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Can NRI become MD of a company in India

12 March 2009

Can anyone clarify what are the implications of an NRI becoming a whole time director of an Indian company? Tax implications? Company law? FEMA? any other?

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8 Replies

Gargi Ranade (CS) (619 Points)
Replied 13 March 2009

Please correct me if I am wrong !

The Comapnies Act ,1956 no where prohibit appointment of NRI as a Managing Director, in fact we have japanese MD (who is working actuly from India ), you just require to obtained a DIN and file form 32 and form 23 ,if you are Public Co. then take Board Meeting shareholder meeting file form 32 and for 25C, form 23 and you can appoint NRI as MD but as he will be whole time director practicaly he must stay in India for fulfilling the MD's responsibility .

sudarshan (CA) (745 Points)
Replied 13 March 2009

but as per sch XIII, the person to be appointed as MD without approval of Central Government, he should be resident in India. Resident means who has been staying in India for a continuous period of twelve months immediately preceding the date of his appointment.

sudarshan (CA) (745 Points)
Replied 13 March 2009

but as per sch XIII, applicable to public companies, the person to be appointed as MD without approval of Central Government, he should be resident in India. Resident means who has been staying in India for a continuous period of twelve months immediately preceding the date of his appointment. So the person should become resident then only he can be appointed as MD

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 14 March 2009

Though, MD is the whole time director of the Company, yet a NRI can be appointed as the MD of the Company. But in case of public companies it requires the approval of Central Government because of not compliance of Schedule XIII. Thus following is required :-

DIN ( Before appointment )

Form 23 ( Within 30 days )

Form 32 (within 30 days )

Form 25B ( Within 90 days of Appointment in case of Public Company )

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Shiv Prakash (164 Points)
Replied 29 October 2009

1. Can NRI hold 75% shares of a non-listed (non-NSE/Non-BSE listed) public company..?

2. Can NRI hold 75% or mor shares of private company ?

Pl reply.

Shiv

DEEPAK KUMAR TIBREWALA (profession) (101 Points)
Replied 19 January 2011

Please let us know any approval of RBI Required for appointment of NRI as a MD.

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7014 Points)
Replied 06 July 2011

Originally posted by : Shiv Prakash
	1. Can NRI hold 75% shares of a non-listed (non-NSE/Non-BSE listed) public company..? 2. Can NRI hold 75% or mor shares of private company ? Pl reply. Shiv

Yes NRI can hold 75% shares subject to the FDI guidelines if the shares are held on repatriation basis by NRI.

Same as above.

Anuj

0-9810106211

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(Guest)

NRI cant become the Managing director/whole time director, because the definition specifically says that Managing director have substantial power of the company and Whole time director means the director in whole time employment.

If NRI is appointed as Managing director, who will manage the affairs of the Regd Office?

It is practically not possible. It is something like that Bill Gates, Laxmi Mittal or Steve Jobs has been appointed as the Managing director of Reliance Industries Limited or some other company.

It is practical only in case of the company, whose Regd. Office is in India but have the branch office outside India and at least 75% of the revenue comes from the operation of that country.