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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

FEMA compliances have been separately covered in a separate blog titled Post Incorporation Compliances-Companies Act 2013

CS Samrish Bhanja


47 thoughts on “Subscription to MoA by Non Residents (at the time of Company Incorporation)

  1. Hello Sir!
    Co is proposed to be incorporated with 3 directors and a fourth NRI to be a subscriber to the Memorandum..Spice form is not allowing 4th person to be included as a director, hence he will be inducted as a director later on.. what are the legal compliances reqd for the first subscription to the M/a for the NRI who resides in Singapore? Apart from notarising and apostillation of the documents such as INC-9, Passport, address proof what else is required?
    Would the PoA be a better option to go ahead with the incorporation, so that all other documents need not be apostilled. To confirm, only the PoA requires the apostillation in the country of residence?
    Thank you

    1. No, there is no as such compliance requirement in case of NR director. As per Rule 13 of Companies Incorporation Rules,2014 where the subscriber to the memorandum is a foreign national his signatures and address on the memorandum and articles of association and proof of identity shall be notarized before the Notary (Public) of the country of his origin and be duly apostilled.

      Apart from the said documents, nothing shall be required for the notarizing and apostillation. However, the Residence proof such as Bank Statement, Electricity Bill, Telephone / Mobile Bill shall be more than 2 months old.

      In that case, the POA shall be notarized and consularised in the country origin.

  2. Sir,

    In the case of incorporation of a company with 2 Indian nationals as directors and one NRI shareholder, would it be possible for the NRI to give a power of attorney to an Indian national (chartered accountant or company secretary) for the purpose of affixing digital signature to the e-MoA? Also, would it be acceptable for such a document to be properly stamped within 3 months of arrival in India?

    Thanks in advance,
    Vikram

    1. Yes, The NRI shareholder can provide authority to affix their DSC on e-MOA. Also, the stamp duty on e- MOA and AOA is paid at the time of Incorporation only. Hence, the concept of 3 months doesn’t apply.

  3. We are going to form a company with two companies in which one company incorporated outside india as subscribers and their authorised representative as first directors and also Indian Resident. My question is do I need to print all the declaration forms, MOA and AOA and then get them signed,notarized and/or apostilled outside India or should Only Board Resolution is notarized and/or apostilled.

    1. Pursuant to Rule 13 of Companies (Incorporation) Rules 2014, if the documents are excuted out of india they are required to be either Notarised or Appostiled or both depending upon the requirement of law

      1. Dear Sir,

        We are forming a company with two foreign subscribers.

        Will this be accepted? Or Should I have one Indian resident as a subscriber mandatorily?

        1. As per the Companies Act, 2013, any person may subscribe to the capital of the Company. It does not mandate that any of the said subscriber be resident of India.
          In accordance to Section 149(3) of Companies Act 2013, “Every company shall have at least one director who stays in India for a total period of not less than 182 days during the financial year”. Therefore, it is mandatorily to have a resident director on the Board, but it is not required to have a resident subscriber in the Company.

  4. Dear Samrish,

    Under new incorporation procedure i.e. in spice forms, if a foreign national holding a valid business visa has arrived in India with Valid DIN and his digital signature has already been formed then any attestation or witnessing is required ??

    1. In accordance to Rule 13(5)(d) of Companies (Incorporation) Rule 2014 no attestation is required if the documents are executed in India and the Non Resident signing the same arrived in India on a Business Visa.

  5. We are going to form a company with two companies which were incorporated outside india as subscribers and their authorised representative as first directors.My question is do I need to print all the declaration forms,moa and aoa on Indian stamp paper and then get them signed,notarized outside india or should I print the documents on foreign countries stamp paper or on just blank paper.

    1. MOA, AOA and other required documents executed by the authorized representatives of the Foreign Companies are to be printed on the plain paper and there is no need to print the same on the Indian Stamp Paper. The Board Resolutions authorizing for signing the docs should be on the letterhead of the foreign Companies. All the docs shall be notarized and/or apostilled as per Rule 15 of the incorporation rules. The documents may additionally be subjected to Stamp Duty in India within 3 months of such documents landing in India.

