{"id":42529,"date":"2022-04-23T11:15:47","date_gmt":"2022-04-23T05:45:47","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=42529"},"modified":"2022-04-23T11:15:48","modified_gmt":"2022-04-23T05:45:48","slug":"foreign-director-for-company-incorporation-in-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/","title":{"rendered":"Foreign Director for Company Incorporation in India"},"content":{"rendered":"\n<p class=\"has-drop-cap\">An Indian entity can be set up with an\noverseas director in India under the Companies Act, 2013. The BODs manage the\ncore affairs of the company. The board of a company can entail Indian as well\nas foreign nationals. But, an Indian entity must have at least one director\nfrom the Indian Territory.<\/p>\n\n\n\n<p>Foreign directors cannot solely run the\ncompany&#8217;s affairs as board members in India. Legally, an Indian company can\nappoint a foreign national as an independent director or executive. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/#Director_under_Companies_Act_2013\" >Director under Companies Act, 2013<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/#Conditions_for_becoming_a_Foreign_Director\" >Conditions for becoming a Foreign Director<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/#Common_documents_required_for_securing_a_DIN\" >Common documents required for securing a DIN<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/#Managing_Director_or_Whole-Time_Director_requirement\" >Managing Director or Whole-Time Director requirement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/#Independent_Director_Requirement\" >Independent Director Requirement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/#FEMA_Norms_for_a_Foreign_Director\" >FEMA Norms for a Foreign Director<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/#Taxability_on_Foreign_Directors_income\" >Taxability on Foreign Director&#8217;s income<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/foreign-director-for-company-incorporation-in-india\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Director_under_Companies_Act_2013\"><\/span>Director under Companies Act, 2013<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong>Companies Act, 2013<sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_2013\"><strong>[1]<\/strong><\/a><\/sup> <\/strong>specifies a director as an individual appointed to the company&#8217;s board. The directors administer the business affairs and are the spearhead of a company. The company directors are collectively called the BODs, i.e. Board of Directors. <\/p>\n\n\n\n<p>The company board is also liable for\nsafeguarding the shareholders&#8217; interests. Under the Act, an individual can be\nappointed to serve the following types of directorship positions in a company: <\/p>\n\n\n\n<ul><li>Managing\ndirector <\/li><li>Whole-time\ndirector <\/li><li>Independent\ndirector <\/li><li>Small\nshareholders director <\/li><li>Additional\ndirector <\/li><li>Alternative\ndirector <\/li><li>Nominee\ndirector <\/li><\/ul>\n\n\n\n<p>The Act does not impose any limitation\nthat prevents foreign nationals from becoming the director of an Indian\ncompany. Therefore, they can serve any of the aforementioned directorship\npositions in the Indian company. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_for_becoming_a_Foreign_Director\"><\/span>Conditions for becoming a Foreign Director<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The conditions that need to be met by a\nforeign national to become a director in an Indian entity are as follows; <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Director Identification Number (DIN)<\/h3>\n\n\n\n<ul><li>Every\nperson intending to become a director in an Indian entity needs to secure a\nDIN, i.e. Director Identification Number, at the time of incorporation. <\/li><li>A\nforeign national must secure a Director Identification Number before being\nappointed as director of an Indian company.<\/li><li>Form\nDIR-3 is used for filing the application for DIN with the MCA, i.e. Ministry of\nCorporate Affairs. Foreign national is also obligated to apply for DIN in the\nSPICe+ form. <\/li><li>The\napplicant should furnish the declaration evidencing that the proposed director\nhas not been disqualified under the Act. <\/li><li>The\nforeign national also requires filing form DIR-2 with MCA before discharging\nthe duties upon successful appointment. <\/li><li>The\nforeign national is liable to share his written consent with the concerned ROC\nwithin thirty days of his appointment.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Common_documents_required_for_securing_a_DIN\"><\/span>Common documents required for securing a DIN<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Photograph<\/li><li>Address\nproof such as DL, latest utility bill, and bank statement <\/li><li>Passport<\/li><li>The\ncopies of the above documentation must be attested by a Public notary and be\nattested by the authority concerned in their nation of residence. