There is no bar in inducting a foreigner as a Director of the Company, provided he has to follow all procedures to be followed by an Indian
- Can a Foreign national Become director in an Indian Company
Yes, Foreign National can become director in Indian Company
- Does Appointment of foreign Directors Require RBI Approval
No, RBI has clarified that under the Foreign Exchange Management Act, 1999, appointment of a foreign national as a director on the board of directors of an Indian company does not require the Reserve Bank’s approval.
- Can all the directors of Indian Company be foreign National
Yes, An Indian company can have all the directors as foreign nationals
- Payment of Sitting Fees , Remuneration and other charges require RBI Approval
No, It is clarified that the Reserve Bank has also granted general powers to an Indian company to make payment in rupees towards sitting fees or commission or remuneration and travel expenses to and from and within India to its non-whole time director who is resident outside India and is on a visit to India for the company’s work.
- What are the minimum formalities to become a director in Indian Company.
To become director in Indian company the directors should have
Directors Identification Number
Digital Signature Certificate
- Does Foreign Directors also Require Directors Identification Number – DIN
Yes, Every Director whether foreign or Indian should have DIN
- What Documents Required for Foreign Directors DIN
For DIN of Foreign Directors the proof of Identity and Proof of Residence are required , Both shall be either duly notarized or shall be certified by Indian Embassy in the country of residence.
- Does Foreign Directors Require Digital Signature Certificate– DSC
Yes, Like any other director foreign Director shall have a DSC.
- Any other disclosure requirement by foreign directors
Yes, Like any other directors the foreign directors of the Indian company has to disclose the list of all the company, firms in which they are directors or they are interested.
Appointment of Non-Resident/ Foreign Citizen/ Foreign National as a Director
Can a Non-Resident/ Foreign National/ Foreign Citizen become Director of an Indian Company?
Yes, a foreign nationals or foreign citizen or Non-Resident Indians residing abroad can be appointed as a Director on the Board of Indian companies whether public listed or unlisted or private. He may be appointed as Whole Time Director (Executive director) or Non – Whole Time Director (Non – Executive Director).
Pre-requisites to become a Director for NR
|1.||Digital Signature Certificate (DSC) and Director Identification Number (DIN)||To become a Director, an individual is required to obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN).|
|2.||Passport||For applying DIN and DSC, Passport Number is mandatory for Non-residents. Foreign nationals shall select the nationality as declared in the passport.The above documents are required to be certified by the Indian Embassy or apostil led by notary in the home country of the applicant.|
Permanent Account Number (PAN) from the Indian Income Tax department is not compulsory required from Non-Residents.
Resident Director under Companies Act 2013: –
Section 149(3) of Companies Act 2013 provides that every Company shall have at least one Director who has stayed in India for a total period of not less than 182 days in the previous calendar year.
Even a Non- Resident can act as Resident Director of the Company provided he has stayed in India for more than 182 days in the previous calendar year.
Attending Board Meeting by Non-Residents: –
Companies Act 2013 does not prohibit holding of Board meetings abroad.
Also, according to Section 173(2), there is a provision for conducting Board meetings through video –conference, thereby making it simple for Non-Residents.
LEGAL PROVISIONS RELATINGTO APPOINTMENT OF FOREIGNERS AS DIRECTORS IN INDIAN COMPANIES
The foreign national or foreign citizen or non-resident Indians residing aborad can be appointed as a Director on the Board of Indian Companies. A foreign body corporate may have 100% subsidiary company in India, may nominate one or all its Directors on the Board of the subsidiary Indian company who are foreign nationals.
What are the Laws applicable to foreign Directors appointed in Indian Companies?
The following Acts are applicable:
- Companies Act, 2013
- Service Tax under Finance Act
- FEMA 1999
- INCOME TAX ACT, 1961
- Companies Act 2013
The Foreign Nationals or Foreign citizen or Non-Resident Indians abroad can be appointed as a Director on the Board of Indian Companies whether Public listed or Unlisted or Private. A Foreign Body Corporate having % subsidiary company in India may nominate all its Directors of the Subsidiary Indian Company who may be Foreign Nationals. A foreign Director may be appointed as Whole Time Director ( Executive Director) or Non Whole Time Director (Non-Executive Director). Procedures relating to appointment of foreign directors under Companies Act 2013.
- To become a Foreign Director he is required to obtain Director Identification Number (DIN). For applying DIN, Permanent Account Number (PAN) from the Indian Income Tax Department is compulsory. Before appointment of Director, the Director has to apply for DIN.
- In the case of Foreign Nationals, the recent color photograph of the Director, Passport and proof of residence and the affidavit (format of affidavit is available in MCA website under DIN 1) have to be notarized from the respective country and by applying in Form DIN 1, the Director Identification Number can be obtained online.
In case of Foreign Director, the supporting documents can also be attested by Company Secretary in employment /CEO/Managing Director of the Indian Company in which he/she proposed to be a Director.
In case of Foreign Director, the supporting documents can also be attested by Company Secretary in Full Time Employment.
- Affidavit by the Applicant to be executed on Non Judicial Stamp-Paper and duly notarized. It is a Mandatory attachement.
- In case of Foreign Applicant, address proof should not be older than 1 year from the date of filing of the E-forms.
- Passport number is mandatory for Foreign Nationals. Foreign Nationals shall select the nationality as declared in the Passport.
- Father’s name proof is not required in the case of Foreign Nationals NRIs.
- In case of proofs which are in languages other than HINDI/ENGLISH, the proofs should be translated in HINDI/ENGLISH form professional translator carrying his details (Name, Signature, Address) and Seal. In the case of Foreign nationals, translation done by the Notary of home country is also acceptable.
All the forms required to be filed under the Companies Act are filed through MCA website through the digital signature. In view of this the Foreign Director is required to have one digital signature with his PAN encrypted so as to enable him to file the returns with income tax authorities on behalf of the Company.