one to each person who is either a Director in a PLC, or a partner in an LLP. The DPIN helps the MCA in staying updated with all Director’s in India.
Digital Signature Certificate
THe DSC of designated partners is mandatory to submit the documents on the MCA portal. Hence, it is mandatory for LLP registration.
PAN and TAN of the entity
The Limited liability partnership firm is a body corporate with a separate legal existence. Hence, it needs to maintain its own PAN and TAN for the purpose of conduction of business and taxes.
Open Bank Account
The bank account in the name of a business entity is its current account. LLPs need to have a current account in their own names to get easy access to financial records of the business. Further, it helps in not mixing up the transactions of business and transactions made in personal capacity.
To conclude, I will state that these reasons as given above are making LLP registration in India more and more preferable to the foreign nationals and Non-Residential Indians. The increase in Foreign Direct Investments is also helping the Indian Startup ecosystem reach amazing ew heights. You can take help from certified online service providers, who can help you with the LLP registration and compliances!.