Trading F&O via LLC or Pvt Ltd


#21

Not required to get NBFC to trade F&O. But yeah, if you start investing into stocks and financial assets constitute more than 50 per cent of the total assets and income from financial assets constitute more than 50 per cent of the gross income - then yeah.

@TAXIQ.IN , don’t think this applies for LLP right?


#23

Thanks Nithin it is clear know.


#24

@nithin Nithin, do the company needs SEBI registration and approval to trade only FnO with LLP company directors money(no client interaction/client’s money), Can you please help.


#25

no approval if u r trading ur own money


#26

Thanks a lot Nithin


#27

Hi @nithin/@TAXIQ.IN

I just want to get one thing cleared, just like mentioned by @sritrader even I want to start a LLP where we 20 people would be registered ourselves as partners and day trade in F&O. Is it feasible/legal? Secondly if we get profits then should the LLP as a whole pay a tax or after dividing the profits among various partners do we need to self declare the tax.


#28

Does LLP require separate trading account to be opened? Does Zerodha support opening an account for LLPs?


#29

it is required , yes they do


#30

Like I have said earlier, if this a way to manage other people’s money, this ain’t legal.


Derivatives trading
#31

LLP can involve in F&O trading and number of partners can be 20 and even more. On profits LLp will pay tax and post tax money can be distributed between partners. This mode can be used close friends and family members.


#32

Can one partner be designated as trader for the LLP and receive some remuneration as a percentage of profits for the same from other partners? (which can be specified in the LLP Agreement) . Provided of course that trading is the object of the company and all partners are family / friends. But all partners may not be professional traders.


#33

Can u advise on how to do this?

Can u send me ur no?
U provide any services to open llp etc?


#34

In in Hyderabad

I need help registering a llp for trading

Do you provide such services?
Can your send me your contact details to discus


#35

by default firm needs to provide power of attorny … you can draw a fixed or variable salary as well as long as it is put in papers


#37

So I just went thru this entire thread. What I understand is that one can form an LLP company with up to 20 known partners and use that company for the sole purpose of trading in the FnO segments and Stocks etc which may lead to 100% of the companies turnover. And Unlike a Pvt company, this LLP doesn’t have to be registered as an NBFC.
Am I right? @nithin @TAXIQ.IN


#38

The ROC can restrict incorporation of LLP for trading into equity . Number of Partners in case of LLp can be more than 20 also as the limit is for normal partnership. If you are investing company you need to have NBFC Licences


#39

Means that derivative can be traded but not cash mkt?


#40

ok so prior to registration we need to mention to the ROC that the company is being formed solely to trade in the derivative segment and not the cash markets ?


#41

We need to mention object of the company at the time of registration. If the object are in conflict, it won’t get approved


#42

If you keep the objective of the company as investing, then like @TAXIQ.IN mentioned, it won’t get approved. But you can keep your objective broad. There is no restriction on any company to invest or trade F&O in the market. For example if you are a software company, you can still trade F&O or invest in stocks both public/private.

But here is what you shouldn’t do, go actively scout for funds - telling people they can become partners in your LLP and you will manage money with them. This will be a violation of the collective investment scheme guideline by SEBI. You can check out the SEBI order on HBJ capital from few years back, where SEBI banned them from capital markets. One of the reason cited was that they were using this LLP route to manage money for people. The only way to manage money today legally is as PMS, Mutual fund/AMC, and AIF (hedge fund).