India rules · all investors
Resident Director: India rules for foreign companies
CA Utsav Dogra, Chartered Accountant, ICAI M. No. 542375
The resident director rule counts physical presence in India during the financial year. A director who spends a few months in India and the rest abroad may not qualify; the safe course is someone who lives in India.
Making the resident director arrangement work
The resident director rule counts physical presence in India during the financial year. A director who spends a few months in India and the rest abroad may not qualify; the safe course is someone who lives in India.
A professional resident director should have a written agreement covering the scope of the role, the decisions reserved for the parent, access to information, fees, indemnity and directors' and officers' insurance. The board should meet regularly and minute its decisions so the resident director can show proper oversight.
Every director must file an annual KYC by 30 September, and directors of companies that default on filings for three consecutive years can be disqualified. Directors can also be named in tax, labour and other proceedings, which is why a clean compliance record protects them as much as the company.
Options
| Option | Control | Points to manage |
|---|---|---|
| Posted manager from the parent | High | Visa, Indian tax residence, home-country tax |
| Senior Indian employee | High | Clear authority limits |
| Professional resident director | Moderate | Written mandate, indemnity, insurance |
Checklist
- Confirm 182-day presence for the year
- Director agreement with reserved matters
- Indemnity and D&O insurance
- DIN, digital signature and annual KYC
- Quarterly board meetings with minutes
Common mistakes
- Appointing someone who will not actually be in India for 182 days
- No written mandate for a professional director
- Letting director KYC lapse
- Giving the resident director no information to act on
How this applies to your country
- USA to India en-US
- UK to India en-GB
- Japan to India en-JP
- Germany to India en-DE
- Singapore to India en-SG
- Australia to India en-AU
- China to India en-CN
- Hong Kong to India en-HK
- Russia to India en-RU
- Spain to India en-ES
- France to India en-FR
- UAE to India en-AE
Our service: Company secretarial
Questions
Can the resident director also be an employee?
Yes. Many companies appoint their country manager, who lives in India, as the resident director.
What happens if no director meets the test?
The company is in default of the Companies Act requirement and should appoint a qualifying director without delay.
Is the resident director personally liable?
Directors can be liable for specified defaults under company, tax and other laws, so mandates, indemnities and insurance should be in place.
Queries
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