NRI Taxation

Can an NRI or Foreigner Become a Director in an Indian Private Limited Company? (2025 Guide)

Can an NRI or Foreigner Become a Director in an Indian Private Limited Company? (2025 Guide)  

Introduction

Indian businesses are increasingly engaging with global talent and investment. Naturally, NRIs and foreign nationals often take up roles as directors, shareholders, or even Managing Directors (MDs) in Indian private limited companies.

This raises some important questions:

  1. Can an NRI or foreigner be appointed as a director or MD?
  2. Can they invest in Indian companies?
  3. Are they eligible to receive a salary?
  4. What compliance steps are needed under MCA, FEMA, and RBI?

Let’s break it down clearly for business owners and legal teams.

Can an NRI or Foreigner Be Appointed as a Director?

Yes. The Companies Act, 2013, allows NRIs and foreign nationals to be appointed as directors in Indian companies.

Types of Director Roles:

At least one director must be a resident Indian (stayed in India for 182+ days in the previous calendar year).

Can an NRI or Foreigner Invest in an Indian Company?  

Yes. They can own shares and even 100% equity in an Indian private limited company, subject to sectoral FDI limits.

Query Answer
Can an NRI invest in Indian companies? Yes (under FDI regulations)
Can a foreigner hold 100% of Indian equity? Yes (under automatic route)
Is RBI approval required? Not in most sectors
Can NRI be both director and shareholder? Yes

FDI through the automatic route does not require prior RBI approval but must be reported via Form FC-GPR on the FIRMS portal.

Step-by-Step Guide to Appoint a Foreign or NRI Director

Step 1: Apply for DSC (Digital Signature Certificate)

Issued by Indian certifying authorities. Foreign documents must be notarized and apostilled or consularized.

 

Step 2: Apply for DIN (Director Identification Number)

DIN can be applied through SPICe+ form during company incorporation or DIR-3 form for post-incorporation appointments.

 

Step 3: Board Resolution

Pass a board resolution for appointment if post-incorporation.

 

Step 4: File DIR-12

Mandatory MCA form to be filed within 30 days of appointment.

Document Checklist

Can an NRI or Foreign Director Be Paid a Salary in India?

Yes. An Indian company can pay salary, sitting fees, commission, or other remuneration to an NRI or foreign director. Tax compliance must be followed.

 

Key Points:

  • PAN is required for TDS purposes.
  • Remuneration is taxable in India if services are rendered in India.
  • FEMA compliance is essential if salary is remitted abroad.

TDS Chart:

Nature of Payment TDS Section TDS Rate PAN Required
Independent Director Fee 194J 10% Yes
Executive Director Salary 192 As per slab Yes
Without PAN 206AA 20% Yes

Common Scenarios and Clarifications  

Scenario Allowed Notes
NRI as Co-founder & Director Yes At least one Indian resident director required
Foreign national as Managing Director Yes Subject to board approval and compliance
100% ownership by foreigner Yes Allowed in many sectors under FDI
Appointment without visiting India Yes Documents must be duly certified
Salary paid abroad in foreign currency Yes Through authorized channels under FEMA

Can a Foreigner Be an Independent Director?  

Yes. For companies required to have independent directors, foreign nationals can qualify if:

  • They meet Companies Act criteria.

  • They are registered on the Independent Director databank.

  • They have valid DIN and DSC.

Summary Table

Area Allowed Notes
NRI/Foreign Director Yes With proper documentation
Managing Director Role Yes Subject to company approval
Independent Director Role Yes Subject to Schedule IV requirements
Salary/Remuneration Yes PAN and TDS compliance mandatory
100% Foreign Shareholding Yes If sector permits automatic FDI

Frequently Asked Questions (FAQs)

1. Can an NRI be a Managing Director in India?

Yes. The company can appoint an NRI as MD with proper board approval and salary structure.


2. Can a foreigner own 100% of an Indian company?

Yes, under the automatic FDI route, this is permitted in most sectors.


3. What documents are needed for appointing a foreign director?

Passport, address proof, consent form, photograph, and certified DSC. Documents must be apostilled or consularized.


4. Can an NRI director receive salary?

Yes, provided PAN and TDS compliance is followed. Remuneration can be transferred abroad via FEMA-compliant methods.


5. Is PAN mandatory for a foreign director?

It is not mandatory for appointment but required for receiving any income from the company.


6. What is the TDS limit or rate for director payments?

For professional fees: 10% under Section 194J. For salary: as per slab under Section 192. Without PAN, 20% applies.


7. Can a foreign director be appointed remotely?

Yes. All documents can be sent digitally and certified properly — physical presence in India is not mandatory.


8. Can a foreign national act as an independent director?

Yes, subject to eligibility criteria and registration with the Independent Director databank.


9. Can an NRI invest in Indian startups or private companies?

Yes. They can invest as shareholders under the FDI route and also serve as directors.


10. Does every foreign investment require RBI approval?

No. Most sectors are under automatic route — RBI approval is only needed in restricted sectors.

Dhruvi

Dhruvi Darji is a Content Writer at Ebizfiling who turned her passion for writing into a full-time career. She holds a Bachelor's degree in Computer Applications from KSV University and has been writing content professionally since 2023. Over time, she has worked on various topics and enjoys creating simple, clear, and helpful content that helps people gain a better understanding. She also holds a 7-band IELTS score, reflecting her strong grasp of language and communication. Beyond work, Dhruvi enjoys journaling and crafting stories.

Leave a Comment

Recent Posts

Employee Handbook Template Guide: Offer, Appointment, Relieving & More

Employee Handbook Template Guide: Offer, Appointment, Relieving & More  Introduction An employee handbook template is not just about company policies;…

21 hours ago

Income-Tax 1961 and 2025: New Income Tax Bill 2025 Highlights Side-by-Side

Income-Tax 1961 and 2025: New Income Tax Bill 2025 Highlights Side-by-Side  Introduction The Income-Tax Act, 1961, guided India’s taxation for…

5 days ago

Compliance Calendar for September 2025

Compliance Calendar for the Month of September 2025  As September 2025 approaches, it’s essential for businesses, professionals, and individual taxpayers…

3 weeks ago

Why Founders Should Trademark Their Name Early in Business?

Why Founders Should Trademark Their Name Early in Business? If you’re a startup founder, chances are your name already appears…

3 weeks ago

Ebizfiling: Empowering Smart Indian Businesses with Hassle-Free Compliance

Ebizfiling: Empowering Smart Indian Businesses with Hassle-Free Compliance Media Feature: Ebizfiling featured in Business Standard – June 2025 Why Compliance…

3 weeks ago

Can You Run a US LLC from India?

Can You Run a US LLC from India? Legal & Practical Truths Explained  What is a US LLC?  An LLC,…

3 weeks ago