FDI In LLP Firms Gets Cabinet Nod.

The Cabinet Committee on Economic Affairs ( CCEA) on Wednesday allowed foreign direct investment (FDI) in limited liability partnership (LLP) firms. A government statement said FDI in LLPs would be implemented in a calibrated manner, beginning with the 'open' sectors where monitoring is not required and would be subject to some conditions. TOI in its May 11 edition was the first to report that the government would allow FDI in LLPs.

LLP is a hybrid structure that combines the elements of a partnership firm and ensures that liability of partners is limited. This structure was put in place to encourage small business entities to undertake larger ventures as the liability of the partners is limited.

LLPs with FDI would be allowed , through the approval route, in sectors/activities where 100% FDI is allowed, through automatic route and there are no FDI-linked performance related conditions. The new rules say that LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business and they will not be eligible to make any downstream investments.

The government also set out conditions relating to funding, and ownership of LLPs. Foreign capital in the capital structure of LLPs would be allowed only by cash, received by inward remittance, through normal banking channels, or by debit to NRE/FCNR account.

Source : timesofindia.indiatimes.com