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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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..... side 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. Eligibility of a LLP FDI in LLPs is permitted, subject to the fol .....

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..... ed 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 towards capital contribution in LLPs shall be made: (i) by way of inward remittance through banking channels; or (i .....

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..... 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 under the provisions of the companies Act, as applicable to ensure compliance with downstream requirement as stated above. (b) A LLP with FDI under this scheme will not be eligible to make any downstream investments in any entity in India. 5. Substituted vide Not. 385/2017-RB - Dated 3-3-2017, before it was read as, 1 [SCHEDULE 9 [See Regulation 5(9)] Scheme for Acquisition/Transfer by a person resident outside India of capital contribution or profit share of Limi .....

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..... ance Companies' or 'Development of Townships, Housing, Built-up infrastructure and Construction-development projects', etc.); or (b) Sectors eligible to accept less than 100% FDI under automatic route; or (c) Sectors eligible to accept FDI under Government Approval route; or (d) Agricultural/plantation activity and print media; or (e) Sectors ineligible to accept FDI i.e. any sector which is prohibited under extant FDI policy (Annex A to Schedule 1 to Notification No. FEMA 20/2000-RB dated 3rd May 2000) as well as sectors/activities prohibited in terms of Regulation 4(b) to Notification No. FEMA 1/2000-RB dated 3rd May, 2000 as amended from time to time. 3. Eligible investment Contribution to the capital of an LLP would be an el .....

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..... m 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. 6. Mode of payment for an eligible investor Payment by an eligible investor towards capital contribution of LLPs will be allowed only by way of cash consideration to be received- (i) by way of inward remittance through normal banking channels; or (ii) by debit to NRE/FCNR(B) account of the person concerned, maintained with an AD Category - I bank. 7. .....

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..... d Assets as specified by the Reserve Bank from time to time] 4 [8. ***] 9. Other Conditions (i) In case an LLP with FDI has a body corporate as a designated partner or nominates an individual to act as a designated partner in accordance with the provisions of Section 7 of the Limited Liability Partnership Act, 2008 , such a body corporate should only be a company registered in India under the provisions of the Companies Act, as applicable and not any other body, such as an LLP or a Trust. For such LLPs, the designated partner resident in India , as defined under the 'Explanation' to Section 7(1) of the Limited Liability Partnership Act, 2008, would also have to satisfy the definition of person resident in India , as prescribed under .....

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