COMPANIES MUST OBTAIN GOVERNMENT APPROVAL BEFORE APPOINTING FOREIGN DIRECTORS TO THEIR BOARDS

The Ministry of Home Affairs issued a notification declaring that individuals from land-border sharing nations require security clearance from the government before being nominated to boards of Indian enterprises. The Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 have been issued by the government to amend the Companies (Appointment and Qualification of Directors) Rules, 2014. In effect, this amendment will make it essential for companies to seek government approval before appointing directors to their boards of directors.
A second proviso has been added to rule 8, which states that if a person seeking appointment as a director in the Company is a national of a country that shares a land border with India, such as China, Pakistan, Bhutan, Myanmar, Afghanistan, Nepal, or Bangladesh, that person must submit the necessary clearance from the Ministry of Home Affairs (MHA) along with the consent of the person seeking appointment.
Furthermore, a proviso has been added to Rule 10 that states that no application number will be generated for anyone applying for a Director Identification Number (DIN) unless that person obtains the necessary clearance from the MHA and attaches it to the application when applying for the DIN.

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