Resident Director vs. Designated Partner: 182 Days or 120 Days? Complete Guide

If you’re a foreign national or NRI planning to start a business in India, understanding the “Residency Requirement” is absolutely critical. A common question for entrepreneurs is whether the minimum stay requirement in India is 120 or 182 days. Here’s the simple answer: It depends entirely on your chosen business structure. A Private Limited Company requires 182 days, while a Limited Liability Partnership (LLP) requires only 120 days. This guide breaks down the exact legal provisions, explains recent amendments, and helps you make an informed decision about your business structure in India.

What is the Residency Requirement for Company Directors?

For every Private Limited Company, Public Company, or One Person Company (OPC) incorporated under the Companies Act, 2013, there is a mandatory requirement to appoint at least one Resident Director.

Key Points for Entrepreneurs: 

• The residency requirement for companies means that at least one director on your Board must spend approximately six months (182 days) physically present in India during each financial year. This requirement applies to all types of companies, whether public, private, or OPC. 
• The calculation period runs from April 1st to March 31st of the following year. Any individual who meets the physical presence test can qualify as a Resident Director, regardless of citizenship. However, in practice, most foreign companies appoint an Indian national to easily satisfy this compliance requirement.

For Newly Incorporated Companies: The Companies Amendment Act, 2017, introduced a proportionate calculation for new companies. If your company is incorporated mid-year, the 182-day requirement applies proportionately at the end of the financial year in which incorporation takes place. For example, a company incorporated on October 1st would have approximately 182 days remaining in the financial year, so that the proportionate requirement would be around 91 days for that first year.

What is the Residency Requirement for LLP Designated Partners?

The rules for Limited Liability Partnerships (LLPs) were significantly relaxed by the LLP (Amendment) Act, 2021, to encourage foreign investment and ease doing business.

Key Points for Entrepreneurs: 

• The relaxed 120-day requirement means you need to spend only about four months in India to qualify as a Resident Designated Partner. This change was specifically designed to attract NRIs and foreign founders who visit India frequently but cannot commit to a six-month stay. 
• The 120-day calculation follows the financial year cycle from April 1st to March 31st. Every LLP must have at least two Designated Partners, and at least one of them must be a Resident of India.

Significant Change: Before the 2021 Amendment, LLPs followed a 182-day residency requirement calculated based on the “immediately preceding one year.” The Amendment Act reduced this to 120 days and aligned the calculation with the financial year, making LLPs significantly more accessible for foreign investors.

Key Difference: Financial Year vs Calendar Year.

1. Companies Act Position: The original Section 149(3) of the Companies Act, 2013 mentioned “previous calendar year” (January to December). However, the Companies (Amendment) Act, 2017 changed this to “financial year” (April to March) to align with how companies typically operate and to synchronise with the Income Tax Act, 1961 residency provisions under Section 6.
2. LLP Act Position: The LLP Amendment Act, 2021, similarly uses “financial year” for calculating the 120-day residency requirement. This alignment makes it easier for business owners to track their stay in India for multiple compliance purposes.

Understanding the COVID-19 Relaxations (Now Expired)

Much of the confusion around residency requirements stems from temporary relief measures granted during the pandemic. It’s vital to know that these were one-time relaxations and have now fully expired.

What Happened During COVID-19: During the COVID-19 pandemic (FY 2019-20 and FY 2020-21), travel restrictions prevented many directors from meeting the 182-day residency requirement. The Ministry of Corporate Affairs (MCA) issued General Circular No. 11/2020 dated March 24, 2020 and General Circular No. 36/2020 dated October 20, 2020, clarifying that non-compliance with the minimum residency requirement would not be treated as a violation for those specific financial years.

Current Status (2025): These circulars have expired. They were temporary “no-default” relaxations and did not permanently amend Section 149(3). As of today, the strict 182-day requirement is fully back in force for companies. Do not rely on pandemic-era articles suggesting otherwise.

Comparison Table: Company Director vs LLP Designated Partner 📊

Penalties for Non-Compliance: Both the Companies Act and LLP Act prescribe penalties for failing to maintain a Resident Director or Designated Partner.

1. For Companies: Since Section 149(3) does not prescribe a specific penalty, the general penalty under Section 172 of the Companies Act, 2013, applies. The company shall be liable to a penalty of ₹50,000 with an additional penalty of ₹500 for each day of continuing failure, subject to a maximum of ₹3 Lakh. Every officer in default (including directors) shall be liable to a penalty of ₹50,000 with an additional penalty of ₹500 for each day of continuing failure, subject to a maximum of ₹1 Lakh. Recent MCA adjudication orders have imposed penalties ranging from ₹60,000 to ₹7 Lakh depending on the duration of default.
2. For LLPs: Contravention of the residency requirement under Section 7(1) attracts a specific penalty under Section 10 of the LLP Act, 2008. The LLP and its every partner shall be liable to a penalty of ₹10,000 and, in case of continuing contravention, a further penalty of ₹100 for each day, subject to a maximum of ₹1 Lakh for the LLP and ₹50,000 for every partner. Small LLPs and Startup LLPs enjoy reduced penalties at 50% of these standard rates.

Can a Foreign National be a Resident Director or Designated Partner? 🌍

Yes! Both the Companies Act and LLP Act focus on residency, not citizenship.

1. For Companies: A foreign national can qualify as a Resident Director provided they hold a valid Director Identification Number (DIN) from the Ministry of Corporate Affairs and have physically stayed in India for at least 182 days during the financial year. They would typically need an Employment Visa or a Business Visa to allow such extended stays.
2. For LLPs: Similarly, a foreign national can become a Resident Designated Partner by obtaining a Designated Partner Identification Number (DPIN or DIN) and staying in India for at least 120 days during the financial year. The relaxed 120-day requirement makes LLPs particularly attractive to foreign investors who visit India regularly but cannot commit to a six-month commitment.

Conclusion 📝

Compliance with residency requirements is mandatory, not optional. The penalties for non-compliance are substantial, and continued default can lead to the disqualification of directors and partners from holding such positions in other entities as well.

Key Takeaways: Private Limited Companies require a Resident Director who stays in India for at least 182 days during the financial year under Section 149(3) of the Companies Act, 2013. LLPs require a Resident Designated Partner who stays in India for at least 120 days during the financial year under Section 7(1) of the LLP Act, 2008 (as amended in 2021). The COVID-19 relaxations have expired; strict compliance is now mandatory. Always verify passport stamps and travel history before filing appointment details with the RoC.

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Editorial Team  

Setindiabiz Editorial Team is a multidisciplinary collective of Chartered Accountants, Company Secretaries, and Advocates offering authoritative insights on India’s regulatory and business landscape. With decades of experience in compliance, taxation, and advisory, they empower entrepreneurs and enterprises to make informed decisions.