India: Types of Company
Limited Liability Partnership
Nature of a Limited Liability Partnership
The Limited Liability Partnership (LLP) was introduced in India in 2010; the previous General Partnership form was not much used since its members were too easily able to escape their liabilities by dissolving the partnership. The LLP however has legal personality while still preserving a limitation on liability for individual members.
A minimum of two partners is required, but there is no maximum number.
Unlike the General Partnership, which was not open to foreigners, foreign individuals and companies can be members of an LLP.
Two persons, individual or corporate, are required to be partners as a minimum. A corporate partner must nominate an individual as a representative. Domestic or foreign individuals or companies may be partners.
Formation of a Limited Liability Partnership
Every partner must contribute towards an LLP in some manner; the value of non-monetary contributions must be certified by a practising accountant. The liability of an individual partner is limited to their contribution.
There must be an LLP agreement which specifies the contributions of all members. There must be at least one 'designated member' who has responsibility for managerial and procedural aspects of the partnership. Each designated partner must obtain a DPIN (Designated Partner Identificationl Number) from the government, but an existing DIN (Director Identification Number) will do instead.
Various forms needing to be filed, including those involved during incorporation, are electronic, and at least one of the Designated Partners must therefore have a DSC (Digital Signature Certificate).
The LLP Agreement needs to be filed with the Registrar of Companies, who must also verify availability of the name of the LLP, and will issue a Certificate of Incorporation.
Ongoing Formalities for a Limited Liability Partnership
An LLP must maintain annual accounts reflecting a true and fair view of its affairs. A statement of accounts and solvency must be filed with the Registrar of Companies every year.
Audit of the accounts is required only if the value of capital contributions exceeds INR25 lakhs (INR2.5m) or annual turnover exceeds INR40 lakhs (INR4m).
Employing Staff for a Limited Liability Partnership
Limited Liability Partnerships can hire local and foreign staff.
The Ministry of Foreign Affairs is responsible for the issuance of work permits (employment visas) under the Foreigners Act. They are normally necessary for foreigners, although people with Indian ancestry may be exempted from the need for a visa. The family members of an individual holding a work permit are also permitted to work. Indian Consulates issue work permits and visas prior to arrival.
Normally a foreigner employed by an LLP will require an Employment Visa, although if only short visits are being made a Business Visa may be sufficient.
The local Foreigners Regional Registration Office (FRRO), an agency of the Home Ministry, is responsible for registering the visas of foreigners employed by LLPs in India and for supervision of the individuals during their stay.
Registration with the police is required witin 14 days of arrival in India (which may or may not be the same as registration with the FRRO in a given region). Documents required include a registration form in quadruplicate and a registration permit booklet, copies of passport and visa, a copy of the employment contract, copies of a letter of recommendation from the parent company, six passport photos. An HIV/AIDS test result must also be filed, within 30 days.
Visas can be extended, through another set of bureaucratic procedures.