CS Mohit Saluja
NOTIFICATION AND RELATED SECTION
The Ministry of Corporate Affairs (MCA) has notified vide Section 149 (3) which effective April 1, 2014, every company must have at least one resident director.
WHO IS RESIDENT DIRECTOR
Resident Director: Resident Director As per Section 149 (3) is the one who has stayed in India for a total period of 182 days in the previous calendar year.
HOW CAN NRI INCORPORATE THE COMPANY IN INDIA
It means if an NRI or some Foreign National have come to India on Business Visa, they cannot incorporate a company without the involvement of Indian Resident, unless and until they have spent 182 days in India in a previous Calendar Year.
PROBLEM FOR NRIs:
Suppose if some Foreign National comes to India on Oct. 1, 2013 and want to start the business without involvement of Indian Resident w.e.f. April 1, 2014 they cannot do the same and will have to wait till Jan. 1, 2015 to start the company and to become the Directors of the Company. AS the Section talks about PREVIOUS CALENDAR YEAR.
As per provision of Section 149, this need to be complied with immediately and there is no transition timeline in this. Hence, in the immediate Board Meeting of the company, the Board needs to appoint Resident Director, if it consist both the Foreign Nationals.
APPLICABILITY OF THE ACT:
This provision applies to all Companies including private companies.
In case of any contravention, then a penalty of up to INR 10,000 will be imposed on the company and every officer of the company. Further, in case of continuing default, a fine of INR 1,000 per day till the date this default continues is applicable.
CS Mohit Saluja, Mohit Saluja & Associates, 2nd Floor, Malhotra Complex, Sehdev Market, Jalandhar City, M- 9914558709, email@example.com