Incorporation of company with Overseas Citizen of India (OCI) as a director or subscriber (shareholder)

In India, an Overseas Citizen of India (OCI) can be a director or subscriber (shareholder) in a company, subject to certain conditions under the Companies Act, 2013, Foreign Exchange Management Act (FEMA), 1999, and Reserve Bank of India (RBI) regulations.

Key Requirements for Company Registration with an OCI Director/Subscriber

1. Type of Company
   1. Private Limited Company (Pvt Ltd) – OCIs can be directors/shareholders.
   1. Public Limited Company – OCIs can be directors/shareholders, but additional compliance may apply.
   1. One Person Company (OPC) – An OCI cannot be a nominee director in an OPC (as per MCA notification).
2. Foreign Direct Investment (FDI) Compliance
   1. If the OCI is investing in the company, FDI rules apply:
      1. Automatic Route: No prior approval needed for most sectors (unless prohibited).
      1. Government Route: Approval required for restricted sectors (e.g., defense, telecom).
   1. Reporting: The company must file Form FC-GPR with RBI within 30 days of receiving foreign investment.
3. Documents Required for OCI Director/Subscriber
   1. Proof of Identity & Address:
      1. Copy of OCI Card.
      1. Copy of Passport (foreign passport since OCI is not an Indian citizen).
      1. Overseas address proof (if applicable).
   1. PAN Card (Mandatory for directorship).
   1. Residential Address Proof (Foreign or Indian, if residing in India).
   1. Passport-sized Photograph.
   1. Digital Signature Certificate (DSC) (Class 3 for e-filing with MCA).
4. Director Identification Number (DIN)
   1. The OCI must obtain a DIN by filing DIR-3 with the Ministry of Corporate Affairs (MCA).
5. Resident Director Requirement
   1. Every Indian company must have at least one director who has stayed in India for at least 182 days in the previous calendar year.
6. Bank Account & Foreign Investment Reporting
   1. If the OCI is investing capital, the company must have a bank account to receive foreign funds.
   1. The company must comply with RBI’s Foreign Exchange Management (FEMA) regulations.

Additional Considerations

• Taxation: Income earned in India may be taxable; DTAA (Double Taxation Avoidance Agreement) benefits may apply.
• Prohibited Sectors: OCIs cannot invest in agriculture, real estate (excluding construction), lottery, etc. without approval.

Steps for Company Registration with OCI Director

1. Obtain DSC & DIN for the OCI director.
2. Apply for Company Name Approval (SPICe+ Part A).
3. File SPICe+ Part B for incorporation (includes MOA, AOA, and director details).
4. Comply with FEMA/RBI reporting if foreign investment is involved.
5. Open a bank account and deposit capital (if applicable).

Conclusion

An OCI can be a director or shareholder in an Indian company, but compliance with FEMA, RBI, and MCA rules is essential. If the OCI is investing, FDI guidelines must be followed. Ensure at least one resident director is appointed.

An OCI cardholder does not require apostille for documents if they are already residing in India or are visiting India. However, foreign nationals require apostille for certain documents depending on their visa type.

Just to know comparisons for NRI (Non Resident Individuals),Foreign Nationals, POI (person of Indian origin) and OCI.

The three categories are: 1) Foreign Nationals with no connection to India, 2) Persons of Indian Origin (PIO) and Overseas Citizens of India (OCI), and 3) Non-Resident Indians (NRIs) for tax purposes.

😀 Foreign nationals are categorized into three groups: Foreign Nationals with no relation to India, Persons of Indian Origin (PIO), and Non-Residents in India.

😀 Foreign nationals who have never resided in India need basic documents like an ID proof (passport), address proof (passport, utility bills), and a recent photograph to set up a company.

😀 If the foreign national is not residing in India, the documents need to be notarized by the embassy of their home country, with translations into English if required.

😀 A valid email ID, contact number, and a declaration confirming no disqualification from becoming a director are also required.

😀 There are changes in the witness requirements for signatures on official documents when the foreign national is in their home country and not India.

😀 If the foreign national is on a valid business visa in India, there is no need for apostille or additional documentation for company formation.

😀 If the person is an Overseas Citizen of India (OCI) or has a PIO card, they must get their documents notarized at the Indian embassy in their home country if they are not visiting India.

😀 Apostille is not necessary for OCI holders or those in India on a valid business visa, as long as they are not visiting on a tourist or personal visa.

😀 Non-resident Indians who have not lived in India for over 182 days in the current financial year must provide additional declarations, such as proof of no PAN and Aadhar number.

😀 For cases where a foreign director or shareholder is part of a company, they may need to provide additional documents like board resolutions to appoint an authorized representative for signing company documents.