Every Indian company must have at least one director who stays in India for not less than 182 days in the financial year. What the test requires, how foreign parents comply, and how to structure board governance.
Section 149(3) of the Companies Act, 2013 mandates that every company incorporated in India shall have at least one director who has stayed in India for a total period of not less than 182 days during the financial year. For the year of incorporation, the stay requirement applies proportionately.
A widespread misconception is that the resident director must be an Indian citizen. Section 149(3) sets a physical presence test, not a citizenship or nationality test.
Full operational control; requires Employment Visa, Indian payroll, and tax residency management.
Utilise an existing senior manager located in India if the group already operates an entity.
Hire an Indian Country Manager / Managing Director as part of the operating scale-up plan.
Engage an independent professional with proper indemnity, board oversight rights, and clear governance boundaries.
Under Section 166 of the Companies Act, 2013, a director owes statutory duties to act in good faith, exercise due care, avoid conflicts of interest, and ensure statutory compliance (TDS, GST, ROC, EPFO). A purely nominal director who signs documents blindly faces severe personal legal liability.
To prevent a resident director from binding the company unilaterally, custom Articles of Association (AOA) should reserve key financial decisions, bank operation limits, and commercial contracts exclusively to parent-nominated directors or require parent board consent.
Our secretarial team assists foreign parents with drafting reserved-matters AOA clauses, obtaining DIN/DSC, and structuring compliant resident director appointments.
