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TAXAJ Corporate Services LLP - Financial Doctors

Resident Director Services for Foreign Company/Subsidiary

In accordance with the Companies Act of 2013, there are no restrictions on foreign individuals serving as directors in Indian companies. Whether the company is public, unlisted, or private, foreign nationals and non-resident Indians living outside of India are eligible to hold positions as executive or non-executive/independent directors. The definition of a "director" as per section 2(34) of the Companies Act 2013 pertains to an individual appointed to a company's board.

Foreign individuals and non-resident Indians can assume directorship roles in Indian companies by adhering to the Act in conjunction with the Companies (Appointment and Qualifications of Directors) Rules of 2014. They can occupy various directorial positions, including Women Director, Independent Director, Small Shareholders Director, Additional Director, Alternative Director, and Nominee Director.

Additionally, foreign nationals and non-resident Indians may serve as Whole Time Directors ("WTD") or Managing Directors ("MD"), provided they meet the requirements outlined in Part 1 of Schedule V of the Companies Act, 2013. This section defines the qualifications for appointment as a Managing or Whole Time Director or Manager without the need for Central Government approval. Among the conditions outlined in Part 1 of Schedule V is the residency requirement, stating that individuals appointed as whole-time directors or managing directors must be residents of India.

Appointing Resident Indian Director in Company

At TAXAJ, we specialize in offering comprehensive Resident Director India services tailored to our international clients. Our all-inclusive package is designed to facilitate seamless entry into the Indian market and includes a range of essential services:

1. **India Company Registration:** We assist in the smooth and efficient registration of your company in India, ensuring compliance with all relevant regulations and requirements.

2. **Local Company and Registered Address:** Our services include providing a local registered office address for your company, ensuring that you meet the necessary legal obligations.

3. **Nominee Director Services:** We offer nominee director services, providing experienced professionals to serve as directors on behalf of your company in India, if required.

4. **Free Trade Zone Company Formation:** We facilitate the formation of companies within free trade zones, helping you take advantage of the benefits offered by these special economic areas.

5. **Work Visa Application:** Our team assists with the preparation and submission of work visa applications, streamlining the process for your employees relocating to India.

6. **Corporate Bank Account Opening:** We guide you through the process of opening a corporate bank account in India, ensuring access to essential financial services for your business operations.

7. **Financial License Applications:** For businesses requiring specific financial licenses to operate in India, we provide support in navigating the application process and meeting regulatory requirements.

If you're considering expanding your business into India, you may encounter terms such as "Nominee Director India" and "India resident director." These terms refer to individuals who can represent your company locally and fulfill legal requirements, ensuring smooth operations and compliance with Indian laws and regulations. Our team at TAXAJ is here to provide expert guidance and support every step of the way, helping you navigate the complexities of doing business in India with confidence and ease.

What is a Resident Director & Why is it Needed?

- Pursuant to Section 149 (3) of India's Companies Act of 2013, every Indian company is mandated to appoint a Resident Director. To qualify as a resident, the individual must reside within India for a minimum of 182 days annually.

- A nominee director, in this context, is a qualified individual appointed as the resident director for your Indian entity. The appointment of a nominee director by a company's Board is sanctioned under Section 161(3) of the Companies Act.

- While the Ministry of Corporate Affairs exempted the resident director requirement for the fiscal years 2019 to 2021 due to challenges in securing a resident director during the COVID-19 pandemic, this exemption wasn't extended to the fiscal year 2021 to 2022. Consequently, new entities incorporated from 2021 onward are still obligated to appoint a resident director to fulfill this role.

- Given the time-consuming and arduous task of finding a suitable candidate for the nominee director position in India, TAXAJ offers a solution by providing a cost-effective nominee and resident director service in India. This ensures that all our clients can meet the minimum officeholder requirements in India without hassle.

All you need to know about Resident Director Services in India!

"Our experience in managing the needs of international business and acting in the capacity of resident director for Foreign Subsidiaries of overseas entities is second to none."

Establishing an Indian subsidiary requires appointing a resident director, a regulatory necessity. We offer comprehensive support for seamless operations in India. Our services include regulatory compliance, company incorporation, strategic guidance, and ongoing support. Partner with us for expert assistance in navigating the complexities of the Indian business landscape.

