Shikha Garg

Shikha GargSection 164(1) of Companies Act, 2013: A person cannot be appointed as director in any of the following cases:

(a) he is of unsound mind and stands so declared by a competent court;
(b) he is an undischarged insolvent;
(c) he has applied to be adjudicated as an insolvent and his application is pending;
(d) he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence:
Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company;
(e) an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;
(f) he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;
(g) he has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or
(h) he has not complied with sub-section (3) of section 152. 164(1) A person cannot be appointed as director in any of the following cases

164(2): No Person Who is or has been Director of Company which 

  • has not filed Financial Statements or Annual Returns for any Continuous period of 3 Financial Years

OR

  • Has failed to repay its Deposits accepted from Public Including interest or Redeem its Debentures on Due Date including Interest, pay any Dividend and such failure Continues for a period of One Year or more

Shall be eligible to be reappointed as Director in same company or be appointed as Director in another Company for a period of 5 Years from the date on which the said Company fails to do so.

A Private Limited Company may provide for any Other Disqualification in Addition to those specified above.

Other References with Respect to Disqualification of Directors under Companies Act 2013:

1) Under Section 143(3) of Companies Act 2013, The Auditor has to State whether any director is disqualified from being appointed as a director under sub-section (2) of section 164.

2) Under Section 152(4) of Companies Act, 2013, every person proposed to be appointed as a director by the company in general meeting or otherwise, shall furnish a declaration that he is not disqualified to become a director under this Act.

3) Under Section 167 of Companies Act, 2013, A Director shall vacate his office if he incurs any of the Disqualifications u/s 164.

How to Verify Whether a Director is Disqualified u/s 164:

1) Open Mca.gov.in

2) Under the Tab MCA Services Click on Enquire DIN Status as shown below:

DIN Services

3) Enter the DIN No. of the Director

4) If The Director is Disqualified, it will show as shown below:

DIN Details

Where A Director becomes Disqualified u/s 164, HE/SHE will not be able to E-file any Form on MCA website using his/her Digital Signature on the behalf of the Company.

Rules with reference to Disqualification of Directors u/s 164:

1) Form DIR-9: Pursuant to Section 164(2) read with Rule 14(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014. Where a Company Contravenes the provisions of Section 164(2), it shall File Form DIR-9 to the Registrar furnishing therein the names and addresses of all the Directors of the Company during the relevant Financial Years.

2) Form DIR-10: Pursuant to Section 164(2) read with Rule 14(5) of the Companies (Appointment and Qualification of Directors) Rules, 2014. Application for Removal of Disqualification shall be made in Form DIR-10.

(Author is a CA Final Student and can be reached at shikhagarg848 @ gmail.com

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One Comment

  1. Trupti says:

    when shall DIR 10 be filed ? why shall Company file DIR 10 on behalf of any disqualified Director ?? as per my understanding disqualification being an individual affair shall be dealt in the same manner.

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