Guide to Filing Form LLP-II

Guide to Filing Form LLP-II

Foreign Direct Investments are permitted into Limited Liability Partnership (“LLP”) firms through automatic route where LLP is operating in the sectors/activities where 100% Foreign Direct Investment (“FDI”) is allowed through automatic route. Government keeps complete control over Foreign Direct Investment made in the country and FDI withdrawn from the country so that appropriate policies can be framed.

FDI in LLP can be made through fresh capital contribution in LLP or acquisition of Profit share in LLP. Otherwise, a non-resident can also make FDI in LLP through acquisition of profit share/capital contribution from an existing resident partner. Similarly, FDI can be withdrawn by a non-resident by selling his capital contribution/profit share to a resident partner.

Fresh Capital contribution/ Acquisition of Fresh Profit Sharing in LLP is informed to RBI through filing of Form LLP-I. Transfer of Capital Contribution/Profit share from a non-resident to resident or from resident to non-resident is informed to RBI through filing of form LLP-II.

In this article  a detailed discussion has been carried out of Form LLP-II.

1. Who is required to File LLP-II

In any of the following situations, a Limited Liability Partnership Firm is required to file Form LLP-II to the Authorised Dealer Category-I bank branch:

  1. Disinvestment of FDI from LLP
  2. Transfer of Capital Contribution/Profit Share of LLP from resident to Non-resident
  3. Transfer of Capital Contribution/Profit Share of LLP from non-resident to resident.

2. What is the Time Limit for filing Form LLP-II

Information about disinvestment or transfer of profit share/capital contribution should be reported within 60 days from date of receipts of funds by LLP.

3. What is the procedure for filing Form LLP-II

  • Filing of Form LLP-II has become completely online and simple with the introduction of Single Master Form (“SMF”). SFM was introduced with an objective to integrate the reporting structure of various types of Foreign Investment in India.
  • LLP-II has been subsumed under SMF. 
  • For the purpose of Filing LLP-II, a LLP is first required to create a profile (if not created earlier) on FIRMS Portal. 
  • Post login at FIRMS portal, following is the procedure of filing of LLP-II:

STEP – 1 : Login into SMF

  • Login into SMF and further reach your workspace.
  • Next, click on the left navigation button and choose Single Master Form (SMF).
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STEP – 2 : Navigate to Form LLP-II

  • Click on the drop down menu “Return Type”. Select “Form LLP-II” and click on Add new return. The user will be taken to form LLP-II.
  • The complete form is arranged into two parts, Common Investment details and “Form LLP-II” which is further arranged into 4 tabs.
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STEP – 3 : Fill in the details as required

  • Common Investment details: These details are common to all returns that can be reported in SMF.
  • Fill up the common investment details as below:
Field NameDescription
CIN, Company Name and PAN Pre-filled, non-editable as per the BU registration details
Application datePre-filled, non-editable, system date
Entry Route*Select Automatic or Government as applicable for the investment being reported. In case the Government route is selected attach the requisite Government approvals.
Clarification: where the company belongs to a sector with mixed entry routes, for example brownfield pharmaceuticals where up to 74% is under automatic route and beyond up to 100% under Government route. If the investment being reported is under 74%. The entry route selected shall be automatic and in case the investment being reported would result into foreign investment beyond 74%, the entry route selected shall be government with relevant government approvals attached.
Applicable Sectoral cap/ Statutory ceilingApplicable sectoral cap as per FEMA 20(R).
Clarification: where the company belongs to a sector with mixed entry routes, for example brownfield pharmaceuticals where up to 74% is under automatic route and beyond up to 100% under Government route, the applicable sectoral cap would be 100%.
Whether the foreign investment received is for a specific project/ manufacturing unit/ plant?Select Yes or No as applicable.
If yes is selected, Following information should be provided:
1. PIN Code
2. State
3. City/District 
4. Brownfield/Greenfield (As applicable)
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a. Tab 1 : Transfer Details

