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Can an NRI form a partnership firm with me?
25-Apr-2023 (In Corporate Law)
Can an NRI form a partnership firm with me?
Yes, they can but mostly on non repatriation basis. What sector will the proposed partnership be involved in? There are Some Rbi compliances too that must be taken care of when the money comes in the firm. Please speak with your lawyer or discuss with me before you go ahead with partnering with an NRI.
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Adv. Mansi Airi Gambhir
Delhi | 25+ Answers
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Yes a NRI can enter into partnership in India. There is no restriction on an NRI to enter into any partnership agreement with an Indian Citizen. But NRI has to comply with regulations laid down by FERMA
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Adv. Varun Singh Ahuja
Delhi | 25+ Answers
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The answer to your query is yes. An NRI can be a partner in a firm with you.
The amendment of Government of India (Allocation of Business) Rules, 1961, vide Gazette Notification dated 15 February 2016, states that:
The following activities will be under the Dept. of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry
Direct foreign and non-resident investment in industrial and service projects.
Promotion of investment by Overseas Indians in India including innovative investments and policy initiatives consistent with the overall Government policies particularly in areas such as exclusive Special Economic Zones for Overseas Indians.
Therefore, activities of investment promotion and facilitation will not fall under the ambit of the Overseas Indian facilitation Centre (OIFC) after the merger of Ministry of Overseas Indian Affairs with the Ministry of External Affairs.
The amendment of Government of India (Allocation of Business) Rules, 1961, vide Gazette Notification dated 15 February 2016, states that:
The following activities will be under the Dept. of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry
Direct foreign and non-resident investment in industrial and service projects.
Promotion of investment by Overseas Indians in India including innovative investments and policy initiatives consistent with the overall Government policies particularly in areas such as exclusive Special Economic Zones for Overseas Indians.
Therefore, activities of investment promotion and facilitation will not fall under the ambit of the Overseas Indian facilitation Centre (OIFC) after the merger of Ministry of Overseas Indian Affairs with the Ministry of External Affairs.
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Adv. Pulkit Prakash
Delhi | 400+ Answers
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NRIs can also invest in Limited Liability Partnerships (LLPs) through automatic route where the FDI is allowed 100% and in other cases with the Government Approval Route. Moreover, LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business.
NRIs or PIOs (Person of Indian Origin resident outside India) can also invest in capital of the Firms whether Partnership Firms/ Sole Proprietorship Concerns but the biggest advantage is that they cannot re-patriate the money back to abroad i.e. they can invest on non-repatriation basis and that even subject to some conditions like
(i) the investments must have not been done in agricultural/plantation or real estate business or print media sector.
(ii) Amount is invested by inward remittance or out of NRE/FCNR (B)/NRO account maintained with Authorized Dealers / Authorized banks.
(iii) Amount invested shall not be eligible for repatriation outside India.
The NRIs/ PIOs can re-patriate such Investments back to abroad from such Sole Prop./ Partnership Firms subject to the prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option. The application will be decided in consultation with the Government of India.
NRIs or PIOs (Person of Indian Origin resident outside India) can also invest in capital of the Firms whether Partnership Firms/ Sole Proprietorship Concerns but the biggest advantage is that they cannot re-patriate the money back to abroad i.e. they can invest on non-repatriation basis and that even subject to some conditions like
(i) the investments must have not been done in agricultural/plantation or real estate business or print media sector.
(ii) Amount is invested by inward remittance or out of NRE/FCNR (B)/NRO account maintained with Authorized Dealers / Authorized banks.
(iii) Amount invested shall not be eligible for repatriation outside India.
The NRIs/ PIOs can re-patriate such Investments back to abroad from such Sole Prop./ Partnership Firms subject to the prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option. The application will be decided in consultation with the Government of India.
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