Form LLP-II Filing: Process, Documents & Penalties

Introduction

Form LLP-II filing is a statutory procedure for RBI reporting about the disinvestment or transfer of capital contribution and share profit of Indian LLPs who engaged in Foreign Direct Investment. As per the FEMA (Foreign Exchange Management Act) guidelines, the Indian LLPs must report under the 60 days from the funds receipt date. By filing this form, India ensures that the transfer of ownership or profit shares is in accordance with its FDI policy and that regulatory transparency is maintained. Some details such as transferred amount, foreign investors’ stake and other related details are essential during the filing procedure. Ontime and accurate form filing is vital to avoid hefty penalties and guarantee a smooth regulatory. Get a complete understanding over the Form LLP-II filing including its meaning, requirements, stepwise procedure, fees, penalties and time taken in this article that will help LLPs to manage their cross-border transactions easily.

What is Form LLP-II?

The LLP-II form is a regulatory filing necessary for LLPs to report their FDI (Foreign Direct Investment) transaction to the RBI (Reserve Bank of India). When foreign investors disinvest or transfer their capital contribution and profit shares, this form must be filed. Accurate FDI reporting ensures that all the compliance is done with regulatory requirements and aids in boosting transparency in foreign transactions. Banks that are Authorized Dealers (AD) Category-I are the banks through which Limited Liability Partnerships (LLPs) file Form LLP-II with the Reserve Bank of India (RBI).

When Form LLP-II Required to file?

Any LLP (Limited Liability Partnership) in India who engages in a disinvestment or transfer of capital contribution and profit shares when any FDI is going on, must file Form LLP-II. Mainly, the below mentioned entities are mandatory to file:

1. LLPs Receiving Foreign Investment: LLPs with foreign investors or partners must report capital contributions or profit shares transferred to or from foreign entities.
2. Foreign Investors/Partner: If foreign investors are transferring ownership or capital in an LLP, they should also ensure that the filing is completed by the LLP, although filing is typically the responsibility of the LLP.

Timeline for Filing form LLP-II

Time to file LLP-II Form - To ensure compliance with RBI's FDI regulations, the form must be filed within 60 days of receiving the funds.

Required Documents for LLP-II Filing

During filing the Form LLP-II some information and documents are required, the list is as mentioned below:

1. FIRC/ Debit Statement
2. KYC Report of foreign investor
3. Certificate from CA/CS
4. Transfer Agreement & Buyer and Seller consent letter.
5. Valuation Report
6. No Objection/ Tax Clearance Certificate
7. Other relevant attachments (if have any)

Stepwise Procedure for LLP-II Filing

Here, is the stepwise procedure for LLP-II filing given below:

Step 1: Creation of Entity user/Entity Master

For first time filings, New Entity Users login needs to be created for the company first. In the new entity user basic company details like CIN no , authorized person email etc along with authority letter attachments goes . It is approved by the AD bank in 1-2 days.

Once an Entity user is created, login id and password comes on authorized person email . After this entity user form is filed with issue details and other company basic details . It is approved by AD bank in 2-3 days.

Step 2 : Registration of New business User

Once Entity master form is approved , new business user registration needs to be done .It is basically authorized person login to report the transactions for the entity that has authorized him during entity master registration.Further, at the time of registration, BU has to select the IFSC code of the bank which would approve the eKYC and the reporting would be made in SMF. In case the IFSC details are changed i.e BU wishes to submit the reporting to another branch or another bank, the entity being the same, he/she needs to repeat the registration process for Business users with the new IFSC code and obtain separate Login.

After BU submits the registration form, the same will have to be verified by the AD Bank Branch concerned. The approval/ rejection of the same would be communicated through email notification to the BU.Once approved login id and password comes through email .It generally takes 4-5 working days to get business user registration.

Step 3 : Login into FIRMS Portal and Reset Password

Once a business user is created , login to the firm's portal using id and password and reset default password .

