PRICING AND REPORTING OF FDI IN LLPs
- FDI (Foreign direct investment) in an LLP (Limited liability partnerships) can be either by way of capital contribution or by way of acquisition/transfer of ‘profit shares’, would have to be more than or equal to the fair price as worked out with any valuation norm which is internationally accepted/ adopted as per market practice
- a valuation certificate to that effect shall be issued by a Chartered Accountant or by a practising 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 a 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.
- LLPs shall report to the Regional Office concerned of the Reserve Bank, the details of the receipt of the amount of consideration for capital contribution and profit shares in Form FOREIGN DIRECT INVESTMENT-LLP(I not later than 30 days from the date of receipt of the amount of consideration. The report would be acknowledged by the Regional Office concerned, which would allot a Unique Identification Number (UIN) for the amount reported.
- The AD Category – I bank in India, receiving the remittance should obtain a KYC report in respect of the foreign investor from the overseas bank remitting the amount.
- Disinvestment/transfer of capital contribution or profit share between a resident and a non-resident (or vice versa) shall require being reported within 60 days from the date of receipt of funds in form FOREIGN DIRECT INVESTMENT-LLP(II).