Hi,
Appointment of Foreign National as MD.
As the appointment of MD is subject to the provisions of Schedule XIII of the Companies Act, 1956, there is a provisions in Part I of the Schedule XIII regarding appointment of MD which says that -
No person shall be eligible for appointment as a managing or whole-time director or a manager (hereinafter referred to as managerial person) of a company unless-
He is resident in India.
Explanation.-For the purpose of this Schedule, resident in India includes a person who has been staying in India for a continuous period of not less than twelve months immediately preceding the date of his appointment as a managerial person and who has come to stay in India,-
(i) for taking up employment in India, or
(ii) for carrying on a business or vocation in India.
So far as condition of part I of Schedule XIII of the act is not fulfilling in our case i.e MD which we r going to appoint is not resident in India, we need to apply to central govt. for his appointment.
However in terms of Section 2(v) of FEMA, a person will be a resident in India only if he resides in India for more than 182 days during the course of the preceding financial year. However, except ion to this general rule is made for any person who comes to India for employment or business or other reasons indicating his intention to stay in India for uncertain period. Such persons become resident immediately for the purposes of FEMA, no matter th ey have not stayed in India for 182 days. Thus, a foreign national seeking employment in India becomes a resident under exchange control law.
The foreign national that we r going to appoint is going to come in India in May on permanent basis.
So my question is that can we appoint that foreign national under schedule XIII if residential status given in FEMA is fulfilled??? I mean to say if we appoint foreign natioanl after May as MD under Schedule XIII then exception that is ginven in FEMA will be fulfilled. Pls. suggest me.
CAclubindia
