Form – DIR – 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, asked strange information therein – 5 – Whether (applicant is) resident in India – yes or no (radio button). Any person filing and certifying the form should be confirm what is asked and what is purpose? Whether permanent residential address or present resident address has any relation with resident status? What is definition of these terms; Resident Status, Permanent Residential Address and Present Residential Address?
More so, verification by applicant contain direct reference of infamous Sections 447, 448 449 and certificate by professional contain direct reference of Section 449.
Clause (e) of Part – I of Schedule V of the Companies Act, 2013 require that No person shall be eligible for appointment as a managing or whole-time director or a manager (hereinafter referred to as managerial person) of a company unless he is resident of India.
Explanation I.—For the purpose of this Schedule, resident in India includes a person who has been staying in India for a continuous period of not less than twelve months immediately preceding the date of his appointment as a managerial person and who has come to stay in India,—
(i) for taking up employment in India; or
(ii) for carrying on a business or vacation* in India [* please read vacation as vocation as intention should be]:
Provided that a person, being a non-resident in India shall enter India only after obtaining a proper Employment Visa from the concerned Indian mission abroad. For this purpose, such person shall be required to furnish, along with the visa application form, profile of the company, the principal employer and terms and conditions of such person’s appointment.
This definition given in Explanation – I is an inclusive definition to include a person who is not Indian National with not less than twelve month continuous stay in India for employment on proper employment visa or business or vocation. Even though, business or vocation in India is also not possible without proper business visa but this is not written.
Whether this definition of “resident” shall be applicable to all directors? Language of this part of schedule is clear that this is applicable only to managing or whole-time director or a manager. There is no other resource available in the Act or Rule made there under to define “resident”. Outside sources may be the Income Tax Act, 1962 and The Foreign Exchange Management Act, 2013. Both of these Acts has different purpose. DIN had no relation with Income Tax Act except alignment with PAN for Name, Father’s Name and Date of Birth only. Further, the context does not require any reference to these Acts as context is to provide a Director Identification Number under the Companies Act.
Section 7(1)(f) of the Companies Act, 2013 ask disclosure of particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed. This has no reference of Resident status but residence address only.
Chapter 11 of the Companies Act, 2015 which deals with appointment and qualification of directors does not contain any reference of resident address or residential address. The Companies (appointment and qualification of directors) Rules 2014 has some reference:
Sub – Rule (3)(a) of Rule 9 state that the applicant shall download Form DIR – 3 from the portal, fill in the required particulars sought therein and sign the form and after attaching copies of the following documents, scan and file the entire set of documents electronically –
- proof of identity;
- proof of residence;
- verification by the applicant for applying for allotment of DIN in Form DIR-4; and
- specimen signature duly verified.
Again, these rules nowhere have reference of resident status of director but of proof of residence. “Instruction Kit for eForm DIR-3”, which download with the form from the site of Ministry of Corporate Affairs is a customary help in relation to these forms. Interestingly till date of writing this present, this instruction kit provide no instruction regarding field – 5 – Whether (applicant is) resident in India – yes or no (radio button).
It has some indication relating to residential address. According instruction for field – 15 – Permanent resident addresses – enter the detail matching with the resident proof. This gives presumption that field – 17 – President resident address may be transitional address without any proof of residence. Instruction kit gives an inclusive list of documentary proof of “permanent residence” which says, “Address proofs like passport, election (voter identity) card, and ration card, driving license, electricity bill, telephone bill or aadhaar shall be attached and should be in the name of applicant only. Instruction kit further instructs that in case of Indian applicant, documents should not be older than 2 months from the date of filing of the eForm and in case of foreign applicant, address proof should not be older than 1 year from the date of filing of the eForm.
This is strange requirement that proof for permanent residence should not be older than a certain period which means applicant has to re-news their passport, voter identity, ration card or driving license before filing application in Form DIR – 3. May intention be presume to refer utility bills only?
With help of instruction kit for Form DIR – 3, We may get following definitions:
- Permanent Residential Address is an address for which a person can provide a documentary proof of residence; and
- Present Residential Address is communication address which will be displayed on “View Signatory Details” of Applicant.
Significance of Address of Applicants:
According to Section 173(3), a meeting of the Board shall be called by giving notice to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means.
Secretarial Standard 1.3.1 of SS – 1 clarify this position that the Notice shall be sent to the postal address or e-mail address,
- registered by the Director with the company or
- in the absence of such details or any change thereto, any of such addresses appearing in the Director Identification Number (DIN) registration of the Director.
According to Section 175(1), no resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the directors, or members of the committee, as the case may be, at their addresses registered with the company in India by hand delivery or by post or by courier, or through such electronic means as may be prescribed and has been approved by a majority of the directors or members, who are entitled to vote on the resolution.
Secretarial Standard 6.2.2 of SS – 1 clarify that the draft of the Resolution and the necessary papers shall be sent to the postal address or e-mail address registered by the Director with the company or in the absence of such details or any change thereto, any of the addresses appearing in the Director Identification Number (DIN) registration of the Director.
It is clear that address appearing in Director Identification Number shall be used by the company to send (a) notices of board meetings and (b) drafts of board resolutions to be passed by circulation if it is Indian address.
This may result in following situations:
Case 1: An Indian National residing in a foreign country for last five year will submit Indian Passport or Indian Bank Statement as address proof for Permanent Address and Present residential address because draft of circular resolution shall be delivered at present Indian address only.
Case 2: A Foreign National residing in India for last two year may submit his statement of his bank account held in India as Permanent Address and Present residential address because draft of circular resolution shall be delivered at present Indian address only.
Case 3: A Foreign National residing in a foreign national may submit his passport as Permanent Address and give a different present residential address because draft of circular resolution shall be delivered at present Indian address only.
Case 4: Indian resident in employment in Delhi due to absence of any other address proof submitting voter identity card of his village in remote district “Kliehriat” as Permanent Address Proof and give a different present residential address because draft of circular resolution shall be delivered at present address only.
Resident status has no relation with permanent residential address or present residential address. Permanent Residential Address is an address for which a person can provide a documentary proof of residence. Present Residential Address is communication address which will be displayed on “View Signatory Details” of Applicant. If director has intention to receive draft of resolution to be passed by circular resolution, present residential address shall be an Indian residential address only.
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I have a query regarding the residential status of DIN applicant.
As stated in your article thqt residential status has nothing to do with present or permnent residential address, then how can we ascertain the status of applicants residence in india in preceeding 12 months or 182 days criteria as per income tax Act.
How can a practicing professional will ascertain the residential status when applicant orally declare himself to be resident in india.
I request you to list out the source, if any, so as to make sure that applicants residential status is correct or not
Passport and visa on passport along with declaration made by applicant is good source of information.