Schedule 06 [See Regulation 5(6)] - Investment in a Limited Liability Partnership (LLP) - Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017

Schedule 6 [See Regulation 5(6)] Investment in a Limited Liability Partnership (LLP) 1. Investment in an LLP (1) A person resident outside India (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than an entity incorporated in Pakistan or Bangladesh), not being a Foreign Portfolio Investor (FPI) or a Foreign Venture Capital Investor (FVCI), may contribute to the capital of an LLP operating in sectors/ activities where foreign investment up to 100 percent is permitted under automatic route and there are no FDI linked performance conditions. (2) Investment by way of profit share will fall under the category of reinvestment of earnings (3) Investment in an LLP is subject to the compliance of the conditions of Limited Liability Partnership Act, 2008. (4) A company having foreign investment, engaged in a sector where foreign investment up to 100 percent is permitted under the automatic route and there are no FDI linked performance conditions, can be converted into an LLP under the automatic route. (5) An LLP having foreign investment, engaged in a sector where foreign investment up to 100 percent is permitted under the automatic route and there are no FDI linked performance conditions, may be converted into a company under the automatic route. (6) Investment in an LLP either by way of capital contribution or by way of acquisition/ transfer of profit shares, should not be less than the fair price worked out as per any valuation norm which is internationally accepted/ adopted as per market practice (hereinafter referred to as fair price of capital contribution/ profit share of an LLP ) and a valuation certificate to that effect shall be issued by the Chartered Accountant or by a practicing Cost Accountant or by an approved valuer from the panel maintained by the Central Government. (7) In case of transfer of capital contribution/ profit share from a person resident in India to a person resident outside India, the transfer shall be for a consideration not less than the fair price of capital contribution/ profit share of an LLP. Further, in case of transfer of capital contribution/ profit share from a person resident outside India to a person resident in India, the transfer shall be for a consideration which is not more than the fair price of the capital contribution/ profit share of an LLP. 2. Mode of payment Payment by an investor towards capital contribution of an LLP shall be made by way of an inward remittance through banking channels or out of funds held in NRE or FCNR(B) account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. 3. Remittance of disinvestment proceeds The disinvestment proceeds may be remitted outside India or may be credited to NRE or FCNR(B) account of the person concerned.