How many foreign directors are allowed?
A Private Limited Company is required to have atleast 2 directors. However, a Public Company needs to have minimum 3 directors.
Out of 2/3 directors, atleast one director is required to be an Indian resident.
A resident means a person who has stayed in India for atleast 182 days in the financial year. Remaining directors can be foreign directors. That means foreign directors need not stay in India.
Attend meeting through Video Conferencing
Further, foreign directors can attend the meeting through video conferencing without being present in India.
Director Identification Number (DIN) Mandatory
Foreign directors automatically get DIN while incorporating the Company. If foreign director gets appointed, then also DIN will be allotted during addition of director
Appointment of Indian Authorized Signatory
Even if foreign director is appointed, Indian authorized signatory is required to sign on:
1) GST
2) Banking documents
3) ROC filings
4) Income Tax
5) EPFO/ESIC portal
Usually foreign directors oversee the operations in India & provide signing authorization to Indian directors to run the operations smoothly
Foreign Directors Must Declare Not Being Convicted / Bankrupt
As part of the incorporation:
- DIR-2 consent
- Declaration of not being disqualified under Section 164 must be signed even by foreign nationals.
Digital Signature Certificate (DSC) required for Foreign Directors
Foreign directors required to have DSC to sign digitally on various documents in India. For application of DSC, notarized copy of passport, address proof & contact details are required.
Can a foreigner become shareholder in Indian Company?
Yes, foreigner can be a shareholder in the Indian Company. A foreign Company can also become wholly-owned holding Company of Indian Subsidiary Company.
It can hold any amount of percentage of shareholding as it may want. There is minimum or rmaximum shareholding restrictions in the Indian Company.
100% Foreign Direct Investment (FDI) under the Automatic route is allowed in almost all sectors. Certain sectors require Government Approval (defence, insurance, media, telecom etc.)
Foreign Shareholding Reporting Under FEMA
This is critical for foreign direct investment:
- FC-GPR must be filed within 30 days of allotment of shares
- Annual FLA return must be filed by 15 July every year
Non-compliance leads to penalties.
If you are a foreign Company who is looking to establish its presence in India & have any queries relating to it, then feel free to contact us
at +91-9268747482 &
vidhu@vidhuduggalandco.com
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