Government favours foreign equity in limited partnerships

NEW DELHI - India’s commerce and industry ministry has favoured foreign investment in limited liability partnerships and floated a discussion paper inviting comments from all stakeholders before taking a policy decision on the matter.

Notified April 1 last year, the permission for domestic limited liability partnerships was given to nurse the growth of professionals such as advocates, lawyers, chartered accountants and doctors.

These professionals were earlier precluded from practising through companies, which effectively meant they were collectively liable for the entire quantum of losses of their firms — and not limited to their share of capital alone.

“Allowing foreign direct investment in entrepreneurial projects carried out through the model would encourage small entrepreneurs in India to explore business ventures with foreign investment and collaboration,” said the ministry.

“Such hybrid entities are prevalent across the globe. They are commonly used by private equity and venture capital funds and professionals. In countries like the US, Canada, Germany, Poland and China, limited liability partnerships can be formed by professional service providers.”