Foreign companies are now establishing their business establishments in India, confirming the idea that India is a land of excellent opportunities. There has been an increase in international multinational corporations (MNCs) expanding in India over the past few years.
Several Indian companies have also seen the value in hiring foreign employees and directors as a result of the rise in foreign collaborations. Businesses have benefited from hiring trustworthy foreign personnel in a variety of ways. Taking a business across borders begins with this step.
Private limited companies are the most suitable corporate entity for large businesses and those seeking to expand quickly, according to the Companies Act, 2013. An association of two or more persons formed for the purpose of accomplishing a common goal. 2 to 200 members are needed for the company. Converting to a public company is necessary if the company intends to grow.
A foreigner or an NRI director may be deputed as a director of a private limited company in India provided the appointment is made in compliance with the Foreign Exchange Management Act, 1999 (FEMA), the Securities and Exchange Board of India Act, 1992 (SEBI Act), and the Companies Act, 2013.
Can an NRI Become a Director in a Private Limited Company? : Director in a Private Limited Company:
The corporate dealings of a private limited company must be executed by natural persons, although it is an independent legal entity. In accordance with the Companies Act, 2013, directors oversee the general functions and administrative activities of the company. A company’s Board of Directors is made up of its directors, who work together on crucial issues that affect a company’s welfare. A company’s growth is greatly influenced by their decisions and actions.
The company’s directors are responsible for entering into contracts. A limited liability company, however, doesn’t solely owe its debts or liabilities to its members and directors. Allotment and transfer of shares are key responsibilities of the directors.
A private limited company may appoint an NRI as a director as follows:
Consent of the Director in Form DIR 2:
Form DIR 2 must be filled out and signed by the proposed director accompanied by the necessary documents before the NRI can be appointed as a director.
Digital Signature Certificate (DSC) and Director Identification Number (DIN):
Having a DSC allows a director to authorize digitally signed forms and documents. Every director on the board must also have a DIN. A DIN number is assigned to every director, including NRI directors. In the event that an NRI director lacks a DIN, the company may pass a special resolution through form DIR 3 to obtain one. KYC documents must be submitted with form DIR 3.
A company’s general meeting appoints NRI directors. An extraordinary general meeting (EGM) must be notified to all members and shareholders. Following the EGM notice to members and shareholders, a NRI director is appointed.
Issuing of Appointment Letter:
The NRI director is appointed after the resolution is passed. Detailed information about the salary package and the conditions of the NRI director’s appointment can be found in the letter.
Filing of Form DIR 12:
Once all the required steps have been completed, DIR 12 along with the stipulated documents should be filed by the company with the Registrar of Companies (RoC) within 30 days of the date of assignation of the NRI director.
To appoint an NRI director, the following documents must be filed:
Pvt ltd company must require the following documents for the appointment of an NRI director:
- Applicants for the position of NRI director should upload passport-size photographs.
- NRI director must provide a copy of their passport.
- A notarized copy of a utility bill, such as a telephone bill or electricity bill, proving your address.
- If applicable, provide your PAN (Permanent Account Number).
- Identity proof such as the AADHAR card.
- An application for directorship is submitted on form DIR 2.
- The NRI director’s appointment resolution passed by the company.
- Shareholders and members were notified of the extraordinary general meeting in a copy of the notice.
The candidate who intends to be elected as an NRI director must not only self-attest but also notarize and apostille all the documents listed above.