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Priyanka Bajpayee
| Updated: 24 Mar, 2020 | Category: Company Registration

Company Incorporation by Non-Resident Director

Non Resident Director

In the eyes of law, company is an artificial person who has a separate legal entity from its members. It is the responsibility of the directors of the company to manage and control the affairs of the company. As per the Companies Act, 2013[1], there is no restriction on Company Incorporation by a Non-Resident Director provided that amongst all one of the directors must be an Indian. The foreign director can be an executive or non-executive director.

In this topic, we will discuss Foreign Directors under the Companies Act 2013 and Company Incorporation by Foreign Director

Non-Resident Director under the Companies Act, 2013 – An Overview

A Director is termed as a Director appointed to the Board of a company. The Directors are the agents and trustee of the company who acts on behalf of the company. The directors of the company look after the management activities of the company as well as protect the long-term interests of the shareholders of the company.

As per the Companies Act, 2013, it does not bar non-residents from becoming directors in the Indian Company. A foreigner Director can be appointed as Whole-time Director, Independent Director, Additional Director, Alternative and Nominee Director.

The appointment of Directors, including the Non-Resident directors, are governed under section 152 of the Companies Act 2013. The Non-Resident Director needs to fulfil the following conditions and possesses the requisite documents to appointed as a director in the company.

Requisites for appointment as a Non-Resident Director

Before the appointment, a Non -Resident Director is required to fulfil the following requirements-

  • To obtain a Digital Signature Certificate.
  • To apply for Director Identification Number.
  • For Non-Residents Indians also, a PAN card is required.
  • Declaration by the applicant that he is not disqualified from becoming a Director.
  • A consent in DIR-2 must be provided by the Non-Resident to hold the office as a director.
  • Submission of the documents to the Registrar of the Company within 30 days from the date of appointment of Non-Resident Director.
Note: All the documents are required to be notarized by the Public Notary and also apostilled by the authority of the Respective Country where the Non-Resident resides.

Additionally, the documents can also be certified by the Managing Director, CEO or Company Secretary of the Indian Company, where the Non-Resident is already a Director.

In the case of Indian Origin Card of a Non-Resident applicant or having Overseas Citizen of India Card, the documents can only be attested by the Gazetted Officer in India.

Important points to be kept in mind in the case of Company Incorporation by Non-Resident Director

  • A Non-Resident Director in an Indian Company can hold a Foreign Currency Account with the bank operating outside India.
  • He/she must attend at least one Board meeting either by personally present in the meeting or through video conferencing.
  • There must be at least 1 Indian director (Resident Director).
  • A Non-Resident is liable for tax deduction under the Income-tax Act.
  • A Non-Resident is eligible for the remuneration, sitting fees and travel expenses from the company.

The procedure of Company Incorporation by Non-Resident

As per the Companies Act, 2013 For Company Incorporation by Non-Resident Director, Below-mentioned procedure is required to be followed-

Incorporation by a Non-Resident Director – As per the Companies Act,2013 there is no bar in the Company Incorporation by a Non-Resident Directors provided, one of the directors shall be an Indian Director. The Non-Indian Director can be appointed as both an Executive and Non-executive director.

At the time of Company Incorporation, every applicant, including the Non-resident, shall be allotted with the DIN. DIN Application shall be made in electronic form DIR-3 to the Central Government.

What documents are required for DIN Application in case of Non -Resident Director?

Below- mentioned documents are required for application of DIN for Non Indian Director-

  • Nationality Identification as an Identification Proof.
  • Passport details(In case of Non-Resident)
  • Bank Statement/Utility Bill/Telephone Bill as an Address Proof.
  •  Photograph (Passport size).

DIN shall be filed and signed by the applicant (Including Non-Resident) using his/her Digital Signature Certificate. DIN shall be valid until the lifetime of an applicant

  • The DIN, along with the Declaration, shall be furnished by the applicant that he is not disqualified from becoming a director.
  • DIR-2 (A Consent in writing by the proposed director) to act as a director(including Non-Resident director). The same shall be filed to the ROC within 30 days from the date of his appointment.

Appointment of Non-Resident Director within the specified limit as per the Companies Act, 2013 – A Non-Resident Director shall be appointed within the limit specified under the Act. However, if the company wishes to exceed the number of appointments, it can do so by passing a Special Resolution.

Further, DIR-12 is to be filed by the Company Secretary or the Chartered Accountant of the company to inform about the appointment of the directors, i.e. even at the time of company incorporation by Non-Resident, it is required to file DIR-12 and intimate the ROC about the appointment of Directors.

At the time of Company Incorporation following documents are required to be attached in DIR-12

  • Declaration of the First Director (Including Foreign Director)
  • Consent to act as a Director.

Takeaway

At the time of Company Incorporation by the Non-Resident Director, he has to follow all the compliances to be followed by the Indian Resident Director. The Act does not restrict the appointment of the Non-Resident Director. However, it does not provide a similar immunity compare to the Indian Resident Director.

For any query related to the appointment or related services, contact Corpbiz, our team of professionals will assist you by providing proper guidance and in the execution of compliances.

Read our article:How to Obtain Director Identification Number?

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Priyanka Bajpayee

Priyanka Bajpayee has done Masters in International Business Law and well versed in content writing covering the area of legal and finance. Also, she has practical experience of almost 1.5 years in Legal compliance and secretarial work.

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