Are fema compliances necessary for funds received in llp by promoter

1. NRI or OCI can contribute to the capital of an LLP on non-repatriation basis. The contribution has to be made by way of inward remittance from abroad through banking channels or out of funds held in NRE/ FCNR(B)/ NRO A/c maintained in accordance with FEMA regulations.

2. Where can you invest? NRIs are permitted an unlimited amount of investment options through repatriable and non- repatriable transactions. As per FEMA (NDI) Rules, 2019, “FDI” or “Foreign Direct Investment” means investment through equity instruments by a person resident outside India in an unlisted Indian company; or in 10% or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company. Hence, investment in equity instruments only amounts to FDI.

3. FDI in an LLP is only permitted through the automatic route. the government brought out a change to allow foreign direct investment in a partnership. Before this move, the RBI permitted FDI only for companies and capitalists. A relaxation was brought out to allow Foreign Direct Investment in an LLP. . 

LLP engaged in certain sectors/activities shall not be eligible to accept FDI.