Appointment of Foreign Director in Private Limited Company

Company directors are key persons who runs company , take business decisions. They are called as board of directors. Role of board of directors is to take necessary decisions in favour of company. As per the provisions of the Companies Act 2013, a foreigner or Non Resident Indian (NRI) can be appointed as executive or a non-executive/independent director in a Private Limited Company provided that there shall be at least one Director who is resident of India. The Companies Act 2013 given permission for foreign nations NRI to become director in Indian Companies. NRI can become an executive or a non-executive/independent director of Indian companies whether public or private. In this article we had explained procedure to appointment of director.

Appointment of Foreign Director can be done by two mode.

1. Appointment by Share Holders
2. Appointment by Board of Directors

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Conditions to Appoint NRI as Director

Companies Act 2013 makes it mandatory that following conditions must be followed to appoint NRI as director in Company registered in India.

• Every person shall hold DIN Director Identification Number
• Persons s not disqualified from becoming a Director
• Need to give consent to act as director in DIR 2

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Key points  Appointment of Foreign Director in Private Limited Company

1. There are no restrictions in term of residency
2. An NRI or Foreign Director can be executive or Non Executive Director.
3. A foreigner can be appointed as Whole Time Director or Non Whole Time Director

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Procedure for Appointment  of Foreign Director in Private Limited Company

Step 1 : Apply DSC

To become director in Private Limited Company first step is to apply for Digital Signature of Director. For making necessary filing at MCA DSC is mandatory. List of documents for DSC 

1. Notarised and Apostilled copy of the passport
2. Notarised and Apostilled copy of Driving Licence
3. Passport size photo (Recent)
4. Cell & Email ID 

Step 2 : Apply DIN For Foreign Director

Director Identification Number is mandatory for becoming director in company. NRI Director need to apply for DIN , by DIR 3 filing. Government fees for DIN registration is Rs. 500/- . Certification From professional CS/CA/CMA is required. 

Step 3 : Conduct Board Meeting

Board of directors take collective decisions in favor of company. After receiving request letter from NRI Director to as director board shall conduct a meeting. In meeting board need to pass board resolution to add NRI as director. This documents need to be signed by board and stamp of company required. 

Step 4 :  Filing of DIR 12 For Appointment

DIR 12 form is required to be filed for appointment of foreign director in Private Limited Company. Content of DIR 12 form are Company details, Date of appointment, Designation , Declaration by first director , Declaration of the appointee director in Form No. DIR-2;

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Procedure under Reserve Bank of India regarding Foreign Inward Remittance by Director 

1. Go to https://m.rbi.org.in/Scripts/femaview.aspx?femaid=64 for stepwise guidance
2. File Form SMF (Single Master Form) 30 days of receipt of Foreign Remittance amount
3. Upload following documents– KYC Report on the non-resident investor through an AD Category – I bank (Refer AnnexureForeign InwardRemittance Certificate (FIRC) issued by the Bank evidencing receipt of remittance.
4. The Report would be acknowledged by the Regional Office concerned, which would allot a Unique Identification Number for the Amount Reported

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Reporting Of Issue Of Shares of NRI Director 

The company shall be required to issue shares/debentures/convertible Preference shares within 180 days from the date of remittance and After issue of shares, the Indian company has to file Form SMF, through its AD Category I bank, not later than 30 days from the date of issue of shares.

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Disclosure of NRI Director under Income Tax Act, 1961

Any income earned in India is subjected to Income Tax. Similarly, in the case where a foreign national earns as a director of an Indian company is subjected to income tax under Income Tax, 1961. The required TDS shall be deducted from their remuneration or commission as per the provisions of Income Tax Act.

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