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Govt amends foreign trade policy to include LLP firm in definition of a 'Group Company'

19 Dec 2013 Evaluate

The government has amended the foreign trade policy to include Limited Liability Partnership (LLP) firms, in the definition of 'Group Company’. With this, neither partnership nor proprietorship firm would come within the ambit of definition of a 'Group Company', but would include LLP, which is hybrid between a company and a partnership firm. Meanwhile, this development comes at a time when the country is taking all the possible measures to push up exports amidst its snail pace economic growth.

With the inclusion, LLPs would be eligible to claim benefits under the government’s foreign trade policy. Under this policy, group companies get duty benefits under different export promotion schemes.

Further, for group companies to claim benefits or have their exports counted for benefits to be claimed by another group company, the group company should have been in existence at least two years prior to date of application, under any of export promotion schemes. Group Company means two or more enterprises which directly or indirectly are in a position to exercise 26% or more of voting rights in other firm or appoint more than 50% of members of board of directors in the other enterprise.

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