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Incorporation of Company with a Foreign Director in India

As India is attracting more FDIs you might want to know how an Indian company can have a foreign national as a director. This article explains everything.

FDIs bring with them not only investment but technical know-how, managerial expertise, and improved technology. With relaxed FDI norms, lower wages, and tax exemptions, India seems an attractive destination to invest in.

Firstly, let’s see who a director is a company is an intangible and invisible person whose duties and functions are entrusted to people called the director of a company.

The Companies Act, 2013 allows foreigners to become directors of Indian companies. A foreign individual can become an executive or a non-executive/independent director of Indian companies whether private, public, listed, or unlisted. A foreign director holds the same duties and roles as an Indian director.

Documents Required to Incorporate an Indian Company with a Foreign Director

(1) Digital Signature Certificate (DSC): To ensure a safe and secure electronic verification, one must obtain a DSC.

(2) Director Identification Number (DIN): It is an 8-digit unique number that has lifetime validity. Through DIN, the details of all the directors are recorded in a database.

As already mentioned above, if the proposed director already has a DIN, the same needs to be furnished. If not, you can apply for DIN by filling out the SPICe form in the MCA portal. Allotment of DINs to the proposed first directors for incorporating a new company is made only through SPICe form. A fee of Rs.500/- is chargeable for the application of DIN.

Use one of the many suggested company names from Vakilsearch’s company name generator for your brand-new, unregistered business.

Documents needed for the application of DIN

  • Passport size photographs
  • As identity proof, a notarised and apostilled copy of the passport (passport is mandatory for foreign nationals)
  • As an address proof, a notarised and apostilled copy of the driving license, passport, or utility bills like telephone bill, electricity bill
  • And if the proofs are in a language other than Hindi/English, the proofs are to be duly translated to English by a certified translator or a notary public of home, under its seal.

(3) A Declaration stating that the applicant is not disqualified from becoming a director has to be furnished along with the DIN.

(4) DIR-2 (consent from Directors) shall be filed to the ROC within 30 days from the date of his/her appointment.

Checklist for Incorporating Indian Company with a Foreign Director

  • Self-attested documents, and passport of the proposed director notarised and apostille in the home country. In case of non-availability, the notary can be obtained in India.
  • If the individual already holds a DIN, it is to be cross-checked if the same was obtained through prescribed laws. Also, the details of directorship with other companies need to be checked as well. If he/she doesn’t have a DIN, you can apply for it in India.
  • In case the foreign director holds shares in the company, its details and specifications are to be furnished.

Things to Note for Incorporation of Company

  • Foreign directors intending to become a whole-time, or a managing director must fulfill the criteria of being a resident of India (someone who has stayed in  India continuously for not more than 12months, immediately before the appointment as a director).
  • They should be aged between 21 – 70 years
  • Further, they should not be insolvent, convicted of an offense
  • They shouldn’t be sentenced to more than 6months of imprisonment
  • The company must have an Indian or an Indian resident on its board of directors
  • Foreign nationals can be appointed as an independent director if he/she possesses skill or expertise in a certain field related to the company’s business
  • The proposed director must hold a valid employment visa.

Incorporation of a company by oneself must be overwhelming. That’s when the services of Vakilsearch come in handy. They ensure smooth processing of documents and successful registration of your company.

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