Non-Resident Directors

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2010 Dear Friends,

I am Working in a Company whose all the Directors are nonresident (foriegners), and whole capital has been funded from outside India. so could you tell me that is it ok with the CLB and MCA as all the directors are foriegners and they are holding 100% ownership in Indian Company but they all are residing in india since more than 10years and doing the business here.

And they have the employement Visa to work here nothing else so can you tell me that is it ok as per the CLB and MCA. if not then let me know the repurcussions of the same.

Thanks & Regard

Raj

ACS Abhishek

ACS Abhishek (Expert)
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05 May 2010 You must have 1 indian subscriber to MOA in case of foreign Co. you can allot him 1 share also but he must be subscriber to MOA.

Regards
Abhishek Sharma

Querist : Anonymous

Querist : Anonymous (Querist)

05 May 2010 Dear Abhishek ji

If there is no one then what would be the repurcussion.

Regards

Rajesh

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 If an Indian company fails to comply with the requirement of having at least one resident director (i.e., a director who has stayed in India for at least 182 days during the financial year) under the Companies Act, 2013, the repercussions can be significant. Here’s an overview of potential consequences:

### **1. **Penalties and Legal Actions**

**Company Penalties:**
- **Fines:** The company can be fined for not having a resident director. The penalty for non-compliance can range from INR 1 lakh to INR 5 lakhs, depending on the specific contravention and whether the non-compliance is rectified.
- **Non-compliance Fees:** Additional fees or penalties may be imposed for non-compliance with statutory requirements, including filing delays or incorrect filings.

**Director Penalties:**
- **Fines for Directors:** Directors of the company may also face personal fines if they are found to be in violation of statutory requirements. The fines can vary based on the nature of the non-compliance.

### **2. **Regulatory Consequences**

**MCA Actions:**
- **Suspension of Name:** The Ministry of Corporate Affairs (MCA) may take action to suspend the company’s name from the Registrar of Companies (RoC) records, which can affect the company’s ability to operate.
- **Legal Proceedings:** The MCA or other regulatory authorities might initiate legal proceedings against the company for non-compliance, leading to further legal and financial consequences.

**Impact on Business Operations:**
- **Operational Disruptions:** The company may face disruptions in its operations due to its inability to fulfill legal requirements. This can impact business transactions, contracts, and relationships with clients and vendors.
- **Inability to File Returns:** The company may face difficulties in filing statutory returns and financial statements if compliance issues are not resolved.

### **3. **Rectification and Compliance**

**Immediate Actions:**
- **Appointment of Resident Director:** The immediate step to rectify the situation is to appoint at least one resident director. This should be done as soon as possible to bring the company into compliance with legal requirements.
- **Notify Authorities:** Inform the Registrar of Companies (RoC) about the changes and ensure that the appointment of the resident director is updated in the company’s records.

**Legal and Professional Advice:**
- **Seek Professional Help:** Consult with a company secretary, legal advisor, or compliance expert to address the non-compliance and guide you through the process of rectification.
- **Regular Compliance:** Ensure that all statutory and regulatory requirements are met on an ongoing basis to avoid future compliance issues.

### **Summary**

- **Penalties and Fines:** The company and its directors may face fines and penalties for not having a resident director.
- **Regulatory Action:** The MCA may take legal actions, including suspending the company’s name or initiating proceedings.
- **Rectification Required:** Appoint a resident director immediately and update the RoC records to ensure compliance.

By promptly addressing the non-compliance and taking corrective actions, the company can mitigate legal and operational risks and ensure smooth business operations.