Every company in India must have at least one director who has stayed in India for 182 days or more in the financial year. A private limited company also needs at least two directors in total. Directors can be foreign nationals, but at least one must meet the residency test, so plan this before filing the incorporation.
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Key facts
| Minimum directors (private company) | Two (Section 149(1) of the Companies Act, 2013) |
|---|---|
| Resident Director | At least one who has stayed in India 182 days or more in the financial year |
| Foreign nationals as directors | Allowed, with a Digital Signature Certificate and a Director Identification Number; at least one director must be resident in India, meaning a stay of 182 days or more in the financial year |
| Annual KYC | Each director files Form DIR-3 KYC by 30 September every year |
| Who can be the Resident Director | An Indian resident executive, a hired local executive or a professional Resident Director |
| Duties | Statutory duties and liabilities apply to all directors |
| Basis | Companies Act, 2013, Section 149 |
The rule
The Companies Act, 2013 requires every company to have at least one director who has stayed in India for a total of at least 182 days in the financial year (1 April to 31 March). For a newly incorporated company, the requirement applies proportionately for the year in which it is incorporated. The director does not have to be an Indian citizen, but must satisfy the stay requirement.
Options for a Japanese parent
- An existing executive who is based in India or will relocate. Best where you plan to station a country head in India.
- A senior local hire. Many Japanese companies hire a country manager who becomes the Resident Director.
- A professional Resident Director. An independent person who serves as director for a fee, used where no executive will be resident yet. Understand that this person carries statutory duties and liabilities and will want protections such as indemnity and clear reserved matters.
Keeping control as the parent
The parent appoints and removes directors as shareholder. Reserved matters that need parent approval can be written into the Articles or an intercompany agreement. The Resident Director still owes duties to the Indian company and must act in its interest, so decisions and approvals should be documented properly.
Ongoing compliance for directors
Directors need a Director Identification Number, keep their KYC up to date, and sign annual filings. Directors of companies that stop filing for continuous periods can be disqualified, so ongoing compliance matters for everyone on the board.
What this means for a Japanese parent
- Decide who will be the Resident Director before the incorporation filing. If it is a professional director, agree the scope of authority, indemnity and the reporting line to your Japanese team in writing.
Mistakes to avoid
- Treating the Resident Director as a formality and not documenting authority and indemnity.
- Leaving the choice until after name and document preparation, which delays the filing.
- Assuming a foreign executive who visits India occasionally will meet the 182-day test.
- Appointing a person who is also a director in many unrelated companies without understanding their liability exposure.
How AU Corporate handles this
We can advise on the choice and, where needed, arrange a professional Resident Director.
Related services: India business setup
Official sources
Rules on this page can be verified at the primary sources: Ministry of Corporate Affairs, Reserve Bank of India, Income Tax Department and the GST portal.
Frequently asked questions
Can a foreign national be the Resident Director?
A foreign national can be the Resident Director if they have stayed in India for at least 182 days in the financial year (Section 149(3) of the Companies Act, 2013). Citizenship is not the test.
How many directors does a private company need?
At least two, and at least one must be resident in India.
Can the Japanese parent's CEO be a director?
The Japanese parent's CEO can be a director of the Indian subsidiary, because foreign nationals can be directors. They need a Digital Signature Certificate and a Director Identification Number.
What if no director meets the residency requirement during the year?
The company is not compliant with the Companies Act and can face penalties, so the board should be reconstituted before the year ends.
How many directors and shareholders does an Indian subsidiary need?
A private limited company in India needs at least two directors (Section 149(1) of the Companies Act, 2013) and two shareholders (Section 3(1)(b)), and at least one director must be resident in India, meaning a stay of 182 days or more in the year (Section 149(3)). In a wholly owned subsidiary, the Japanese parent holds nearly all the shares and a nominee holds the balance.
Can Japanese executives be directors of the Indian subsidiary?
Japanese executives can be directors of the Indian subsidiary. Foreign nationals can be directors once they obtain a digital signature and a Director Identification Number, but at least one director must be a resident of India. Directors carry statutory duties and liabilities, so they should be chosen with that in mind.
What is a Digital Signature Certificate and how does a foreign director get one?
A Digital Signature Certificate (DSC) lets a director sign MCA filings electronically. A foreign director obtains one using a passport and address proof, usually with attestation or apostille and a verification step, and the process can be completed remotely.
Does the Indian subsidiary need a director who lives in India?
An Indian subsidiary needs at least one director who has stayed in India for 182 days or more in the financial year (Section 149(3) of the Companies Act, 2013). A private limited company also needs at least two directors in total (Section 149(1)). Directors can be foreign nationals, but at least one must meet the residency test.
Who controls the Indian subsidiary: the board or the Japanese parent?
The Board of Directors manages the company, and the parent controls the board by appointing and removing directors as its shareholder. Matters that need parent approval can be written into the Articles or an intercompany agreement. Directors still owe legal duties to the Indian company.
Does the Japanese parent need its board's approval first?
A Japanese parent usually needs its board's approval before setting up an Indian subsidiary. The board passes a resolution approving the investment, naming the authorized signatory and directors, and authorizing documents to be signed for India. The charter, shareholder agreements and any investor consent rights should be checked before the resolution is drafted.
Related guides
Incorporation Process for a Japanese-Owned Indian Subsidiary, Step by Step
The eight steps to incorporate a wholly owned subsidiary in India from Japan: forms, order of steps, typical 4 to 6 week timeline and first 90 days.
Read the guide →Subsidiary vs. Branch vs. Liaison Office vs. LLP: Which Is Right for a Japanese Company in India?
Compare the four ways a Japanese company can enter India: wholly owned subsidiary, branch office, liaison office and LLP. Activities, approvals, tax and control.
Read the guide →Compliance Calendar for an Indian Subsidiary: What Is Due and When
The recurring compliance of an Indian subsidiary: monthly, quarterly, annual and event-based filings under company, tax, GST, FEMA and labour law.
Read the guide →Ten Mistakes Japanese Companies Make When Setting Up in India, and How to Avoid Them
The ten most common and costly mistakes Japanese companies make when setting up an Indian subsidiary, and how to avoid each. Includes a pre-filing checklist.
Read the guide →Sources
Last updated 20 October 2026. General information only, not legal or tax advice. Indian rules change often; confirm current requirements before acting.