  • Incorporation of Indian Entity, including managing the setup of Indian Tax Office.
  • Oversee Banking requirements in the initial setup
  • Provide appropriate indemnities to protect the resident director and ensure non-resident directors have complete control over the Indian  operations
  • Arrange for your Indian operations to have a substituted year-end in line with head office operations
  • Implement financial control and systems to manage the accounting affairs of the Indian operations in line with the reporting
  • requirements of your head office operations
  • Provide our expertise to manage the day-to-day accounting needs of the Indian operations
  • Manage the ongoing financial reporting and tax compliance needs of the Indian operations to ensure the company’s affairs are accurate and lodged on time to the necessary regulatory bodies
  • Provide consultative advice and support for the successful growth of the Indian operations

Under what conditions can an India company appoint a nominee director by the Companies Act?

There are certain conditions that must be met before the nominee director can be appointed. These are:

> The Appointment must comply with the conditions of any applicable legal contract the company is a part of, as well as applicable corporate laws in India.

> Parties who can appoint a director can be natural persons who possess the legal authority to do so, or a State or Central government in India.

> The nominee must represent the company or institutions' best interests at all times.

> The appointment must comply with the clauses of the business' Articles of Association, otherwise, the Articles of Association will need to first be amended to include provisions for the appointment of such a director.

Legal duties of the India nominee director

Section 116 of the Companies Act outlines duties and obligations for nominee directors, including:
- Acting in the company's best interests and members' welfare.
- Avoiding conflicts of interest.
- Executing duties with skill, care, and diligence.
- Overseeing compliance with regulations.
- Being personally liable to the company and nominator.
- Refraining from seeking undue advantages.
- Actively engaging in board matters.
- Adhering to the Articles of Association.

What will the Resident Director or Shareholder require before agreeing to act?

A nominee director typically requires the following from you:

1. Overview of current and proposed company activities.
2. Business plan, forecasts, and budgets.
3. Confirmation of compliance with Indian laws (e.g., licensing, consumer, importation, tax laws).
4. Evidence of financial standing to ensure solvency.
5. Appointment of a local accountant and Tax Agent.
6. Agreement to provide regular financial and operational reports, with direct access to local accountant and Tax Agent.
7. Acceptance of their fees and charges for directorship.
8. Agreement to indemnify the company and the nominee director for liabilities in India, ensuring avoidance of insolvency. This may involve you or the foreign parent company assuming responsibility for the Indian company's debts and obligations.

We will only provide Resident Director Services on the following conditions:

    To initiate the process, we require the following documentation from you:

    1. Proof of identity and address of the beneficial owner, initially as scanned copies. Certified original copies must be sent via post within two weeks.
    2. A reference letter on the Ultimate Beneficial Owner (UBO) from a bank, employer, accountant, or solicitor with a minimum of two years of acquaintance.
    3. Reasons for necessitating a Nominee Director.
    4. Nature of your business activities.
    5. The company's registered office must be with us.
    6. Submission of relevant business conduct information; annual accounts must be prepared by us as the director will sign them.
    7. If GST registered, GST returns must be handled by our accountant.
    8. Notification is required if you intend to dissolve the company. We will terminate our services and cease acting as a director if the company is over a year old.
    9. A Resident Shareholder safeguards the shareholder's identity for security purposes. Our contracted Resident Shareholder will disclose essential information such as ID and passport numbers as needed.

    Engaging a Resident Shareholder entails protecting your share rights via a Declaration of Trust, affirming your full ownership while the Resident Director represents you effectively.

Advantages of using Resident Director Service in India

Fulfilling residency requirements while reducing overhead costs:
- Appointing a representative director in India ensures compliance with local regulations and reduces overhead expenses, preventing additional costs during incorporation.

Expertise in local regulations:
- Our India representative directors possess knowledge of local regulations, including accounting and tax obligations, ensuring full compliance with legal requirements.

Bridging language barriers:
- Resident directors in India assist in navigating language barriers, translating documents to and from Hindi, facilitating smoother communication and paperwork procedures.

