SPOTLIGHT ON INDIAN ELECTRONICS Spotlight on Indian Electronics | Page 49

ESDM & FDI QUERIES
Liaison Office: A LO( also known as Representative Office) can
undertake only liaison activities, i. e., it can act as a channel of communication between the head office abroad and parties in
Q. 19 What is a Limited Liability Partnership?
India. It is not allowed to undertake any business activity in
Limited Liability Partnerships: The LLP format allows corporate
India and cannot earn any income in India. Expenses of such
business entity along with the benefits of limited liability. At
offices are to be met entirely through inward remittances of
the same time, it allows the members the flexibility of
foreign exchange from the head office outside India.
organizing their internal structure as a partnership based on
Permission to set-up a LO in India is initially granted for a
mutually-agreed terms. Like a private limited company, LLP is
period of 3 years and this is likely to be extended from time to
a body corporate having a distinct legal entity. The LLPs are
time. Upon expiry of the validity period, these entities have to
governed by the LLP Act 2008. However, the RBI has still not
either close down or be converted into a Joint Venture( JV) /
notified the LLP structure in FEMA.
Wholly Owned Subsidiary( WOS), in conformity with the extant
Foreign Direct Investment policy.
FDI will be allowed through the government approval route, only in LLPs operating in sectors / activities where 100 % FDI is
Specified Activities:
allowed through the automatic route and sectors are not
( i)
Representing in India the parent company / group
subject to additional conditions.
companies;
The other details can be seen from page numbers 16 and 17
( ii) Promoting export / import from / to India;
( iii) Promoting technical / financial collaborations between parent / group companies and companies in India;
on the following link-
( http:// dipp. nic. in / English / Policies / FDI _ Circular _ 01 _ 2013. pdf).
The LLP act and rules can be seen from the following link-
( http:// www. mca. gov. in / LLP /).
( iv) Acting as a communication channel between the parent company and Indian companies.
The details of registering a New LLP and reporting requirements can be seen from the following links-
Branch Office: The BO should be engaged in the activity in which the parent company is engaged. Retail trading activities of any nature are not allowed for a BO in India. A BO is, also not allowed to carry out manufacturing( except in an SEZ) or
( http:// www. mca. gov. in / LLP / RegisterNewComp. html),
( http:// www. mca. gov. in / LLP / CARFiling. html)
Q. 20 Is it possible to dissolve the LLP in India?
processing activities in India, directly or indirectly. Profits
The details of LLP closure can be seen from the following linkearned
by BO are freely remittable from India, subject to
( http:// www. mca. gov. in / LLP / CloseCompany. html).
payment of applicable taxes
Specified Activities:( I) Export / import of goods;( ii) Rendering professional or consultancy services;
( iii) Carrying out research work, in areas in which the parent company is engaged;
( iv) Promoting technical or financial collaborations between Indian companies and parent or overseas group company;
( v) Representing the parent company in India and acting as buying / selling agent in India;
( vi) Rendering services in information technology and development of software in India;
( vii) Rendering technical support to the products supplied by parent / group companies;
( viii) Foreign airline / shipping company.
Q. 17 What are the repatriation rules, reporting requirements, etc., in case of LO / BO / PO?
The details of reporting and repatriation rules for LO / BO / PO are available in the RBI master circular which can be seen from the following link-( http:// www. rbi. org. in / scripts / BS _ CircularIndexDisplay. aspx? Id = 7312)
As per the new circular, the entity establishing LO / BO / PO are also required to report to the Director General of Police of the concerned state government. The details can be seen from the following link-( http:// rbi. org. in / Scripts / NotificationUser. aspx? Id = 7589 & Mode = 0)
Q. 18 Can LO / BO / PO be closed down?
The winding up procedure for LO / BO / PO are laid down in the RBI guidelines. For details visit the following link-( http:// www. rbi. org. in / scripts / BS _ CircularIndexDisplay. aspx? Id = 7312)
Information on other forms of business
Spotlight on Indian Electronics 2016 | 49