What changed
RBI has amended the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 to include LLPs as an 'Indian Party'. This means LLPs can now undertake financial commitments to or on behalf of a joint venture or wholly owned subsidiary overseas, effective from May 7, 2014.
What it means for you
Banks and lenders must now recognize LLPs as eligible entities for overseas direct investment, expanding the pool of clients who can invest abroad. AD banks need to update their internal processes to handle LLP-related reporting and ensure compliance with the amended FEMA regulations.
What you must do
- Update internal systems to accept and process overseas investment applications from LLPs as Indian Party.
- Ensure LLPs submit Form ODI Part I and II for financial commitments and comply with all other reporting requirements like APR and disinvestments.
- Inform your constituents and customers about this new eligibility for LLPs to invest overseas.
Who it affects
Category-I Authorised Dealer Banks, Limited Liability Partnerships (LLPs) registered under LLP Act, 2008, Customers and constituents of AD banks seeking overseas investments
What is the effective date for this change?
The amendment is effective from May 7, 2014, the date of publication in the Gazette.
What reporting is required for LLPs making overseas investments?
AD banks must report financial commitments by LLPs in Form ODI Part I and II, and also handle other reporting like APR and disinvestments as per existing rules.