Section 43(3) of the Limited Liability Partnership Act, 2008 allows an NRI to be a designated partner in a LLP.

As a law firm, we would like to provide an informative and detailed opinion on Section 43(3) of the Limited Liability Partnership Act, 2008 which allows Non Resident Indians (NRI) to be designated partners in a LLP.

According to Section 43(3), “an individual who is resident outside India” can become a designated partner in a LLP. This provision recognizes that NRIs have valuable expertise and resources that they can bring to LLPs as owners or managers. It also provides flexibility for businesses with global operations or those seeking investments from overseas investors.

However, it should be noted that NRIs are subject to certain restrictions under the Foreign Exchange Management Act (FEMA). For instance, they cannot hold more than 24% ownership in Indian companies without prior approval from the Reserve Bank of India (RBI).

In light of these provisions, it is essential for NRIs interested in becoming designated partners in an LLP to seek legal advice on compliance with FEMA regulations and other applicable laws.

To further illustrate this point, let us examine some case laws related to this issue:

1. In 2016, the Bombay High Court stated that there was no restriction on an NRI from being appointed as director or promoter of an Indian company. However, such appointment must comply with FDI norms prescribed by RBI.

2. In another case during 2019 which was filed before National Company Law Tribunal (NCLT), it was held that if the NRI director had failed to obtain prior approval from RBI and SEBI before acquiring shares of Indian company then he could not exercise any voting rights till necessary approvals were obtained.

3. There has been confusion regarding applicability of tax deductions at source for payments made by LLPs having NRI partners as compared to purely domestic partnerships since many years now.In one instance during late 2020 ,the Authority for Advance Rulings clarified that TDS deduction would be made on payments made to NRI partners of Indian LLPs.

4. In March 2021, The Reserve Bank of India eased norms for investment by Non-Resident Indians (NRIs) in Limited Liability Partnerships (LLPs), thereby making it easier for NRIs to invest in and run businesses in India.

In conclusion, Section 43(3) of the LLP Act provides an opportunity for talented NRIs to participate as designated partners in a LLP with due compliance under applicable laws.Such NRIs must seek appropriate legal advice before commencing operations in India.It is important that NRI designated partners comply with FEMA regulations and other relevant laws while managing investments or holding ownership stake in Indian companies through LLP structures.