Foreign Director in Indian Company

 

India's economy is one of the fastest-growing in the world, which is in part due to FDI (Foreign Direct Investment) contributions and globalisation in general. 

 

Since the nation offers them seasoned subject matter specialists who have mastered the technical know-how, unique investment schemes, and tax breaks, many foreign businesses have started to set up their operations here. 

 

Alternately, the nation is amenable to accepting foreign nationals to fill important jobs in several businesses. 

 

The Companies Act of 2013 (hereafter referred to as "The Act") introduced a number of novel elements, one of which was the ability of an Indian company to have a foreign director.

 

In essence, the Board of Directors made up of Indian or foreign people, manages and administers the operations of a corporation. 

 

The Act permits a foreign director to serve on the board, but at least one of the directors must be an Indian national. 

 

Any foreign national or Non-Resident Indian (NRI) may serve as an executive or independent director for private limited company registration online under the provisions of the Act.

 

Role of a Company's Director

 

According to the guidelines outlined in the 2013 Companies Act, the board of a firm appoints the director. The board is made up of all of the company's directors, who are referred to as the Board of Directors as a whole.

 

The Board of Directors represents and safeguards the interests of the shareholders in its capacity as fiduciary. 

 

They are crucial in developing business policies and managing the organization's resources. 

 

The Board decides who gets hired and fired from the company's top positions, including the CEO. 

 

Along with setting the company's goals, they are also responsible for determining staff compensation.

 

The Act permits a person to be proposed for one of the following directorships:

 

1. Independent director
2. Managing director
3. Whole Time director
4. Small shareholders director
5. Alternative director
6. Additional director
7. Nominee director
8. Woman director

 

Foreign nationals or NRIs may be authorised as any of the aforementioned directors under the Act.

 

Qualifications for Foreign Directors in Indian Companies

 

Despite the fact that the Act permits a foreign national to serve as a director of an Indian company, the person must immediately meet the following requirements in order to occupy the post.

 

Director Identification Number (DIN)

 

A Director Identification Number (DIN) must be obtained at the time of the company's incorporation by anyone who will soon be named as a director. 

 

Every director of the firm is given a different eight-digit number, and it is through this number that the director's information is stored in the database.

 

Before being appointed as a director of the company, a foreign national is expected to obtain the DIN. By submitting the form DIR-3 to the Ministry of Corporate Affairs, the same can be received (MCA). 

 

It may also be received by submitting the SPICe+ form, which is required to submit a company incorporation application.

 

The foreign national who wishes to serve as the company's director must certify on the DIN application that they are not otherwise ineligible to occupy the position of the director under the Act's provisions. 

 

Additionally, the form DIR-2 must be used to provide consent to act as the director. 

 

Within 30 days of the day they were appointed as the company's director, the foreign national must submit written consent to the Registrar of Companies (RoC).

 

The following documents are to be enclosed while making an application for the DIN:

 

• Recent passport-size photographs
• Valid address proofs such as bank statements, driving license, telephone bills, electricity bills etc, that are not older than 2 months on the date of the application
• A valid passport copy.

 

The copies of the aforementioned documents need to be properly notarized by a public notary and apostilled by the authorised official from the foreign national's home country.

 

Digital Signature Certificate

 

The foreign individual who wants to be appointed as a director of an Indian firm must be in possession of a class 3 Digital Signature Certificate (DSC). The forms must be submitted online through the MCA portal by the DSC. To receive the DIN, the DSC must be affixed to the forms DIR-3 or SPICe+.

 

The following documents are required for obtaining the DSC:

 

• Passport size photographs
• Address proofs- bank statements, driving license, telephone bills, electricity bills etc (not older than 2 months from the date of the application)
• Valid Passport Copy

 

A competent notary public and an authorised authority from the foreign national's home country, respectively, must notarize and apostille the copies of the documents.

 

Qualifications for the Posts of Managing Director or Full-Time Director

 

The following qualifications must be met by foreign nationals who wish to occupy director positions in an Indian company:

 

• Prior to being appointed as a director, the foreign national had to have been an Indian resident, that is, have lived there continuously for at least a period of 12 months.
• The foreign national must also be at least 21 years old and not more than 70 years old.
• The foreign national should not have been declared bankrupt, should not have been found guilty of any crime, and should not have been sentenced to more than six months in prison.

 

Requirements for the Position of an Independent Director

 

An Indian corporation may select a foreign national as an Independent Director if they have the necessary training, expertise, knowledge, and experience in the areas of marketing, business law, finance, administration, and research.

 

 

Compliance Required by the Foreign Exchange Management (FEMA) Act, 1999

 

When a foreigner is appointed as a director during company registration online, they are accorded the same benefits as Indians, including suitable compensation, commissions, and sitting fees. A foreign national must also abide by the FEMA Act of 1999's rules in addition to these.

 

• The foreign nationals who will serve as directors must possess a current Indian employment visa.
• They are permitted to have a foreign currency account at a licenced bank located outside of India where they can deposit the compensation they get for serving as directors of Indian companies.
• When an Indian firm appoints a foreign director, it must take the necessary steps to compensate them, such as submitting applications to the appropriate dealers. The statement regarding the payment of income tax must be submitted with an undertaking certificate.