FDI permitted in LLPs under the automatic route

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The RBI has amended schedule 9 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, modifying paragraph 4 to permit foreign direct investment (FDI) in limited liability partnerships (LLPs), subject to the following conditions:

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  1. FDI is permitted under the automatic route in LLPs operating in sectors/activities where 100% FDI is allowed through the automatic route and there are no FDI-linked performance conditions.
  2. An Indian company or an LLP with foreign investment will be permitted to make a downstream investment in another company or LLP engaged in sectors in which 100% FDI is allowed under the automatic route and there are no FDI-linked performance conditions. The onus shall be on the Indian company/ LLP accepting the downstream investment to ensure compliance with the above conditions.
  3. FDI in an LLP is subject to compliance with the conditions of the LLP Act, 2008.

The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bangalore, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.

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