Limited partnerships Bill gets going
Foreign limited liability partnership firms may soon be allowed to set up shop in India paving the way for foreign collaboration in areas like financial services, IT, venture capital, consulting and possibly legal services.business Updated: Oct 21, 2008 20:54 IST
Foreign limited liability partnership (LLP) firms may soon be allowed to set up shop in India paving the way for foreign collaboration in areas like financial services, information technology, venture capital, consulting and possibly legal services.
Prem Chand Gupta, corporate affairs minister, on Tuesday introduced the Limited Liability Partnership Bill, 2008 in the Rajya Sabha.
The Bill, once enacted, is expected to allow entrepreneurs, professionals and enterprises providing services of any kind to form commercially efficient entities. The LLP is also a suitable vehicle for small enterprises and for venture capital investments.
The Bill makes it is mandatory for a foreign LLP to have an Indian partner to operate in the country, officials said. “Every LLP should have at least one Indian partner,” an official said.
The government was not against prohibiting foreign direct investment in LLPs. “The contribution made by the foreign entity may be counted towards FDI in accordance with the policy and method that might be adopted for accounting for FDI,” the official added.
The domestic legal community, however, is opposed to the opening up of legal services to overseas entities. “The Bill does not restrict the benefit of LLP structure to certain classes of professionals only and would be available for use by any enterprise which fulfills the requirements of the Act,” a statement said issued by the corporate affairs ministry said.
It is not yet clear whether an amendment would be required in the Advocates Act.
“Partnerships are the only permitted model of practice for law firms in India and other modes of practice like LLP is not permitted. Multidisciplinary practice with other professions is also not allowed in the legal profession,” a senior government official said.
First Published: Oct 21, 2008 20:53 IST