Step 4 : Login SMF for form filing and submission

Single Master form ( SMF ) is a master form which provides for the reporting of 9 forms for foreign investment viz., FC-GPR, FC-TRS, LLP-I, LLP-II, CN, DRR, ESOP, DI, InVi. Before LLP-II form filing, you have to login into the Single Master Form (SMF) section via the FIRMS Portal . Basically this section is for reporting foreign investment. Click on a dropdown menu tab of Return type. Click on it and then select Form LLP-II. Next, go with Add New Return. Here, the LLP-II form will open where you need to provide all the required and necessary information related to the foreign investment such as types of transaction and related information. These are common investment details to all forms.

Step 5: Complete the LLP-II form

Here, You will get two tabs, fill all of them accordingly:

Tab 1: Transfer details: Here, you need to input particular details of transfer including the type of transaction, parties involved and other transfer terms.

Tab 2: Buyer Seller details: it required name, contact details, nationalities of both seller and buyer or their representatives.

Tab 3: Particulars of Transfer: In this tab, file the details of profit/capital shares transferred, valuation and other supporting documents.

Tab 4: Shareholding pattern: The new shareholding structure should be updated or input after the shares have been transferred.

Step 6: Submit the form

At the end, when all these aforementioned tabs are done, you have to save and submit the form to the RBI or save as Draft if you want more time to review it for later. Click Reset if you wish to reset all the information and start afresh, or Back if you wish to return to the dashboard without saving.

Approval or resubmission will be communicated by RBI via mail . In case of any query , forms need to be resubmitted with documents asked . If approved , fee and bank details will be shared by RBI and needs to be paid within 7 days of approval. No other acknowledgement will be shared from the RBI end.

Fees for Form LLP-II Filing

There are no government fees required for Form LLP-II Filing, but the professional fees may vary as per their expertise. At Bizfoc, We provide this service at a minimum rate of Rs. 4,999 only, assuring the accurate compliance and effective reporting requirements.

Penalties for Delay Filing

If there is any delay to file the LLP-II form, the LLPs have to face penalties as per the FEMA guidelines. There is a penalty of Rs.7,500 + (0.025% × A × n) for late reporting.

As per the RBI’s circular, the maximum LSF amount cannot exceed the amount involved in the delayed reporting.

In case even Late submission fee is not paid within 3 years , Penal action under FEMA , 1999 will be taken.

Note:

a) “n” is the number of years of delay in submission rounded-upwards to the nearest month and expressed up to 2 decimal points.

b) “A” is the amount involved in the delayed reporting.

Time Taken in Form LLP-II Filing

The time taken for Form LLP-II filing basically depends upon the documentation and the transaction's complexities. If all the required documents are accurate and filled accurately, generally it will take 10 to 15 days. Furthermore, the timeframe may vary according to the specific situation and scenarios. Bizfoc ensures your filing process in just 15 days, that includes many steps that assure the accurate compliances such as documentation, preparation, verification and many more to complete the procedure more effortlessly.

How can Bizfoc help you?

Bizfoc provides a comprehensive professional guidance over LLP-II filing that guarantees compliance with FEMA guidelines. Our service includes:

1. Expert Guidance: Our professional team will provide expert and detailed advice over LLP-II form filing accurately that covers each required information.
2. Document Preparation: Our expert team helps you to collect and prepare all the necessary documents that make your procedure more fluent.
3. Form Submission: We have a number of experienced team members who ensure timely and accurate filing that also avoids hefty penalties.

Connect with us and make your LLP-II filing procedure easier and penalty free.

Conclusion

Form LLP-II filing is vital for LLPs to regulate the RBI’s FDI regulation, guarantee accurate foreign transfer reporting. This form must be filed in a particular timeframe which is within 30 days from the receiving foreign capital and profit share. Timely form filing helps to avoid hefty penalties and manage compliances. Accurate Form LLP-II submission where the documents must be accurate, helps to manage the reporting obligation. It can be a complex procedure, therefore it is highly advisable to get guidance from professionals, allowing LLPs to focus on their primary activity while staying compliant with regulatory requirements. Contact Bizfoc for a hussle-free form filing.

Frequently Asked Questions