Can an NR become a partner in a partnership firm?

547 votes

Hi, As per your query, yes an NR can become partner in a Partnership firm on the non-repatriation basis. It mandated that they need to comply to the regulations as enumerated under the Foreign Exchange Management Act. Hope your query is answered.

Advocate Rajesh Kumar K LawRato

554 votes

Dear Sir/Madam,
I am sorry for the late response. We will discuss the matter in detail. Many notifications, orders and acts cover this matter. Master Circular no. 2/2009-10 of RBI mentions about prohibition on Non-resident becoming a partner in a Partnership firm. The notification talks about prohibition in detail however, we need to concentrate on the specifics of the partnership firm you want to deal with.
Foreign Investment in any form is Prohibited in Certain 'Partnership Firms' like chit fund, agricultural activities, real estate business, Trading in Transferable Development Rights.

Part IV of the Notification deals with Investment in Partnership Firm or proprietary concern of a "Non-Resident Indian"
A "Non-Resident Indian" can invest in a Partnership firm provided

1. Amount is invested in inward remittance or out of NRE/FCNR(B)/NRO Account maintained with authourised banks.
2. Amount invested shall not be eligible for repatriation outside India.
3. NRIs may seek prior permission of RBI for Investment in Partnership Firms with repatriation benefits.

Advocate Nachiketh Konapur LawRato