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Can NRI become a board member in a pvt ltd company


Folks,

Please clarify, can NRI become a board member in board of directors, in a pvt ltd company or in any form of company except public sector.

Most recently, one of my friend who is NRO now, established a company in india and his CA adviced him not to select NRIs friends as their partners/shareholders/onboard to run and do business in india.

Can NRI be a sole director/MD of a indian pvt ltd company to conduct international exports services by having EC and what tax exemptions are there for firms that managed by NRIs.

 
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Assistant Manager @ EY


In my view.......Companies Act is silent about the residential status of the Director...No where it is mentioned that NRI is ineligible for being appointed as Director. Hence a NRI can become a director. Regarding tax exemptions We never came across of specific exemtions for  firms that managed by NRIs.

 

Better to post your query with an expert.

 
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Company Secretary


Dear Mr. Anwar

 

There is no restriction on appointment of NRI as director of the Indian company.However in case of appointment of NRI as MD you must comply some procedural requirements under Companies Act, 1956.

 

DCA Circular dated 16-2-1995 clarifies that there can not be any restriction for incorporation of a company whether all the subscriber to the MOA/AOA/ proposed directors are residing abroad, being either foreign nationals, or NRI subject to the approval of RBI, where necessary.
 
 
Regards

 


Total thanks : 1 times

 
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Dear Ajay,

Appreciate your expert comment. This sounds genuine when you refer that DCA.

Thanks much.\

 
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Company Secretary


Dear Mr. Anwar

 

You can see the details regarding incorporation matter and director in the circular no. 1/95 dated 16-2-1995 issued by DCA.

 

Regards

 
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dear mishra sir

                               can u pls tell me did the first auditor need to inform the roc for his appointment as a statutory auditor of private limited company?

 
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Hello Anwar,

 

Section 286 of the Companies Act provides that notice of every meeting of the Board of Directors  of a Company must be given in writing to every director for the time being in India, and at the usual address in India to every other director. However,telephonic invitation/oral can not amount to the notice within the meaning of Section 286.( R.Khemka Vs Deccan Enterprises  (P) Ltd. 1998.

 

In view of the above section it is clear that if an NRI appointed as board member it is difficult to call board meeting and other board proceedings, since he is residing abroad.Though there is no express prohibition to appoint an NRI as Board member practically there are difficulties to appoint an NRI as Board member by complying with Section 286 of The Companies Act.

 

 

However, The Institute of Company Secretaries of India (ICSI) has, through its Secretarial Standard-1(SS-1),Suggested service of notice by e-mail or any other electronic mode also. However, where a director has specified a particular mode the notice should be given by that mode only.

 

With Best Regards,

Kiran Kumar V

 
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Law Manipulator


Auditor appointed in the newly Incorporated Company need not to give the Intimation to ROC.

 
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Chartered Accountant


ONE OF MY CLIENT IS A AMERICAN CITIZEN BUT LIVING IN INDIA FROM LAST 3 YEARS .  HE IS PRESENTLY DIRECTOR OF A PRIVATE LIMITED COMPANY OF WHICH I AM THE CA.  HE NOW WANTS TO BE MD OF THE SAID PRIVATE LIMITED COMPANY.  CAN YOU TELL ME: IF THERE ARE ANY RESTRICTIONS OR NORMAL PROVISIONS APPLY.

 
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Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA

There should be no restrictions on NR becoming MD of the Company.

 
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