Legal obligation to act in company's interest:
- Nominee directors are legally bound by the Companies Act 2013 to prioritize the company's best interests, alleviating concerns about conflicts of interest.

Representation to banks and authorities:
- Our India representative directors represent you during interviews with local banks for opening corporate accounts, ensuring seamless banking procedures at no additional cost.

Minimal interference in company operations:
- Engaging resident director services enables compliance with residency requirements without undermining your authority. Nominee directors typically refrain from significant involvement in decision-making processes unless specifically requested.

Risks of appointing a Resident Director in India

  • As with all undertakings, there are some risks involved in the appointing of nominee directors. The risk is namely that the individual, as one of the company's directors, has the legal power to participate in the decision-making process and even veto certain decisions of the company, according to the Companies Act.
  • However, as nominee directors are also bound by law under Section 166 of the 2013 Companies Act to always act in the company' best interests instead of his or her own self-interest, you will not have to worry about him or her making decisions that threaten your company.
  • In addition, before the appointment, TAXAJ's legal team will lay out strict terms in the Nominee Director Agreement we will draft, that will prohibit the nominated person from interfering significantly in the day-to-day running of your business. The nominee director will mostly take a passive role and act on your instructions, and he or she will not have access to your corporate bank account. This will ensure that you are able to maintain full control over your company at all times.

Risks undertaken by a Resident Director India under the 2013 Companies Act

  • The role of a representative director entails personal risks and legal responsibilities as outlined by the Companies Act:

    1. **Equal Liability**: As per Section 166, both executive and non-executive directors share equal responsibilities and authorities under the law. Accordingly, nominee directors, as per Section 149(2), are liable if they were aware of offenses, mistakes, or negligent actions.

    2. **Disqualification**: Section 167 of the Companies Act stipulates that nominee directors can face disqualification if they fail to fulfill legal duties or comply with regulations. This includes instances such as criminal offenses or non-attendance at board meetings.

    3. **Representing Shareholder Interests**: Under the shareholder agreement, nominee directors are obligated to uphold and represent the interests and rights of the nominator, ensuring alignment with the shareholder's objectives and expectations.
  • Other Foreign Company Services:

    For any overseas company looking to establish an Indian subsidiary, we can provide a number of additional business registration and support services as required.

     These services include the following (however additional services can be arranged on as needed basis):

    • Establishment of a new Private/Public Limited Company
    • Registration for GST (Goods and Services Tax)
    • Opening of a business bank account
    • Provision of a Registered Office Address in India
    • Provision of a business address facility in India
    • Related corporate secretarial services


    For further information about our services including pricing please contact us.

    Are you looking for Resident Director in India?

    As per the provisions of sub section (3) of section 149 of companies Act, 2013, Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two (182) days in the previous calendar year. This Provision applies to all the companies w.e.f. 26th June, 2014. Wholly owned subsidiary Companies with only Foreign Directors are mainly impacted by this provision of companies Act, 2013.

    Power and Duties of Nominee/Resident Director:

    Resident/ Nominee Director shall have all the power and duties which are define for other Director of the company but subject to the approval of Board. He shall abide by all the provision for directors defines under Companies Act, 2013.

    Penal Provisions

    If a company contravenes this provision of companies act, 2013 then the company and every officer of company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.

    How TAXAJ can help?

      • We will appoint one of our team members as the Resident Director for your company.
      • Resident Director appointee will neither be a corporate bank account signatory nor play a active role in our your business.
      • Resident Director merely the resident director of the company in order to fulfill the local statutory requirement (law of land requirement).
      • You will be solely responsible for daily business activities.
      • You will sign a legal contract outlining the terms and conditions and limitations of the resident director’s appointment.
      • You can ask our Resident Director to resign at any point of time.
      • Resident Director will sign all the key corporate documents which are obligatory to be signed by the director to comply with the law of land.

      For example: Annual return, Financial Statements and other key docs as may be required by law.

      • You must have a vigorous system to comply with the law of land. You may ask for our annual compliance and maintenance of statutory records & registers services.
      • Our fees for resident director services will depend upon the level of risk in the business the same shall be provided upon request.
      • Our client may also avail the service of shareholder as well as Annual Compliance Services.