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Digital Signature Certificate (DSC)<\/h3>\n\n\n\n<p>The foreign nationals appointed as\ndirectors must secure a Class 3 DSC. The Digital Signature Certificate is\nrequired to e-sign the online form. The foreign national is also required to\naffix the said DSC on the DIR-3 form or Spice+ from for securing the DIN. <\/p>\n\n\n\n<p><strong><em>Following are standard paperwork required\nfor securing DSC<\/em><\/strong><\/p>\n\n\n\n<ul><li>Photograph<\/li><li>Address\nproof such as DL, latest utility bill, and bank statement <\/li><li>Passport<\/li><li>The\ncopies of the above documentation must be attested by a Public notary and be\nattested by the authority concerned in their nation of residence. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Managing_Director_or_Whole-Time_Director_requirement\"><\/span>Managing Director or Whole-Time Director requirement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Foreign nationals seeking to hold the\nposition of whole-time directors or managing directors in Indian companies must\nhave stayed in India continually for not less than 12 months immediately before\nthe date of appointment as director. <\/p>\n\n\n\n<p>There is an age criterion in this context\nthat every foreign national should comply with. According to the Act, the\napplicant&#8217;s age should not be less than 21 years and more than 75 years. <\/p>\n\n\n\n<p>Also, being insolvent or convicted shall\nprevent such an applicant from qualifying for such a position. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Independent_Director_Requirement\"><\/span>Independent Director Requirement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The independent director position is only\navailable to foreign nationals who possess the required skill set, experience,\neducation and qualification in one or multiple fields of law, finance, sales,\nmarketing, research and administration related to the company&#8217;s business. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FEMA_Norms_for_a_Foreign_Director\"><\/span>FEMA Norms for a Foreign Director<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A foreign national serving the position\nof directorship in an Indian company qualifies for receiving remuneration,\ncommission and sitting charges, just like Indian directors. Therefore, they\nmust comply with the Foreign Exchange Management Act (&#8216;FEMA&#8217;), 1999.<\/p>\n\n\n\n<p>Foreign nationals seeking to become a\ndirector should hold a legitimate employment visa. They are eligible for\nholding a foreign currency account with a designated bank operating abroad. <\/p>\n\n\n\n<p>Also, they qualify for remitting or\nreceiving the whole salary credited to them for their services. <\/p>\n\n\n\n<p>When the Indian entity appoints a foreign director, the latter should apply for remittance of their remuneration to the valid dealers with an undertaking certificate and statement about payment of<strong> <\/strong><a class=\"text-primary\" href=\"https:\/\/corpbiz.io\/income-tax-return-filing\"><strong>Income Tax<\/strong><\/a><strong> .<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Taxability_on_Foreign_Directors_income\"><\/span>Taxability on Foreign Director&#8217;s income <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The income reaped by a foreign national attracts taxes under the IT Act, 1961. The required <a class=\"text-primary\" href=\"https:\/\/corpbiz.io\/tds-return-filing\"><strong>TDS<\/strong><\/a><strong> <\/strong>(Tax deduction at source) shall be deducted from their remuneration or commission as per the IT Act&#8217;s norms. <\/p>\n\n\n\n<p>Under the IT Act, foreign nationals\nserving the position of a director are liable to obtain a PAN card in case\ntheir threshold of a financial transaction is equal to or more than Rs.2 50,000\nin a given FY. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The appointment of a overseas national as a director in an Indian company is subjected to heaps of compliance. The Companies Act, 2013 is the prime legislation that oversees and regulates such subject matters. The foreign director in an Indian company is liable to meet several compliances such as timely filing of taxes, constituting a CSR committee, whenever the turnover threshold surpasses the prescribed limit and filing key forms with MCA. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/company-incorporation-by-non-resident-director\/\">Company Incorporation by Non-Resident Director\n<\/a><\/mark><\/p>\n\n","protected":false},"excerpt":{"rendered":"<p>An Indian entity can be set up with an overseas director in India under the Companies Act, 2013. The BODs manage the core affairs of the company. The board of a company can entail Indian as well as foreign nationals. But, an Indian entity must have at least one director from the Indian Territory. Foreign [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":42531,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[2287],"acf":{"service_id":"408"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":4585,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/42529"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=42529"}],"version-history":[{"count":9,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/42529\/revisions"}],"predecessor-version":[{"id":42541,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/42529\/revisions\/42541"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/42531"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=42529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=42529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=42529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}