Directorship in Indian Companies- Special requirement for resident of a Country sharing Land Border With India

Special Requirement For The Foreign National Native of A Country Which Shares Land Border With India Aspire To Hold Directorship In Indian Companies

Ministry of Corporate Affairs (MCA) vide its notification dated 1^st June, 2022 has notified Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 and amended Rule 8, Rule 10, Annexure, Form DIR-2, FORM DIR-3 of Companies (Appointment and Qualification of Directors) Rules, 2014 for adding an additional requirement for the person who is native of a county which shares land border with India and who wishes to apply for the Director Identification Number (DIN).

The Amendment states that:

1. In rule 8, after the proviso, the following proviso shall be inserted namely:-

“Provided further that in case the person seeking appointment is a national of a country which shares a land border with India, necessary security clearance from the Ministry of Home Affairs, Government of India shall also be attached alongwith the consent.”

This is an additional requirement for a person having a nationality of a country that shares a land border with India wishes to be appointed as a director in an Indian Company, shall obtain and attach necessary security clearance from the Ministry of Home Affairs, Government of India along with consent in writing to act as a director in Form DIR-2.

2. In rule 10, in sub-rule (1) the following proviso shall be inserted, namely:-

“Provided that no application number shall be generated in case of the person applying for Director Identification Number is a national of a country that shares a land border with India, unless necessary security clearance from the Ministry of Home Affairs, Government of India has been attached along with an application for Director Identification Number.”

A prior security clearance from the Ministry of Home Affairs, the Government of India is mandatory in case an application is made by a person having a nationality of a country that shares a land border with India. The Director Identification Number (DIN) won’t be allotted until and unless necessary security clearance from the Ministry of Home Affairs, Government of India has been attached along with an application for DIN.

3. In the Annexure:-

(A) in Form DIR-2, under the heading Declaration, the existing paragraph, shall be numbered as paragraph (i) thereof and after the paragraph (i) as so numbered, the following shall be inserted, namely:-

“(ii) I further declare that –

 I am not required to obtain the security clearance from the Ministry of Home Affairs, Government of India before seeking appointment as director; or

I am required to obtain the security clearance from the Ministry of Home Affairs, Government of India before seeking appointment as director and the same has been obtained and is attached.   

(B) in FORM NO. DIR-3, under the heading Verification, after serial number 3, the following serial number shall be inserted, namely:-

“3A. I am not required to obtain the security clearance from the Ministry of Home Affairs, Government of India under sub-rule (1) of rule 10 before applying for director identification number; or

I am required to obtain the security clearance from the Ministry of Home Affairs, Government of India under sub-rule (1) of rule 10 before applying for director identification number and the same has been obtained and is attached. ; and”.

Indian Company and a Practicing Professional certifying the Form DIR 12 shall obtain a Declaration from a person having a nationality of a country that shares a land border with India confirming that he/she has sought necessary security clearance from Ministry of Home Affairs, Government of India.

NOTE: The Countries which share land border with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.

Disclaimer: The entire contents of this document have been developed on the basis of relevant statutory provisions. Though the author has made utmost efforts to provide authentic information however, the author and the firm expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.