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
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For further details please contact:
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Ms. Shipra Wadhwa
Direct No : +91 11 40622248
Email : shipra@indiacp.com
Discussion Paper on FDI in Limited Liability Partnership (LLP)