Why does a foreign-owned company need a director in India?
A private limited company needs at least two directors and at least two members. A foreign parent typically holds all but one share, and a nominee or group entity holds the rest. The Companies Act, 2013 also requires at least one director to have stayed in India for at least 182 days during the financial year.
Many foreign groups have nobody in India at incorporation. You can send an employee, appoint a resident individual from within the group, or use a nominee director service. See the directors, shareholders and capital guide.
What is a nominee director service?
A nominee director is a resident individual appointed to the board of your Indian company, usually to meet the residency rule while the group builds a local presence. ProLead provides nominee director services: it appoints a qualified individual with a clean compliance track record to the board. They are complete nominees and act solely on the instructions of the parent, and ProLead takes an indemnity from the parent for acts committed as an agent of the parent.
A nominee shareholder is a separate arrangement. If a nominee holds shares for the parent, the parent’s beneficial ownership can still need to be declared under the significant beneficial owner rules.
What duties and liability does a director carry?
Being appointed to satisfy a rule does not remove the duties of the role. Every director of an Indian company, including a director appointed to meet the residency requirement, has duties under the Companies Act, 2013 and can be exposed to penalties for certain company defaults. For example, missing the commencement declaration (INC-20A) can attract penalties on the company and on officers.
Directors also have their own filings. DIR-3 KYC is now due once every three financial years by 30 June, includes foreign national directors, and a missed filing can deactivate the DIN.
What are the registered office requirements?
A company must have a registered office in India from the date of incorporation, and the Registrar verifies it through proof of address. The registered office guide sets out what to prepare.
ProLead provides virtual office solutions as a service. A virtual registered office gives you a compliant address for notices and filings without leasing space. We provide GST-compliant virtual office spaces. It does not give you a place to seat staff. Where you need office space to seat staff, we can connect you with real estate partners, similar to our GCC ecosystem connections.
Which option suits you?
| Your situation | Likely option |
|---|---|
| You plan to hire an Indian country head soon | Appoint that person as the resident director once they join |
| Nobody in your group is in India yet | Nominee director service in the interim, with a plan to replace |
| You need desks for staff | A physical office, not a virtual one |
| You only need a compliant address for notices and filings | Virtual office, subject to state and GST checks |
| You want an exit plan | Agree replacement and resignation terms before you appoint |
A nominee arrangement is a temporary bridge, not a permanent structure. To see how it fits with incorporation, read the incorporation and registrations service page, then book a free consultation.
Note: Rules and forms change often. This page is general information, not legal or tax advice. Check the current position with a practising Chartered Accountant or Company Secretary before you act.
Frequently asked questions
Do I need a resident director for an Indian subsidiary?
Is a nominee director free of liability?
Can a virtual office be my registered office?
Sources
General information only, not legal or tax advice. Rules and forms change, so confirm the current position with a practising Chartered Accountant or Company Secretary before you act. See our disclaimer.