Govt relaxes resident director norms for companies

Providing leeway for corporates, the government has relaxed norms under the new companies law for resident directors this year.

The relaxation allows for companies to have at least one director who has resided in India for more than 136 days this year.

The latest move from the Corporate Affairs Ministry, which is implementing the new companies law, comes after stakeholders sought clarification on the applicability of norms with respect to resident director.

Under Section 149(3) of the new Companies Act, every company is required 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.

The first previous calendar year for compliance with these provisions would be 2014, according to the Ministry.

Since the Act came into force from April 1, the Ministry said the period to be taken into account for compliance with these provisions would be the remaining period of this calendar year -- April 1 to December 31.

"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," it said in a circular.

With regard to companies set up between April 1 and September 30, 2014, the Ministry said those entities should have a resident director either at the incorporation stage itself or within six months from that date.

"Companies incorporated after September 30, 2014 need to have the resident director from the date of incorporation itself," the circular said.

Leave Your Comment(s)