An LLP mitigates the risks that could have arisen due to the inability of the NRI partner to monitor day to day affairs of the firm
Article Source: LegalDesk.com
A Non-Resident Indian (NRI), as the term denotes, is an Indian citizen who left India for education or employment. In other words, an NRI is an expatriate Indian, living in a foreign country. The Income Tax Act defines an NRI as a person who does not reside in India for (1) 182 days in the year preceding the assessment year and (2) 365 days in total in four years preceding the assessment year. The income earned or accrued by non-residents are not taxable in India.
NRIs bring into India valuable foreign exchange and investments. States like Kerala enjoy high human development Index due to high volume of remittances made by NRIs based in the middle east. NRIs enjoy high levels of income and savings. This is mostly translated into investments in the form of real estate, gold, among others. There is also a trend of investments being made by NRIs in businesses. The popular choices being Limited Liability Partnerships (LLPs) and Private Limited Companies.
The government of India has identified the potential of NRI investments and has made the procedures simpler in order to promote the growth of manufacturing and service industries in India. The licensing and paperwork have been converted into online format to a great extent, allowing for NRIs to complete many procedures from abroad.
Limited Liability Partnership
A limited liability partnership is a type of business carried out by a group of partners with limited liability. It is different from traditional partnership firms which provide for unlimited liability to partners. The concept of limited liability is similar to that of a company where shareholders’ liability is limited to the extent of investments made. In India, LLPs are formed under the Limited Liabilities Partnership Act, 2008. An LLP is an ideal form of business to be started by NRIs since there is protection provided to partners from joint liability that may arise from unauthorised actions of partners. It thus mitigates the risks that could have arisen due to the inability of the NRI partner to monitor day to day affairs of the firm.
Many non-resident Indians (NRIs) using LLP route to send money out of India (in the countries where they are residing for business or commercial purposes).
The practice, however, has come under the scrutiny of some large domestic banks where NRIs keep non-resident ordinary (NRO) accounts, through which NRIs manage their deposits and receive dividend, rent and interest earned in India.
Starting an LLP by a Non Resident Indian (NRI)
A Limited Liability Partnership requires a minimum of two partners. At least two among the partners shall be identified as Designated Partners who would be responsible for legal compliances. The Limited Liability Partnership Act stipulates that at least one of the Designated Partners should be a resident in India.
DPIN
The primary step in registering an LLP is the procurement of the unique DPIN or Designated Partner Identification Number. A Non Resident Indian may apply for DPIN by submitting a copy of Passport for proof of identity, and address proof at the LLP portal of the Ministry of Corporate Affairs.
The documents shall be notarised by the appropriate Consular officer at the Indian Consulate, Embassy, or High Commission as applicable in the country of residence.
Digital Signature Certificate
The next step would be to Apply for Digital Signature Certificate. Partners of the proposed LLP, whose signatures shall be affixed on the e-forms need to obtain class 2 or class 3 Digital Signature Certificate (DSC) from any authorized certifying agency mentioned on the homepage of the LLP portal under the tab “Certifying Authorities”.
Reservation of Name
The application for name of the proposed LLP is made by filling up form-1 at the LLP portal of the Ministry of Corporate Affairs. Up to 6 names can be proposed for approval. The fees for the same may be paid online. The digital signature needs to be affixed to this document.
Incorporation
Once the name is reserved, Form-2 may be filled, which is called Incorporation Document and Statement. The prescribed fees may be paid online. Digital signature of the partners along with the attorney/Chartered Accountant/ Cost Accountant in practice and engaged in formation of LLP needs to be affixed. The registrar may issue the Certificate of incorporation (Form 16) within 14 days of filing of Form 2.
Partnership Agreement And Notice
Along with Form-2, the LLP agreement drafted between the partners may be submitted under Form-3 and the notice for appointment partners under Form-4 may be made.
The status of approval of the forms may be tracked under the portal of the Ministry of Corporate Affairs by logging in.
Article Source: LegalDesk.com