  6. few of the first subscribers areNRIS in gulf . what to do of stamp paper and for INC9 notary . Any additional requirement .
    regards

    1. Every documents which are required to be filed by NRI to MCA shall be notarized and apostille/ consularised as per the requirement of sub rule 5 of rule 13 of companies (incorporation) rules 2014.
      In case subscribers are NRI’s, INC-9 or any other document signed by subscribers, needs to be notarized and apostille/ consularised in the country where the subscriber is signing the document.
      For more details on the process of notarization you need to check whether the country is part of Hague convention or not (Mostly Gulf countries are not a part of this, so consularization might be needed)

      1. Thanks for responding to all queries with crisp and clear explanation. Its very relevant and helpful.

        My query is :
        New Pvt Ltd company under incoporation with foreign national (Srilanka) as subscriber to MOA and AOA. Directors approached respective country embassy to appostile subscription page but the apostile authority refused to apostile. My questions are : 1) whether subscription page needs to be notorised first before it goes for apostilation. 2) Is there any other process that needs to be performed in India before documents goes for apostile or notary like approval from srilankan embassy in India or approval of high commission or approval ministry of external affairs??

        1. Srilanka is a Commonwealth country. In case of foreign subscriber from Srilanka, his/her signature and address on the Memorandum and Articles of Association and Proof of Identity and Proof of Address shall be notarized by the notary in that part of the Commonwealth.
          Regarding the second query, no other process needs to be done.

  7. Sir, I’m a NRI and starting a private company with Indian director. I’m asked to notarize and get apostille for all the documents INC-10, Inc-9, Inc-8, Declaration, DIR-4, DIR-8, DIR-2, letter of appointment, subscription pages of MOA and AOA. Do all these documents to be notarized and get apostille? I was told earlier only the AOA and MOA to be notarized.
    None of the affidavit or declaration is printed on stamp paper. Is this acceptable for NRI?
    Thanks for your reply.

    1. Every documents which are required to be filed by NRI to MCA shall be notarized and apostille. As per the requirement of sub rule 5 of rule 13 of companies (incorporation) rules 2014, if the country of foreign national is a part of commonwealth, the documents shall be notarised by a Notary (Public) in that part of the Commonwealth.
      If the country of foreign national is a part of Hague Apostille Convention 1961, the documents shall notarized before the Notary (Public) of the country of his origin and be duly apostillised in accordance with the said Hague Convention.
      lastly, if the person does not belong to a country which is a part of commonwealth or hague convention, then the documents shall be notarized before the Notary (Public) of such country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic or Consular Officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 (40 of 1948) or, where there is no such officer by any of the officials mentioned in section 6 of the Commissioners of Oaths Act, 1889 (52 and 53 Vic.C.10), or in any Act amending the same;

    2. If the country of foreign national is a part of commonwealth as well as a member to the Hague Convention. In such case what type of attestation should be followed?

      1. Rule 13 of Companies (Incorporation) Rules 2014 provides that
        If the Country is in any part of the Commonwealth, the documents are required to be notarized by a Notary (Public) in that part of the Commonwealth.
        in a country which is a party to the Hague Apostille Convention, 1961 the documents are required to be notarized before the Notary (Public) of the country of his origin and be duly apostillised in accordance with the said Hague Convention.

        In case the Country is a part of both Commonwealth and Hague Convention, it depends upon the requirement of a particular Country.

  8. Dear Sir,
    Thank you for the article. It is very useful.
    IS the circular 17/69/2003 CL-V dated 7th January, 2004 by dept of Company affairs valid even now regarding “MoA can also be subscribed by suitable authorisation”. Please Clarify.

  9. M having a private company with the non resident as we both are the subscribers but till yet have not subscribe as the money is returned back.
    My question is now we want that me and another person who is resident want to become the subscriber.
    what is the detailed procedure to be followed for removal of the non resident from the deemed subscriber?
    Thanks in advance.

    1. sorry for the late reply. the reply to your query is as follows:
      Foreign Direct Investment (FDI) in India have to comply with time bound FEMA (Foreign Exchange laws) compliances as well. As per Company Incorporation Rules under Companies Act, 2013 subscriber sheet can’t be altered, shareholders can transfer their shares though subject to necessary compliances.

    1. Till now there is no FDI allowed in Real estate sector.

      FDI is allowed in construction sector with a lock in period of 3 years. government has done away with restrictions on size and minimum capitalisation, meaning that “FDI can now be brought into the construction sector in any amount and for any size of project.

