Dear Sumathy,
As per RBI Press Release no. 2005-06/142, dated. 2-8-2005,
Under the Foreign Exchange Management Act, 1999, appointment of a foreign national as a director on the Board of Directors of an Indian company does not require the Reserve Bank's approval.
The Reserve Bank has also granted general powers to an Indian company to make payment in rupees towards sitting fees or commission or remuneration and travel expenses to and from and within India to its non-whole time director who is resident outside India and is on a visit to India for the company's work.
Section 267 lays down certain categories of persons who have been disqualified from appointment to the post of a Managing Director. These list of disqualifications must be read alongwith section 274, which provides or states about who are disquilified as director appointed on the board of company.
If we closely analyze these provisions as above, we can conclude that an NRI, if qualified, can be appointed as a managing director of the Private Limited Company.
There is no special procedure for appointment of NRI as an MD. You will be required to take DIN no for the proposed director and a consent letter of his that he is willing to become a director in the company. Then pass following Board resolution to take him on board and then file Form No 23 and 32 along with Fees.
“RESOLVED THAT pursuant to the provisions of article ______ of Article of Association of the company and other applicable provisions of the Companies Act, 1956, Mr. Preet Bharara, be and is hereby appointed as non-rotational Managing Director of the company without any remuneration for a period of 5 years w.e.f. August13th, 2012.
RESOLVED FURTHER THAT any director of the company be and is hereby authorized to file the necessary returns with the Registrar of Companies.”
Regards,
Veeral Gandhi
CAclubindia
