Do NRIs Need A Resident Director In A Pvt Ltd Company

Yes, NRIs setting up a private limited company in India must appoint at least one resident director. The NRIs will still serve as directors or even shareholders, but the company cannot operate in compliance unless the requirement for a resident director is met.

In this blog, we will address one of the most frequently asked questions: "Do NRIs need a resident director while establishing a private company in India?" We will also cover the eligibility criteria, the consequences of non-compliance, and more.

Eligibility Criteria For A Resident Director In India?

Under the Companies Act 2013, Section 164, an individual is eligible to serve as a director of a company if they meet the following conditions.

• The director must be a natural person and not a corporate entity.
• The person is not of unsound mind.
• The individuals must not be undischarged insolvents.
• The person must not have been convicted of any offense or sentenced to imprisonment.
• The person has stayed in India for more than 182 days or more in the previous financial year.
• Possess a valid Director Identification Number (DIN)
• The person must not be disqualified under the Companies Act.

What Are The Minimum & Maximum Director Requirement For Private Limited Companies

The Companies Act 2013 sets the minimum and maximum number of directors for a private company. Under Section 149(3), a private company in India may have up to 15 directors; however, if it requires appointing more than 15 directors, the company may do so by passing a special resolution at the general meeting. Generally, larger organizations or those anticipating rapid growth pass a resolution to increase the maximum number of directors, as it is particularly beneficial for businesses with more than 15 directors on the board.

Whereas the minimum number of directors a private limited company can have is two. A minimum of two directors is required to establish a private limited company, and that there is sufficient representation on the board for governance and decision-making. Another reason for having at least two directors is to promote accountability within the company and ensure that no unilateral decisions are made, which can lead to conflicts of interest.

Consequences Of Non Compliance

In an event where a private limited company fails to appoint at least one resident director on the board, it has conducted non-compliance under the Companies Act 2013. This further incurs penalties and complications during ROC filings and corporate foreclosure checks. Not just this, such non-compliance may create practical issues in banking documentation and other business operations.

Furthermore, for an NRI-led company, this non-compliance is not a minor issue but a major one. For a private limited company registered by NRIs in India, this is mandatory and must be addressed at the time of company incorporation.

The Bottom Line

A director in a private limited company is a key player responsible for decision-making, strategic governance, and more. Henceforth, as an NRI-led private limited company in India, having a resident director on board is mandatory for compliance.

If you are an NRI planning to register a private limited company in India and seeking professional assistance, Savetaxs is the name to trust. Our experts provide end-to-end consultation on the optimal business structure, documentation, DSC, DIN management, name approval, incorporation, post-incorporation compliance, and more. Savetaxs experts help NRIs navigate Indian regulatory requirements, including FEMA, the Companies Act 2013, and RBI guidelines, with ease.

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