Can an NRI or Foreign National Be a Partner in an LLP?
Short answer: Yes. Under section 5 of the LLP Act, 2008, any individual or body corporate can be a partner, so an NRI, an OCI cardholder, a foreign national or a foreign company can all join an Indian LLP. Two conditions apply. At least one designated partner must be resident in India, meaning in India for at least 120 days during the financial year. And money coming from abroad must follow FEMA: foreign investment in an LLP is allowed under the automatic route only in sectors open to 100% foreign investment with no FDI-linked performance conditions.
Who can join, and on what terms
| Who | Partner? | Designated partner? | How their money comes in |
|---|---|---|---|
| NRI (Indian citizen living abroad) | Yes | Yes. Counts as the resident designated partner only if in India 120 days or more in the financial year | Either as foreign investment (repatriable), or on a non-repatriation basis with no limit |
| OCI cardholder | Yes | Yes, same residence test | Same two options as an NRI |
| Foreign national | Yes | Yes, same residence test | Foreign investment rules |
| Foreign company | Yes, as a body corporate | Acts through an individual nominee, who can be a designated partner | Foreign investment rules |
| Citizen or entity of Pakistan or Bangladesh | Not eligible to contribute to an LLP's capital under RBI's directions | ||
The resident designated partner rule
Section 7(1) requires every LLP to have at least two designated partners who are individuals, and at least one of them must be resident in India. The Explanation to section 7 defines resident as a person who has stayed in India for not less than 120 days during the financial year; the older 182-day test no longer applies. So an LLP can have mostly foreign partners, but it needs at least one designated partner who meets this test. Where a partner is a company, an individual nominee of that company can act as a designated partner (proviso to section 7(1)). More on the numbers in how many partners an LLP needs.
FEMA rules for foreign money in an LLP
These come from the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, as summarised in RBI's Master Direction on Foreign Investment in India.
- Sector condition. A person resident outside India can contribute to an LLP's capital, or buy a profit share, only if the LLP works in a sector where 100% foreign investment is allowed under the automatic route and there are no FDI-linked performance conditions. Foreign Portfolio Investors and Foreign Venture Capital Investors cannot invest in LLPs.
- Price. A non-resident's capital contribution or purchase of a profit share must be at not less than the fair price, worked out under an accepted valuation method and certified by a Chartered Accountant, a practising Cost Accountant or an approved valuer.
- Payment. The money must come by inward remittance through banking channels, or from the investor's repatriable foreign currency or rupee account in India.
- Reporting to RBI. The LLP reports the receipt in Form LLP(I) within 30 days of receiving the money, on RBI's FIRMS portal through its bank. A transfer of capital or profit share between a resident and a non-resident is reported in Form LLP(II).
- Land-border countries. Investors from a country that shares a land border with India face extra approval requirements for foreign investment. Take advice before admitting one.
NRI investment on a non-repatriation basis
An NRI or OCI can also contribute to an LLP's capital on a non-repatriation basis, without any limit. RBI treats this as domestic investment, at par with investment by a resident. The money is paid from the NRI's NRE, FCNR(B) or NRO account. The catch: the capital cannot later be sent abroad, and any sale proceeds are credited only to the NRI's NRO account.
Filings when an NRI or foreign partner joins
- Consent to act as designated partner, if they will be one: see our Form 9 format.
- DIN and DSC. A designated partner needs a Director Identification Number and a digital signature; a passport is required for any NRI or foreign partner. Documents issued abroad need the extra attestation explained in our documents list for LLP registration.
- Form 4 within 30 days for the new partner, and Form 3 within 30 days for the supplementary LLP agreement. See the partner change procedure.
- Form LLP(I) to RBI within 30 days of receiving foreign money, as above.
Frequently asked questions
Can an NRI be a designated partner in an LLP?
Yes. But they count as the LLP's resident designated partner only if they stayed in India for at least 120 days during the financial year. If they did not, the LLP needs another designated partner who meets that test.
Can all partners of an LLP be NRIs or foreigners?
Only if at least one designated partner is resident in India under section 7. If no individual partner meets the 120-day test, a partner that is a company can nominate a resident individual to act as designated partner.
Can a foreign company be a partner in an Indian LLP?
Yes. Section 5 allows any body corporate to be a partner. It acts through an individual nominee, and its investment follows the FEMA sector, pricing and reporting rules.
Can an NRI invest in an LLP from an NRO account?
Yes, on a non-repatriation basis. The investment has no limit and is treated as domestic investment, but it cannot be repatriated; sale proceeds go only to the NRO account.
Which LLPs can take foreign investment?
Only LLPs in sectors where 100% foreign investment is allowed under the automatic route and no FDI-linked performance conditions apply. An LLP outside such a sector cannot take foreign investment.
Which form reports foreign capital received by an LLP?
Form LLP(I), filed within 30 days of receiving the money, on RBI's FIRMS portal through the LLP's bank.
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