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Resident Director

Resident director

Resident director requirement (Section 149 (3) of the Companies Act, 2013) is a form of local representation; some of the countries refer it as nominee director. In India, even foreign nationals who meet the criteria of having stayed in India for a certain period (182 days during the financial year)  also can be appointed as resident director. The eligibility is not dependent on the citizenship of the proposed director but on the period he / she has stayed in India.

A Resident Director is a director of an Indian company who meets the residency requirement of having stayed in India for at least 182 days during a financial year, as per India’s Companies Act, 2013. This role serves as local representation, ensuring the company’s compliance with local laws and regulations, and assisting with operational and governance matters, particularly for foreign companies establishing a presence in India.

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Key Aspects of a Resident Director

Mandatory for Indian Companies:

Every company registered in India must appoint at least one Resident Director.

Residency Requirement

The individual must be an Indian resident who has stayed in the country for a minimum of 182 days in the preceding financial year.

Local Representation:

They act as a local liaison, facilitating communication with regulatory authorities and navigating the Indian business environment.

Compliance Focus:

A key duty is to ensure the company adheres to Indian company law, taxation, and other relevant regulations.

Shared Director Duties:

Like other directors, a Resident Director is responsible for acting in good faith, exercising care and skill, and promoting the company's interests.

Support for Foreign Companies:

For foreign businesses, the Resident Director fulfills legal and operational functions, helping to ensure smooth operations and compliance from the outset.

Why is a Resident Director Needed?

Legal Compliance:

It's a statutory requirement under Section 149(3) of the Companies Act, 2013.

Local Insight:

They provide valuable knowledge of the local regulatory landscape, simplifying processes and helping to avoid legal issues.

Operational Support:

For foreign companies, they act as a local point of contact, supporting governance and local operational requirements.

Penalties for Non-Compliance:

Failure to appoint a Resident Director can result in penalties and legal consequences for the company.

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