TaxTMI 
TaxTMI 
Scheme for Acquisition/Transfer by a person resident outside India of capital contribution or profit share of Limited Liability Partnerships (LLPs)
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....ligible Investors: A person resident outside India (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than an entity in Pakistan or Bangladesh), not being a Foreign Portfolio Investor or Foreign Institutional Investor or Foreign Venture Capital Investor registered in accordance with SEBI guidelines, may contribute foreign capital either by way of capital contribution or by way of acquisition / transfer of profit shares in the capital structure of an LLP. 2. Eligible investment Contribution to the capital of an LLP would be an eligible investment under the scheme. Note: Investment by way of 'profit share' will fall under the category of reinvestment of earnings 3. Elig....
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....bution / profit share of an LLP") and a valuation certificate to that effect shall be issued by the Chartered Accountant or by a practicing Cost Accountant or by an approved valuer from the panel maintained by the Central Government. In case of transfer of capital contribution / profit share from a resident to a non-resident, the transfer shall be for a consideration equal to or more than the fair price of capital contribution / profit share of an LLP. Further, in case of transfer of capital contribution / profit share from a non-resident to resident, the transfer shall be for a consideration which is less than or equal to the fair price of the capital contribution / profit share of an LLP. 5. Mode of payment Payment by an investor....
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....less of nature of 'ownership' or 'control' of an Indian Company) shall require Government/FIPB approval." 4. Omitted vide Notification No. 362/2016-RB - dated 15-02-2016, w.e.f. 15-02-2016, before it was read as, "8. Downstream investment (a) An Indian company, having foreign investment (direct or indirect, irrespective of percentage of such foreign investment) will be permitted to make downstream investment in an LLP only if both, the company as well as the LLP, are operating in sectors where 100% FDI is allowed under the automatic route and there are no FDI- linked performance related conditions. Onus shall be on the LLP accepting investment from Indian Company registered und....
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....f LLP for accepting foreign Investment (i) A LLP, existing or new, operating in sectors/activities where 100% FDI is allowed under the automatic route of FDI Scheme would be eligible to receive FDI. For ascertaining such sectors, reference shall be made to Annex B to Schedule 1 of Notification No. FEMA. 20/2000-RB dated 3rd May, 2000 as amended from time to time. (ii) A LLP engaged in following sectors/activities shall not be eligible to accept (FDI): (a) Sectors eligible to accept 100% FDI under automatic route but are subject to FDI-linked performance related conditions (for example minimum capitalisation norms applicable to 'Non-Banking Finance Companies' or 'Development of Townships, Housing, ....
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....Indian company/ LLP accepting downstream investment to ensure compliance with the above conditions. iii. FDI in LLP is subject to the compliance of the conditions of LLP Act, 2008.] 5. Pricing FDI in a LLP either by way of capital contribution or by way of acquisition/transfer of profit shares, would have to be more than or equal to the fair price as worked out with any valuation norm which is internationally accepted/adopted as per market practice (hereinafter referred to as "fair price of capital contribution/profit share of an LLP") and a valuation certificate to that effect shall be issued by the Chartered Accountant or by a practicing Cost Accountant or by an approved valuer from the panel maintained by the C....
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....t of consideration. The report would be acknowledged by the Regional Office concerned, which would allot a Unique Identification Number (UIN) for the amount reported. (ii) The AD Category - I bank in India, receiving the remittance should obtain a KYC report in respect of the foreign investor from the overseas bank remitting the amount. (iii) Disinvestment /transfer of capital contribution or profit share between a resident and a non-resident (or vice versa) shall required to be reported within 60 days from the date of receipt of funds in Form FOREIGN DIRECT INVESTMENT-LLP(II) as specified by Reserve Bank from time to time. ^2[(iv) All LLPs which have received Foreign Direct Investment in the previous year(s) incl....