Not an employee, not a director, not a citizen... not a problem

Legal framework for authorising a foreign national to act on behalf of an Indian Company

For a company, having a deciding authority residing outside the country can be tricky. Even trickier, when such deciding authority has no formal executive relationship with the company- not being a director or an employee.

This is usually the case with, inter alia, companies which are step-down subsidiaries of foreign companies, where some functions may effectively be controlled at the parent company level, and it is often useful for someone there to sign documents and take decisions on the Indian company’s behalf, without each document having to travel back to India.

The tricky nature of this arrangement, apart from possible Place of Effective Management (PoEM) concerns under Indian tax laws, often stems from the legality of such decisions, their enforceability, especially before statutory authorities or judicial/quasi-judicial bodies, and the absolute limitations that this delegation suffers from (limiting what actions can actually be taken by such a person).

In this article, we give a quick overview of how Indian law allows this, including the legality and enforceability of decisions taken under this arrangement, how it is set up, and the limitations it suffers from.

Legality and enforceability

Section 22(2) of the Companies Act, 2013 allows a company to authorise any person as its attorney, generally, or for specified matters, to execute deeds on its behalf in India or outside. The point relevant for our discussion is that such attorney need not be Indian or resident in India.

The power of attorney is signed by two directors, or by a director and the company secretary, under the authority of a Board resolution. Where those two signatories are when they sign decides how the document is executed.

One director in India, one in the US

Each director can sign a separate execution page of the same original document, before a notary where they sign. The US page, however, should also be apostilled.

Section 84 of the Bharatiya Sakshya Adhiniyam, 2023 presumes that a power of attorney executed before a notary was duly executed. But Section 14 of the Notaries Act, 1952 recognises the acts of foreign notaries only from countries the Central Government has notified on a reciprocal basis, and the US is not one of them. At least one High Court has refused US-notarised powers of attorney on this ground, as recently as 2025. India and the US are both parties to the Hague Apostille Convention, and an apostille from the competent US authority closes that gap at modest cost.

Both directors in India

Where both signatories can sign in India, the power of attorney is notarised here and the presumption applies directly. No apostille is needed, even though the attorney is in the US.

What the attorney need not do

In either case, the US-based power of attorney (POA) holder does not need to sign, accept or countersign it. Section 1A of the Powers of Attorney Act, 1882 describes a power of attorney as an instrument empowering a specified person to act for and in the name of the person executing it. The power is therefore complete once the company executes it. Section 2 then makes acts the attorney does in their own name and signature as effective as if the company had done them. The attorney accepts by acting, so the acceptance and witness blocks that often find their way into drafts are not needed.

Limitations of such power

The standard limitations of such an approach apply:

• The POA holder can execute, but not decide, matters reserved for the Board. Under Section 179(3) of the Companies Act, 2013, powers such as issuing securities, borrowing, investing funds, granting loans and approving financial statements can be exercised only by the Board, by resolution at a meeting. On these, the POA holder can only sign documents implementing a Board decision.

  
  

• The POA holder acts only within the four corners of the instrument and the Board resolution behind it. Indian courts construe powers of attorney strictly, and acts outside their scope do not bind the company.

  
  

• Unless the instrument expressly permits it, the POA holder cannot appoint a substitute or delegate the authority further.

  
  

• Some acts are reserved by law for specified persons, such as signing the financial statements, the Board's report and MCA e-forms.

  
  

• The power ends on revocation, on expiry of its term or on the company's liquidation. A revocation binds third parties only once it becomes known to them (Section 208, Indian Contract Act, 1872), so banks and counterparties must be told.

  
  

• The power of attorney must be signed in wet ink, as the Information Technology Act, 2000 excludes it from electronic signatures, and stamped under the relevant State's law. An under-stamped instrument is inadmissible in evidence until the deficit duty and penalty are paid.

This update is for general information only and is not legal advice.

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