MCA Clarification on Applicability of requirement for Resident Director

General Circular No. 25/2014, No. 1/22/13-CL-V, dated 26th June, 2014

Clarification on Applicability of requirement for Resident Director

Section 149(3) of the Companies Act, 2013 (Act) requires every company to have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year. Government has received requests from stakeholders for clarification with regard to applicability of these provisions in the current calendar/financial year.

2. The matter has been examined. It is clarified that the ‘residency requirement’ would be reckoned from the date of commencement of Section 149 of the Act i.e. 1st April, 2014. The first ‘previous calendar year’ for compliance with these provisions would, therefore, be Calendar Year 2014. The period to be taken into account for compliance with these provisions will be the remaining period of calendar year 2014 (i.e. 1st April to 31st December). Therefore, on a proportionate basis, the number of days for which the director(s) would need to be resident in India, during Calendar Year 2014, shall exceed 136 days.

3. Regarding newly incorporated companies it is clarified that companies incorporated between 1.4.2014 to 30.9.2O14 should have a resident director either at the incorporation stage itself or within six months of their incorporation. Companies incorporated after 30.9.2014 need to have the resident director from the date of incorporation itself.

This issues with the approval of the competent authority.

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Source: Ministry of Corporate Affairs.