Field NameDescription
Date of TransferSelect the date of transfer. In case the date of transfer is a future date, please leave this date as blank
Transfer TypeSelect from the following (radio buttons) as applicable :
1. Transfer of capital contribution/profit shares from a person resident outside India to a person resident in India [including NRI/ OCI or eligible investor under Schedule 4 of FEMA 20(R)].
2. Upon selection of this option enter the amount of outflow in INR and attach the relevant acknowledgement letters, if any.
3. Transfer of capital contribution/profit shares instruments from a person resident in India [including NRI/ OCI or eligible investor under Schedule 4 of FEMA 20(R)] to a person resident outside India.
4. Upon selection of this option enter the amount of inflow in INR and attach the relevant acknowledgement letters, if any.
(In case, there is no necessary attachments, attach a declaration specifying the same)
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b. Tab 2 : Buyer Seller Details

Field nameDescription
Buyer and Seller detailsEnter following details of Buyer and seller:
1. Name
2. Address
3. Country of residence and 
4. Constitution/nature from the drop down menu
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c. Tab 3 : Particulars of Transfer

Field nameDescription
Whether the change in the shareholding pattern due to this transaction being reported has already been accounted in the pre transaction shareholding patternSelect Yes or No accordingly.
Value of capital contribution in INREnter the value of capital contribution being transferred
Fair price in INREnter the fair value of the capital contribution and attach the valuation certificate
Remittance DetailsSelect the name of the AD bank facilitating remittance for this transfer and enter the address of the same
Remittance details –Mode of PaymentCheck the declaration box appearing and attach the requisite declaration and other attachments, if any.
DeclarationCheck the declaration box appearing and attach requisite declaration and other attachments, if any.
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4. Tab 4 : Shareholding Pattern

Field nameDescription
Shareholding pattern1. Enter the particular of pre and post-transaction as below :
a. Value of equity shares (on fully diluted basis) other than Foreign Portfolio Investment and indirect foreign investment or Value of Capital contribution/profit shares.
b. Foreign Portfolio Investment
c. Indirect foreign investment- Value of equity shares (on fully diluted basis)
2. Pre transaction values are auto-populated from the Entity Master (tab 3)
3. Post transaction values are auto-calculated based upon the details provided in the form. 
Post transaction = Pre transaction value of shares + Value of shares reported in the form.
4. The Business user shall ensure that the details are correctly filled in the form, so that the shareholding pattern which is auto- calculated is correct.
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STEP – 4 : Save and Submit the Form

  • After filling in all details, click on “Save and Submit” for submitting the form.
  • “Save as draft” feature: The Business User can also save the draft and submit later, by filling in all mandatory details in the “Common details” page.
  • “Reset” feature : This will reset the complete form.
  • “Back” button: To go back to the Dashboard.

4. What documents are required under Form LLP-II

The following documents are required to be attached to Form LLP-II

  1. Consent Letter duly signed by the seller and buyer or their duly appointed agent and in the latter case the Power of Attorney Document. 
  2. The capital contribution/ profit shareholding pattern of the investee LLP after the acquisition of capital contribution/ profit shares by a person resident outside India. 
  3. Certificate indicating fair price of capital contribution/profit share of an LLP from a Chartered accountant / a Cost accountant/ an approved valuer from the panel maintained by the Central Government,. 
  4. Declaration from the buyer to the effect that he is eligible to acquire capital contribution /profit shares, i.e., necessary Government approval has been obtained and terms and conditions of the Government approval, the foreign investment limits mentioned therein as well as the pricing guidelines have been complied with. 
  5. Additional documents in respect of transfer of capital contribution /profit shares of a Limited Liability Partnership by a person resident outside India.
  6. No Objection/Tax Clearance Certificate from Income Tax Authority/ Chartered Account//Cost Accountant/ Company Secretary in practice.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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