As per the provision of FEMA, any individual none resident people, or corporation registered outside India can invest in India by way of acquisition transfer of profit shares in the capital structure of an LLP under FDI. However, there is some person who cannot make an investment or cannot contribute foreign capital in the Indian Economy those are:-
- Foreign Portfolio Investor
- Foreign Institutional Investor
- Foreign Venture Capital Investor registered in accordance with SEBI guideline
Apart from this a person or entity of other than a citizen of Pakistan or Bangladesh also barred under FDI.
An investment made under Foreign Direct Investment (FDI) in the capital or profit of limited liability partnership (LLP) is called FDI-LLP. You can make a foreign direct investment in LLP who is registered as on the date of investment as per provision and proves mentioned under the LLP Act, 2008.
Eligible Investor under the FDI-LLP:-
- A Non-Resident individual person
- A foreign registered company
These are two types of investor who can contribute foreign capital in LLP-FDI
Contribution can be made by these two types of investor by way of
- Capital contribution
- Acquisition / Transfer of profit shares in LLP
The only contribution to the capital of limited liability partnership is an eligible investment under the LLP-FDI. And investment in profit of LLP is reinvestment not investment.
To Receive Foreign Direct Investment LLP should meet the following criteria:-
- limited liability partnership should be in the business operation where 100 % foreign direct investment is allowed under the automatic route and there must not be any kind of FDI linked performance conditions.
- If Company or limited liability partnership has already received foreign direct investment and wishes to make the investment in the limited liability partnership can do so if the LLP receiving FDI operating in sectors/activities where 100% foreign direct investment via automatic route.
- foreign direct investment in LLP as per the provision of the LLP Act, 2008.
- The company who have received FDI and converted under the limited liability partnership are eligible to take foreign direct investment if he fulfills the condition mentioned on point no 1
- FDI should be as per the pricing guideline under the FEMA Act.