      Also, there will now be no lock-in period for FDI investments into hotels and resorts, hospitals, SEZs, educational institutions, old age homes and NRI investments. FDI, however, will not be permitted in construction of farm houses, trading in transferable development rights (TDRs) and dealing in land or immovable property.

  10. a client wants to incorporate a mobile assembling company of whose one of the subscriber is a person resident of china and is also of china origin will this attract FDI? can he be be subscriber to MOA?

  11. Respected Sir,

    Can any one Promoter sign on behalf of other on MOA Sub Pages in case that promoter is out of India. Please let me know its urjent

    1. An Indian National resident in India can be authorized by way of Power of Attorney granted by Foreign Subscriber for signing the MoA and related acts. 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.

  12. Does the circular 17/69/2003 CL-V dated 7th January, 2004 still hold true?
    We are in the course of incorporating a company through INC 29 and one of the subscribers to MOA who happens to be a Non-resident is on a temporary visit to India. Will the attestation of his signature through a practicing CA/CS suffice as we are also supposed to attach the proofs with INC 29?

  13. Dear Samrish,

    A client of mine is a NRI(holding Indian passport) and staying in China since last 7 years.I wanted to know whether the notary of china will notarize INC-9 and another Affidavit,since It would be on Indian Stamp Paper.
    Also please let me know,whether I need to get embassies attestation in addition to Notarization on all ID Proofs’ and MOA/AOA since China is a party to Hague convention.Should I send the MOA & AOA
    after signature of Indian Promoter or before it.
    Regards,
    Amar

    1. In case of NRI, Notarization of INC-9 can be notarized in China in terms of their law.It is to be stamped as per Indian law after the executed and notarized document has arrived here in India. As regards attestation of MOA/ AOA and all his IDs Proofs’, China is a party to Hague Apostille Convention, 1961, accordingly these documents shall be notarized before the Notary (public) of the China and duly apostilled in accordance with the said Hague Convention. Also copy of valid business visa is to be attached

  14. IF Promoters are not in a position to bring subscribed capital as per MOA then what is way out ?
    Wen section 248 is not enforced how can we close/deregister the company?

  15. Can subscriber to MOA bring their share capital by way of adjustment of royalty/fees for technical services payable to them?
    In short can company be formed with shares issued for consideration other than cash to the promoter of the company.

  16. Dear All,

    Does FEMA or /rules/notifications prescribed thereunder or Companies Act, 2013 provide any time period within which a new company with non-resident as first subscribers should receive share capital from such non-resident subscribers i.e. for example: the share capital is to be received within say 90 days of certificate of incorporation, etc?

    Thanks
    Sia

  17. Thanks a lot for prompt reply. They are really helping me.
    Pls let me know can power of attorney holder also sign INC9, INC10,DIR2 on behalf of promoters.
    Does it mean all the docs required to be signed by promoters can be signed by attorney

  18. Thanks for your prompt reply. Pls let me know Can one attorney be appointed for 2 promoters to sign MOA. can one person sign on behalf of both the promoters of the Wholly own subsidiary company?

    1. Neeta, legally one person can be appointed as authorised representative for 2 promoters. But sometimes we may face difficulty in clearing it from the official who is examining the docs.

  19. Very useful info. Thx a lot for sharing. I have one query
    Does following option of POA still hold good in new companies Act?
    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.

    How to we get it stamped in India ? No will be ready to stamp it once its notarized and signed by the party

  20. Dear Samrish,
    Can a foreign company authorise its director (not an India resident) who is also the nominee share holder in Indian company to sign the MOA in its behalf?

    1. Dear Srishti

      Yes, the foreign company may authorise its director to sign MOA. As also stated above, “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”

  21. Will Apostille of the document not be adequate for the documents to be submitted by the foreign national. India as a signatory to the Hague Convention accepts Apostille as a valid form of authentication of foreign documents. Does the MCA not recognise Apostille?

    1. Dear Saurabh,

      Apostille of the document, to my understanding will work. However, their signatures and address on the Memorandum of Association and proof of Indentity, where required, shall be notarised before the notary of the Country of their origin and be duly apostilled according to Hague Convention.

      You raised the query a bit early as I was about to cover this in my next blog. But I guess, this space is more appropriate.

      Thanks Saurabh.

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