Director of company is person who is under onerous pressure to perform on behalf of company’s shareholders for the proper functioning and taking company toward growth.
This responsibility comes with huge revenues also, but sometimes some take undue advantage of their power and use the position and other resources of the company for their own profit. The Companies Act, 2013 has covered a whole special provision which deals which states the circumstances under which a director can be disqualified to act as director of the company. Now let us stick to our topic and go through important aspects of same.
SITUATION MAKING DIRECTOR DISQUALIFIED
The disqualification of director also arises as given under Companies Act, 2013, which states:-
In the last two (B) clause, the director shall not be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.
The Government in 2017 in order to tackle with corruption which is deep rooted in Indian economy start taking steps.
Accordingly, in 2017, the Ministry of Corporate Affairs (MCA) has struck off the around 2.17K Companies on the basis of not carrying on any business from last many years and/or are shall companies as well as many directors who were associated with such company has been disqualified as director which means they cannot be appointed in any other company onwards for a period of five (5) years apart from this such disqualified director shall be punishable with the imprisonment for a term upto 1 year or with fine of Rs. 1 lac to Rs. 5 Lacs or with both.
Removal of Disqualification
When status of the Company is ‘struck off’ and the Director intends to revive the Company and remove his disqualification:- An appeal for revival of the Company has to be filed before the National Company Law Tribunal (NCLT)*. Once the order for revival is passed by NCLT, the appellant shall comply with the requisites to revive the Company within the time stipulated in the Order.
If revival of the Company is denied by NCLT, the Company can appeal before the Appellate Tribunal (NCLAT) for revival
When status of the Company is ‘struck off’ but wants to remove his disqualification without reviving the company
Writ petition for removal of disqualification shall be filed before the High Court* / Supreme Court. Once the interim and/or final order against such disqualification is received, the Petitioner shall comply with the requisites to removal his disqualification.
When the status of the Company is ‘active’ but all the Directors are disqualified and wants to remove disqualification.
In certain situation, where the Company is active but either one or all directors is/are disqualified because of any reason, such person shall opt for situation II.
In certain other situations, when there is a deadlock in the Company it is advisable to appoint to new Directors in the Company the status of which is ‘active’.
(The Author is Corporate Consultant and provides varied array of services including secretarial, financial, Intellectual property, start-ups, taxation, Audit, GST, Book keeping and other ancillary advisory service and can be contacted through email id:- [email protected])