Appointment of Foreign National as Director of Indian Company

 

1. Directors and their Role in a Company

 

A company, being an artificial person, is managed and controlled by its officers called the directors of the company. According to the inclusive definition under the Companies Act, 2013, a Director means a Director appointed to the Board of a company. The Directors are the head of a company. They are the supreme authority controlling the managerial and other affairs of the company. They are jointly known as the Board of Directors (BOD) of a company under Section 2 (10) of the Companies Act, 2013.

 

2. Foreign National As Director in an India Company

 

The company’s law in India does not bar foreign nationals to become directors in

Indian companies. A foreigner or a non-resident Indian can become an executive or a non-executive/independent director of Indian companies whether public or private.

 

3. Foreign National as a Director under Companies Act, 2013 Appointment of directors under Companies Act, 2013

 

Under Indian Companies Act, 2013, 6 types of Directors are appointed in a company, i.e., Women Director, Independent Director, Small Shareholders Director, Additional Director, Alternative and Nominee Director. The Act does not bar a foreign national to be appointed as any of the above-mentioned directors in Indian Companies.

Following are the criteria that are to be fulfilled by a person (including a foreign national) to become a Director of a company under the Act:

 

1. Every person (including a foreign national) shall be allotted with a Director Identification Number (DIN) before appointed as a director;

 

2. Every person (including a foreign national) to be appointed as a Director shall furnish his DIN and shall declare that he is not disqualified from becoming a Director under this Act; and

 

3. The person (including a foreign national) appointed as a Director shall not act as a Director unless he gives his written consent to act as director in Form

DIR-2 Such consent has to be filed with the Registrar within 30 days of his appointment.

 

4. Application & Allotment of Director Identification Number (DIN)

An applicant (including a foreign national), shall make an application for obtaining DIN in electronic Form DIR-3 to the Central Government along with fees of Rs.500 as provided under The Rules. The Central Government will provide an electronic system to facilitate submission of the application for allotment of DIN through the portal on the MCA (Ministry of Corporate Affairs) website.

 

In the case of foreign national applying for DIN to become a director in an Indian company, details of a valid passport should be filled in Form DIR-3, and a certified copy of same should be attached with DIN application. All supporting documents including photograph should be certified by the Indian Embassy or a notary in the home country of the applicant or by the Managing Director / CEO / Company Secretary of the company registered in India, in which applicant is a director.

 

5. Independent Director

 

An independent director of a company means a director who is not a promoter nor related to the promoter of the company; or has no pecuniary relationship nor related to any person having pecuniary relationship with the company, its holding or subsidiary or associate company; neither himself nor his relative is a key managerial personnel or any employee in the company.

 

1.  Foreign national can be an independent Director of a company

 

Possesses skills, experience, and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to company’s business.

 

2. Managing Director or Whole-Time Director

 

A foreign national, intending to become a managing or a full-time director, should be a resident of India i.e. who has been staying in India continuously not less than 12 months, immediately preceding the date of his appointment. He should not be less than 21 years of age nor more than 70 years of age.

 

6. Foreign National as a Director under Foreign Exchange Management Act (FEMA), 1999

 

As per Companies Act and FEMA, there are no restrictions for a foreign national to become a director in an Indian Company. He is eligible for sitting fees, remuneration, commission, travel expenses just like any other director.

A foreign national as a director in an Indian company can hold and maintain a foreign currency account with a bank outside India and receive or remit the whole salary payable to him for his services. Where foreign nationals are engaged by Indian companies, the Indian companies shall make an application for remittance of remuneration to authorized dealers with a statement and undertaking certificate regarding payment of Income Tax. A foreign national intending to become a director in an Indian company shall hold a valid employment visa.

 

 

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