Sun & Moon LLP, Trademark and Patent Attorneys, seeks your advice as to the circumstances which would require their accounts to be audited. They have also asked you whether foreign direct investment is allowed in lim

Advice to Sun & Moon LLP Here's advice for Sun & Moon LLP regarding audit requirements, Foreign Direct Investment (FDI), and External Commercial Borrowings (ECBs): 1. Audit Requirements for LLP Accounts: Provisions: Section 34(4) of the LLP Act, 2008: States that the accounts of an LLP shall be audited in accordance with such rules as may be prescribed, unless the LLP is exempted from audit under Rule 24(8) of the LLP Rules, 2009. Rule 24(8) of the LLP Rules, 2009: An LLP is exempted from the audit of its accounts if: Its turnover does not exceed, in any financial year, ₹40 lakh ; OR Its contribution does not exceed ₹25 lakh . An auditor for an LLP must be a Chartered Accountant in Practice. Advice to Sun & Moon LLP: Sun & Moon LLP's accounts would require an audit if, in any financial year, its turnover exceeds ₹40 lakh OR its contribution exceeds ₹25 lakh. If both turnover and contribution are within these limits, the LLP is exempt from audit. 2. Foreign Direct Investment (FDI) in LLPs: Provisions: FDI in LLPs is allowed only through the Government Approval Route . It is permitted only for LLPs operating in sectors/activities where 100% FDI is allowed through the automatic route for companies, and there are no FDI-linked performance-related conditions (e.g., for Non-Banking Finance Companies, Development of townships, housing, built-up infrastructure, and Construction-development projects). FDI in LLPs is not allowed at all , even through the government route, in those sectors where 100% FDI is not allowed under the automatic route for companies. Advice to Sun & Moon LLP: FDI is allowed in LLPs under strict conditions. As Trademark and Patent Attorneys, they would need to check if their specific sector allows 100% FDI under the automatic route for companies and if there are any FDI-linked performance conditions. If these conditions are met, they can seek FDI via the government approval route. 3. External Commercial Borrowings (ECBs) for LLPs: Provisions: Under the extant Foreign Exchange Management (Borrowing and Lending) Regulations, LLPs are not permitted to avail External Commercial Borrowings (ECBs). Advice to Sun & Moon LLP: Sun & Moon LLP is advised that they cannot avail External Commercial Borrowings (ECBs) as LLPs are not eligible for them under current regulations.