FOREIGN DIRECTOR ENTRY

FOREIGN DIRECTOR ENTRY

To be appointed as a director in an Indian company, a foreign national must comply with the provisions of the Companies Act, 2013, the Foreign Exchange Management Act (FEMA), and other applicable rules. The process involves obtaining a Director Identification Number (DIN) and a Digital Signature Certificate (DSC), followed by official appointment by the company. 

Mandatory requirements for entry

• Director Identification Number (DIN): A foreign national must obtain a unique 8-digit DIN from the Ministry of Corporate Affairs (MCA). This is required for all individuals who intend to serve as a director in an Indian company.
• Digital Signature Certificate (DSC): A Class 3 DSC is mandatory for digitally signing the application forms and other regulatory filings on the MCA portal.
• A resident Indian director: Under Section 149(3) of the Companies Act, 2013, every Indian company must have at least one director who has resided in India for a minimum of 182 days in the previous calendar year.
• Valid visa: For whole-time or managing director roles, a foreign national must hold a valid Employment Visa. A Business Visa may be sufficient for non-executive or independent director roles, but it is not valid for receiving a salary in India.
• Security clearance: An individual who is a national of a country sharing a land border with India (including China, Bangladesh, Pakistan, Bhutan, Nepal, and Myanmar) must obtain prior security clearance from the Ministry of Home Affairs. This is required for applying for a DIN or being appointed as a director.

Step-by-step process

1. Obtain a Digital Signature Certificate (DSC):
The first step is to apply for a Class 3 DSC from a government-approved certifying authority in India. The application requires attested copies of the applicant's passport and address proof. 

2. Apply for the Director Identification Number (DIN):
A foreign national can obtain a DIN through one of the following methods: 

• For a new company: The DIN can be applied for through the integrated SPICe+ incorporation form for up to three proposed first directors.
• For an existing company: File eForm DIR-3 on the MCA portal. The form must be digitally signed by the applicant and a practicing professional in India. The security clearance from the Ministry of Home Affairs must be attached for nationals of bordering countries. 

3. Document authentication:
Supporting documents, such as the passport and address proof, must be duly authenticated. For a foreign national residing outside India, authentication is required through: 

• Apostille: If the applicant's country is a signatory to the Hague Convention.
• Indian Embassy/Consulate: For individuals from other countries. 

4. Company passes a Board Resolution:
After the foreign national obtains a DIN, the company's Board of Directors must pass a resolution at a board meeting to approve the appointment. 

5. File Form DIR-12 with the Registrar:
The company must file eForm DIR-12 with the Registrar of Companies (ROC) within 30 days of the board resolution. The following are attached to the form: 

• Certified copy of the board resolution.
• The director's consent to act in Form DIR-2.
• The director's declaration regarding disqualification in Form DIR-8.

6. Post-appointment compliance:

• FEMA compliance: Foreign directors are subject to FEMA regulations concerning compensation and financial transactions.
• Annual KYC: The foreign director must file their KYC details annually using the DIR-3 KYC form or DIR-3 KYC web service.
• Taxation: Income earned in India by a foreign director is taxable under the Income Tax Act. The company is responsible for deducting TDS.