Suyog S Kabra

Suyog KabraSection 164 of companies act 2013, deal with Disqualification of Director. Sub-section 1 of section 164 list disqualification of Directors for appointment as a Director of a company. Appointment shall include reappointment but not continuation to be in office. Subsection 2 of section 164 adds two disqualifications which are applicable to reappointment of Directors in same company and appointment in any other company for a period of 5 years from the Date on which said company defaulted & disqualification arises. Disqualification under this two sub section is applicable in all companies irrespective of their category & status i.e. it applies to both public & private company however private company may specify additional Disqualification in its AOA.

COMPANIES APPOINTMENT & DISQUALIFICATION RULES, 2014

According to rules 14 of the rules, every Director shall inform to the company concerned about his disqualification, if any, in form DIR 8 before he is appointed or reappointed. Where company fails to file to file their financial statements or annual returns or fails to repay deposit or Interest or Dividend or fails to redeem its debentures as specified in subsection (2) of section 164 company shall immediately file DIR 9 within a period of 30days of the failure that would attract disqualification. Upon receipt of the Form DIR 9 registrar shall immediately register the document & place it in the document file for public inspection. Any application for removal of Disqualification of director shall be made in Form DIR -10.

DISQUALIFICATION OF DIRECTORS (FEW CONDITIONS)

1. No person who has not filed financial statements or annual returns for any continuous period of Three financial years or

2. Has failed to repay deposits accepted by it or pay interest thereon or redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continuous for one year or more

POINTS TO REMEMBER

1. Shall the period of three consecutive years be calculated in respect of financial years commencing on or after this date i.e. 1st April, 2014 or prior to this date shall also incurs Disqualification.

No period has been provided under this section hence even past period of default will be considered for the purpose of section 164(2).However such disqualification will arise only at the time of reappointment & not before that.

2. Director of company which has not filed their financial statements & annual returns shall continue to hold office in other companies in which he holds office as a Director & he shall not appointed as Director in any new company for a period of 5 years.

(Suyog S Kabra is  partner with White Collar Legal LLP and can be reached at whitecollarlegal@gmail.com)

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6 responses to “Disqualification of Director under Companies Act, 2013”

  1. R. Mondal says:

    Financial Accounts of a company approved by 2 directors in 15.09.2017, As per Central Government notification dated 25.09.2017 1 of the directors is disqualified. Whether the approved accounts valid.?

  2. Abhishek Desai says:

    sir can you please tell me that ,how to file DIR-10 and what are the attachments required to file DIR-10

  3. Suyog S Kabra says:

    Dear Mukesh sir,

    Greetings!

    section 274(1)(g)disqualification of Directors under old act, there is exemption vide circular dated 21.10.2003 for government company Directors

    As per my view

    If section 274(1)(g)itself is abolished now how can circular relating to that section still hold good.

    Please clarify me if i am wrong

    Thanks a lot

  4. Mukesh Bansal says:

    Thanks a lot. But i have one another question – whether the circular/guidelines/clarification issued under Companies Act 1956 still hold good if they are not violating the provision of Companies Act 2013.

  5. Suyog S Kabra says:

    Dear Mukesh,

    Greetings!

    from my point of view the same is also applicable to Government company Directors.
    As the wording of the section says Disqualification is applicable to all companies irrespective of their category & status. There is no such exemption mentioned under new act.

    Regards

  6. Mukesh Bansal says:

    Sir can you please tell me whether the same is also applicable for Government co. directors. As in 274 i g there is exemption vide circular 829 date 21.10.2003.

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