Analysis of Companies (Appointment & Qualifications of Directors) (Amendment) Rules, 2023

MCA vide its Notification dated January 20th , 2023, has notified Companies (Appointment and Qualifications of Directors) (Amendment) Rules, 2023.

Earlier, the directors were required to inform the concerned companies about their disqualification under section 164(2) only but now a declaration regarding disqualification under section 164(1) must also be given in form DIR-8.

Disqualification under section 164(1) occurs on the following grounds :

• Being of unsound mind.
• Being  an undischarged insolvent.
• Application is pending in the court  with reference to be adjudicated as an insolvent.
• Convicted by a court for  any offence,  involving moral turpitude  and sentenced for the same  for 6  months  + 5 years has not elapsed from the date of expiry of the sentence.
•  Convicted for any offence and  imprisoned  for 7 years/ more.
•  An order disqualifying  from appointment as a director has been passed by a court/Tribunal
• Not paid any calls in respect of any shares of the company, held alone/ jointly since  6 months  from the last day fixed for the payment.
• Convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding 5 years.
• Has not been alloted DIN
• Has held directorships in more than 20 Companies.

Form DIR-9 was used only when a company failed to file the financial statements/ annual returns/ repay any deposit, interest, dividend,/redeem its debentures, as specified in section 164(2). However, now , the Companies are required to file this form with the ROC within 30 days from the date when form DIR-8 is received regarding disqualification of director under section 164(1)  and section 164 (2).

Post the amendment any application for removal of disqualification of directors  made in Form DIR-10 is required to be  filed before the Regional Director.

In the above context, forms DIR-3, DIR-3C, DIR-5, DIR-6, DIR-8, DIR-9, DIR-10, DIR-11 and DIR-12 have been revised.

The amended provisions shall come into force w.e.f.  January 23rd , 2023.