The resident director requirement: how foreign-owned companies actually meet it

Short answer: Section 149(3) of the Companies Act 2013 requires every company to have at least one director who stays in India for a total of 182 days or more in the financial year (April to March). It applies to wholly owned subsidiaries without exception. Groups usually meet it by putting an India-based employee on the board, relocating an executive, or appointing an independent professional as a non-executive director. Whoever it is takes on personal statutory liability, which is why a hired name is a poor answer.

What the section requires

A good deal of guidance, including some provider websites, still says "previous calendar year". That was the wording before the Companies (Amendment) Act 2017, and it is no longer the test.

The first year

The proviso says the requirement "shall apply proportionately at the end of the financial year" in which the company is incorporated. It does not say how. The natural reading scales 182 days by the part of the year the company existed:

That is a reading of the proviso, not a prescribed formula. Record the working in the board minutes, and keep the director's passport stamps or travel record, because the question is one of fact.

How groups actually meet it

An India-based employee or the country manager

The most durable answer. The person who runs the Indian operation lives in India, is on the payroll, and has a real reason to understand what the board approves. They can be appointed as a whole-time director with a service contract, or as a non-executive director alongside their employment.

For a private company, the Schedule V conditions for appointing a managing or whole-time director — including twelve months' continuous residence before appointment — do not apply, following a 2015 exemption notification. A public company, or a private company that later converts, has to check them.

Relocating an executive

Where there is no India team yet, a parent executive moves to India. Three consequences follow, and all three need planning before the move:

• Immigration. An employment visa and registration with the Foreigners Regional Registration Office.
• Personal tax. 182 days in India in a financial year generally makes the individual resident for Indian income tax under Section 6 of the 1961 Act (Section 6 of the 2025 Act from tax year 2026-27), subject to the treaty tie-breaker. See NRI and residence rules under the 2025 Act.
• The parent's tax. An executive who continues to make decisions for the parent while sitting in India can create a permanent establishment of the parent. See PE risk for a foreign parent.

An independent professional as a non-executive director

A senior professional resident in India joins the board in a non-executive role, usually alongside one or more parent nominees. This is common where the Indian entity is small, and it can work well if the person is given real information and real board time.

What they take on:

• Officer in default. A director is an officer, and can be personally penalised for the company's defaults. Section 149(12) limits a non-executive director's liability to acts that occurred with their knowledge, attributable through board processes, and with their consent or connivance, or where they did not act diligently — a real protection, but only for someone who can show they asked the right questions.
• Disqualification. If the company fails to file its financial statements or annual returns for three continuous financial years, every director is disqualified under Section 164(2) from being appointed to any company for five years. That falls on the professional across all their other boards.
• Tax and GST exposure. Directors of a private company can be held personally liable for tax that cannot be recovered from the company, unless they show the failure was not due to their gross neglect, misfeasance or breach of duty — under Section 89 of the CGST Act for GST, and under Section 179 of the 1961 Act for income tax (the 2025 Act equivalent should be checked).
• Other statutes. Labour, environmental and sector laws define "officer in default" or "person in charge" in their own terms, and directors are routinely named in notices.

A professional taking this on will reasonably ask for directors' and officers' insurance, an indemnity from the company, board papers in advance, and access to the auditor.

A note on chartered accountants. Under the Chartered Accountants Act 1949 and ICAI Council guidelines, a chartered accountant in practice may be a non-executive director without specific permission, but needs the Council's prior approval to be a managing or whole-time director, and cannot be a director of a company that they or their partners audit. The firm that audits a subsidiary is therefore not a source of its resident director.

Why a "nominee director for hire" is a risk

Arrangements in which an unconnected individual lends their name and presence to the board for a fee exist, and are advertised. They create problems in both directions.

• For the individual. Every liability above, for a company whose operations they do not see. Some such individuals sit on many boards, up to the limit of twenty companies in Section 165, which multiplies the disqualification exposure.
• For the company. It depends on someone with no stake in the business. If they resign, the company is in default from that day. If they are disqualified because of another company's failures, their office is vacated under Section 167 and the company is again without a resident director. Their DIN KYC, their digital signature and their availability to sign are outside the group's control.
• For the group. A board on which the only India-resident member has no real role is a board that is not supervising the Indian entity, which is the opposite of what the requirement is for, and is hard to defend if the company's affairs are ever examined.

We do not provide nominee directors. Where a group has no India-resident candidate yet, the usual answer is to time incorporation around the first senior hire, or to relocate someone for the first year.

DIN, DIR-3 KYC and foreign directors

Every director needs a Director Identification Number (DIN).

The document stage is where foreign-director incorporations lose time, because apostille queues in some countries run to weeks. The full list is in documents for foreign directors, and what follows incorporation is in the first 90 days of a foreign-owned company.

Getting the order right

1. Identify the resident director before anything else, and check they will actually be in India for the days required — including the proportionate figure for the first year.
2. Brief them on what they are taking on, and put insurance and an indemnity in place.
3. Collect DIN documents for every director, with attestation lead times in mind.
4. Incorporate, and minute the resident-director position at the first board meeting.
5. Track the days each year, and plan cover before the director leaves India or the role.

Where this sits in the wider entry sequence is in setting up a company in India as a non-resident. Our foreign subsidiary work covers incorporation and the board set-up that follows.

This note summarises Section 149(3) and related provisions of the Companies Act 2013 and the director KYC rules as at 23 September 2026. It is not advice to any individual on accepting a directorship. The proportionate first-year figure is a reading of the proviso, not a statutory formula; personal tax residence, immigration and permanent establishment consequences depend on individual facts and the applicable treaty. Confirm the current rules and each director's position before incorporation or appointment.