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Foreign Director Appointment in Indian Company(2021)

Company registration in India is regulated under the Companies Act, 2013 and rules made thereunder.
The companies act permits foreign individuals to become a director in an Indian company at the various
positions of Independent director, Additional director, Small shareholder director, Women director,
Managing director, Whole-time director, Alternative and Nominee director in Indian companies.
Further, it is managed and controlled by the Ministry of Corporate Affairs (MCA) and Registrar of
Companies (ROC) in respective states.

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Besides, there is no restriction to the foreigner by the Foreign Exchange Management Act (FEMA), 1999,
to be designated as a director in an Indian company. A foreign director is eligible to receive
remuneration, commission, sitting fees, etc., as like an Indian director. He/she can also hold a foreign
currency account with a bank outside India.

1. How can a foreigner form a company in India?

An individual or foreign company can register and start an independent company or a foreign subsidiary
in India. Setting up a company in India can be achieved with the following alternatives:
 Buying shares in the existing company
 Incorporating a new company
Also, a foreigner can start his own company in different structures, including:
 Private limited company
 Liaison office (LO)
 Project office (PO)
 Branch office (BO)
 Limited Liability Partnership (LLP)
To form a company in India, the foreign director is required to qualify the following requirements:
 Obtain Director Identification Number (DIN) in Form DIR – 3 along with the specified fees.
 Obtain Digital Signature Certificate (DSC)
 A declaration that the person is not disqualified from becoming a foreign director (under section
164 of Companies act, 2013)
 Written consent to become a foreign director in Form DIR-2 within 30 days of the director’s
appointment.
 Filing DIR-12 with the registrar within 30 days of the foreign director appointment in the
company’s board meeting.
In addition to the above foreign director’s qualification requirements, other minimum requirements that
need to be fulfilled are:
 Appointment of a minimum of two directors and at least one should be resident of India.
 The local registered address for the company office in India
 Between 2 – 200 shareholders anywhere in India or foreign nations.
 Due date for appointment of a statutory auditor within 30 days from the date of company’s
incorporation.
One can easily form a company with foreign director through online business and tax consultant like
Consultaxx. They are trusted partner for business growth and expansion in India.
The process to form an Indian company with foreign directors:
Step 1: Apply DSC and DIN – Obtain digital signature and director identification number for foreign
directors and Indian directors.

Step 2: Conduct board meeting – In the board meeting, the board of directors must pass a favorable
board resolution to appoint a foreigner as director.
Step 3: Name approval – The next step is to reserve the company’s unique name by filing the name
approval form.
Step 4: Submission of documents – After the name approval, one must submit the required documents
through the MCA website. On successful submission of forms, the department will approve the
company registration.

2. Documents required to register foreign director company

A foreign director is required to submit the following self-attested documents for establishing a foreign
director company in India:
 Photograph – Latest passport size photograph of shareholders and directors
 PAN card – PAN card of shareholders and directors
 Proof of identity – VoterID/Driving license and copy of passport duly attested foreign notary in
the applicant’s home country and apostilled of shareholders and directors.
 Address proof – Electricity Bill/Telephone Bill/Bank account statement duly attested foreign
notary in the applicant’s home country and apostilled (not older than six months) of
shareholders, directors, and registered office address in India.
 Constitutional documents – An apostilled copy of the charter, statutes, or memorandum and
articles. If the documents are not in the English language, then a certified copy of the translation
in English.
 You can also get to know list of documents from below image taken from consultaxx.com

3. Time Required

For registering a foreign director company, the whole process of company registration takes around 30
days and 4-5 working days to issue a certificate of incorporation from the department’s date of receiving
application.

4. Can foreigners form LLP and partnership?

Yes, a foreigner can form LLP and partnership in India. After November 2015, the Indian government
relaxed the FDI norms, making the LLP and partnership registration process easy for foreigners.
To register an LLP in India, there must be a minimum of two-persons, and among the two partners, one
should be identified
 as designated partners who shall be responsible for legal compliances; and
 an Indian citizen and Indian resident.
An Indian resident has stayed in India for a total period of not less than 182 days in the previous
calendar year.

 Conclusion

The company’s law in India doesn’t prevent foreign/NRIs to become a director in an Indian company
after complying with the conditions specified under the Indian regulations. Thus, a foreign director can
become an executive or non-executive or even an independent director in Indian public or private
companies.
It should be noted that any income earned in India subject to the Indian Income-tax and TDS provisions
under the Income-tax Act, 1961.

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