Appointment of Non-Resident/ Foreign Citizen/ Foreign National as a Director

30 September 2015 • Kamini Goyal

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Appointment of Non-Resident/ Foreign Citizen/ Foreign National as a Director

30 September 2015 • Kamini Goyal

Updated on 16 March 2022

Can a Non-Resident/ Foreign National/ Foreign Citizen become Director of an Indian Company?

 Yes,  a foreign national 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 

Sl No.

Nomenclature

Details

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 apostilled by notary in the home country of the applicant.

Note:

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 during the financial 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 financial 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.

For more info on BM through Video Conference, please click https://bsamrishindia.com/board-meeting-through-video-conferencing-or-other-audio-visual-means/

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30 comments

  1. Sir, an NRI is already acting as a MD (NRI but holds Indian passport
    ) in two Companies where one is an Indian Company and other is foreign company. Now, management of 1 more company desire to appoint the same NRI as MD in public unlisted company however, section 203 is not applicable to that company. My concerns are:
    • Whether foreign company will also be counted for above limit of 2 Companies?
    • Can he be further appointed as managing director in unlisted public company?
    • If, yes do we again need to take central government approval for his appointed as MD?
    Should I suggest that to appoint him as CEO rather than MD to avoid lengthy process of getting central government approval?
    Though NRI but holding an Indian passport still need to obtain employment visa?

    1. If by the term ‘foreign company’, you mean a company incorporated outside India, then it will not be covered under the provisions of the Companies Act, 2013 and will not be counted for the purpose of section 203. If by foreign company, you mean a company as defined under section 2(42) of the Act, then the same shall be counted for the purpose of section 203.

      A Non-Resident Indian can be appointed as a Managing Director (“MD”) subject to the compliance of rules given in Part 1 of Schedule V of the Companies Act, 2013, in absence of which, an application is to made to the approval of Central Government in Form MR-2 for such appointment. One of the conditions of Part 1 of schedule V of the Act is that a person appointed as managing director should be a resident of India. The term resident in India includes a person who has been staying in India for a continuous period of not less than twelve months immediately preceding the date of his appointment as a managerial person and who has come to stay in India,—

      • for taking up an employment in India; or
      • for carrying on a business or vacation in India. Further, non-resident shall enter India only after obtaining a proper Employment Visa from the concerned Indian mission abroad.
  2. Can a foreigner in India on business visa be appointed managing/ whole-time director in a private limited company incorporated by him and receive a salary

    1. As per clause (e) of Part I to Schedule V of the Companies Act, 2013, a non-resident in India can be appointed as Managing or Whole Time Director of the Company only after obtaining a proper Employment Visa from the concerned Indian mission abroad.
      Therefore in your case a he/she cannot be appointed as a Managing or Whole Time Director of the Company on the basis of Business Visa and cannot receive salary. Business Visa is granted to conduct business activities in India. In order to receive salary a person should have an Employment Visa.

  3. Hi, we want appoint a foreign resident as Executive director of private limited company , we will be paying commission based on the sales we make, so i wanted to know will there be any tax on what we pay to her. ( we are not issuing any shares to foreign director.)

    1. Since the commission will be generated from an Indian Company, it will be taxable as per the Income Tax Act (As per Residential Status Rule)and the Company will be required to deduct TDS at the time of making payment. Also, as per sec 139A of Income Tax Act, every person, whether resident or non-resident in India, who is a director in an Indian Company that has financial transaction of Rs. 250,000/- or more in a financial year will have to compulsory obtain Indian PAN card.

  4. i am floating a PLC with NR as a director in the company. in such a case while filing DIR-2, do i need to mention the details regarding the holding of directorship by NR in company not registered in India?

  5. Section 196 of the Companies Act, 2013, Can you elaborate, if the NRI can become MD of a public company, but shares are not traded publically

    1. As per point (e) of Part 1 of Schedule V to Companies Act 2013 , a MD or WTD or Manager of company shall be a resident of India. If you wish to appoint an NRI as an MD, you need to make an application to Central Government.

  6. Please tell me how much share in private limited company a foreigner can hold. In my company I have two indian director and we want to add one foreigner director.

  7. Dear sir, Namaskar! I am a Russian citizen, having O.C.I. card, residing in India for 5 years 6 month continuously. I have PAN card, Aadhar card, Bank Statement. My husband (Indian citizen) and I want to incorporate PVT. LTD. Company. But i am confused at one place whether I should file MoA and AoA physically signed and attached in attachment column of INC-32 or should submit through linked form INC-33,34. Thank You in advance with regard.

    1. If the number of subscribers to MOA are less than 7, the documents are to be filed through linked forms i.e. e-MOA and e-AOA. However, if the number of subscribers to MOA are more than 7, then the documents have to be submitted in physical form.

  8. can a nri director pay for preliminary expenses from his account and later get reimbursed by the company?

  9. The MD of the company is Indian Citizen and Resident Indian at the time of his appointment. Can he subsequent to his appointment as MD relocate to the overseas office of the Indian company, thereby becoming non-resident and still continue as the MD of Indian company?

    1. As per provisions of Section 196 of the Companies Act, 2013, In case of private companies vide Notification dated 5th june, 2015 there is no such restriction that MD should be resident in India. Thus, even a non-resident can become MD.

      1. As per provisions of Section 196 of the Companies Act, 2013,in case of a private company Notification dated 5th june, 2015. there is no such restriction that MD should be resident in India. Thus, even a non-resident can become MD.

  10. Sir, can the foreign director be made a party to suit in a case filed against the company in india? are there special provisions for that?

  11. Sir you mentioned that PAN is not required for NRIs but while filing DIR-3 even after selecting Non Resident it shows PAN is Mandatory.

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