Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Llp as nbfc

vasoya ankit (Practice) (137 Points)

12 June 2014

can LLP be formed to do NBFC business ?, if so is there any prior permission required from RBI / ROC for this purpose ?

Reply
Follow
Share

2 Replies

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 13 June 2014

Hi, In my view, RBI does not allow LLPs to do NBFC Business as the Definition of NBFC itself says - A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. In fact RBI has even prohibited NBFCs form being partners in partnership firms including LLPs... So it has to be registered as a company, be it public or private for the same.... Regards

1 Like

vasoya ankit (Practice) (137 Points)
Replied 13 June 2014

we are planning to work in stock market by opening demat account, so if we form company , it will be defined as investment company , which is by default treated as NBFC as per business code allotted by ROC . so which is best form of organization for this purpose ( Partnership Firm, LLP or Pvt Ltd Company ) we may take loan from outsiders in this organization.