Subscription to MoA by Non Residents (at the time of Company Incorporation)
January 11, 2014 by CS Samrish Bhanja
Subject to the sectoral policy on foreign investments and non-resident holding limits applicable to an Indian company, the entire share capital of a company may be held by non-residents. There is no restriction on a non-resident being a subscriber to the Memorandum of Association, however some procedural aspects under Companies Act needs to be taken care of.
Signature of the Foreign National to be consularised by the Indian consulate in the country of the Non Resident subscriber
Special procedure as to the legal validity is followed in case of subscription to Memorandum of Association (MoA) as a measure of safeguard for tracing Foreign National in case of default made. It was felt appropriate that the address of the Foreign National is attested by the Indian Embassy of Country of origin of Foreign National. This was the logic given by the Department of Company Affairs (DCA, now MCA) way back in 2003 vide its circular 17/69/2003 CL-V dated 7th January, 2004. DCA came out with this circular in order to prescribe uniform procedure on subscription to MoA by Foreign National.
Vide the said circular dated 7th January 2004, RoCs were advised to follow uniform procedure on subscription to MoA by Foreign National. The circular provided for the following:
- If the MoA is signed by foreign nationals outside India, their signatures are to be attested before the Indian Embassy in the Country in which subscribers are residing
- If the MoA is signed by foreign nationals (who are not resident of India and are on temporary visit) in India, their signatures can be attested by a person in India (professional like Chartered Accountant, Company Secretary, Advocate etc) and proof of their visit to india like passport and visa are to be produced for verification
- If the MoA is signed by foreign nationals residing in India for several years / permanently, procedure as at para (b) above is followed and documentary proof of the fact that the subscribers have been residing in india is also insisted upon.
MoA can also be subscribed by suitable authorisation
It may also be noted that an Indian National resident in India can also be authorised by way of Power of Attorney (PoA) to subscribe to the MoA. In that case the PoA should be Notarised and consularised in the country of origin. Also, such PoA should be adequately stamped within 3 months of the document landing in India.
If the subscriber is a foreign company, the authorisation shall be by way of Board Resolution which shall also clearly specify the number of shares being subscribed. Such Board Resolution should be notarised and consularised in the country of origin.
If the MOA is subscribed in any other language other than the language of the MoA, then an affidavit shall be required stating that the subscriber has understood the contents of the document, i.e. Memorandum and Articles of Association.
FEMA compliances have been separately covered in a separate blog titled “Post Incorporation Compliances-Companies Act 2013”
CS Samrish Bhanja