Role of FDI in Limited Liability Partnerships in India
LLP is now legal in India under the Limited Liability Partnership Act, 2008. It is a corporate body that is separate from the partners involved in it. If you are planning to set up an LLP in India, then you will require registering the company under the Act with at least two members. A Limited Liability Partnership firm can have unlimited partners as there is no limit on the upper case. It has a separate legal entity with perpetual succession.
Notable features of an LLP
The liability of your firm and the partners involved in it will become unlimited in case the firm or any of the partners carry out any action with a purpose to defraud the creditors or any investor with a fraudulent intention. Thus, it is apt to say that LLP is a hybrid form of a business entity that has features of both the partnership firm and the Joint Stock Company.
Registration of LLP
If you want to incorporate an LLP in India, then you will have to apply to the prescribed forms with the Registrar of Firms. The application should include the following details-
- The name of the firm
- The principal place of business of the firm
- Names of the branches where you want to carry forward the business
- The kind of business the LLP will deal with
- Full names and permanent address proof of all the partners
- The date on which each partner joined the firm
- Duration of the partnership (optional)
When does the Registrar come into existence?
The stated-above application must be verified and signed by all the partners. You will then have to submit it to the Registrar of the area where you want to commence your principal LLP firm.All the active partners of the firm need to deposit a certain amount as the registration fee. The Registrar will then examine the documents and the application that you have provided before approving it.
If the Registrar is satisfied with all the legal formalities, then they shall make an entry in the register of firms. A statement from an advocate, a Company Secretary or a Chartered Accountant stating that all the rules have been duly adhered to should also be provided along with the application. If you want to make any changes in the information submitted during registration,you can talk to the Registrar and make the required alterations.
Importance of Foreign Direct Investment in LLPs It is fair to say that FDI plays a crucial role in the economic development of a country. FDI refers to direct investments by foreign companies or individuals for increasing production, strengthening infrastructure, and enhancing employment opportunities in the host country.Also, in India, FDI contributes to the advanced technology introduced and regulating foreign resources. The foreign exchange reserves in India allow the country to get involved in the international stock exchange. It also helps the country to stabilize the foreign exchange rates to a great transaction.
Contribution of LLPs in economic growth
Developing countries require substantial capital investments for industrialization. The different forms of companies also contribute to the economic growth of any developing country.However, some LLPs suffer from a shortage of capital due to the low rate of savings. They are often unable to raise a substantial amount of money required for economic development. In such situations, foreign direct investments promote capital formation and ensure a healthy choice of projects. The FDI acts as a supplement of capital resources for LLPs, thereby facilitating economic improvements in the country as a whole.
Role of FDI in generating employment
Foreign Direct Investments bring about homogeneity in the requirements and desires of people in the country. It helps in widening the market and mobilizing resources, which adds to Government revenues. It also encourages competition and breaks local monopolies. FDI is an excellent medium of international trade which equalizes the cost of production in both countries. FDI, on the other hand, creates indirect as well as direct employment in marketing, manufacturing, and other service activities.
With the help of modern technologies, Indian firms can improve the quality of products that LLPs manufactures. Better quality and lower costs allow the export of domestic products to foreign markets. FDI is also helping India to expand its market territory beyond the geographical boundaries of the Country.