Disqualification of Director - Companies Act 2013

This webpage contains very useful information about the disqualifications of a person for being appointed as a director to a company, as per the new Indian Companies Act of 2013, and also about how a director declared temporarily disqualified can again become a director. MCA has now become quite strict to the disqualified directors and dormant companies.

The Ministry of Corporate Affairs (MCA) has recently (since September 2017) disqualified over 2 Lakh company Directors based on the relevant rules and provisions given in the Companies Act, 2013. Names of the disqualified directors have also been published on MCA website. Hence, company directors as well as companies now require to be rather strict in this respect in India. The lower section on this webpage offers exclusive information about how to become a director again, after being recently and temporarily disqualified according to the provisions related with disqualification of directors mca, to help the aggrieved directors.

The Section 164 of the Indian Companies Act of 2013 deals mainly and primarily with the disqualifications for being appointed as a director to a company. According to this Section (containing provisions related with director disqualification companies act 2013), anyone or more of the following main grounds or reasons can disqualify a director in India for his/her appointment to a company:

• Unsound Mindedness or Insolvency declared by a competent court.
• Conviction of any offence which involved imprisonment up to Seven Years or More (in case of imprisonment up to Six Months, the person can again become a director after Five Years of expiry of the sentence).
• Non-Compliance under Section 152(3) of the Companies Act of 2013.
• Any rigorous disqualifying order passed by a court or a Tribunal against his/her appointment as a director to any company.
• Delayed payment of any calls by Six Months, in respect of any shares of his/her company.
• Any offence or delinquency committed by the person in connection with the Related Party Transactions (RPTs) during last Five preceding years.
• If the person or his/her company has not filed the Financial Statements or Annual Returns for any continuous period of Three financial years.
• Found guilty of any irregularities of delinquencies related with the repayment of accepted deposits, redamation of any debentures, payment of due interest on the deposits or debentures, etc. for One Year or More.
• Non-compliances with the provisions stipulated in Part I of the Schedule V of the Indian Companies Act, 2013.
• And, any clauses of disqualification for appointment as a director, given in the Articles of the employing private company.

Hence, to avert director disqualification, one of the most important things to be followed strictly by a company director, is to ensure that his/her company has regularly been filing the MCA annual returns timely. The above conditions apply to the Private Limited Companies, One Person Companies, and Public Limited Companies (both listed and unlisted).

Director Disqualification - How to Become a Director Again ?

The Sub-Section (3) of the Section 164 of the Companies Act of 2013 also states that any disqualifying conviction or order (mentioned above) does not take effect within Thirty Days. Hence, the concerned director can file the overdue annual returns and appeal to the NCLT within thirty days, in order to stay the proceedings. Once, an earnest appeal is initiated, the impugned director can continue to hold his/her post, until expiry of Seven Days counted from the date on which the appeal/petition is disposed off. For these tasks, the director should better take help of a well-informed and veteran company lawyer or practicing company secretary.

To carry on the responsibilities of the Board of Directors further, the company must appoint new directors to replace the existing disqualified directors with support of the ROC, who will then digitally sign the returns and other compliances under the MCA, Income Tax Act, etc. Thereafter, an application is to be made before the NCLT (National Company Law Tribunal) for rendering the current status of the company 'Active', rather than 'Striking Off'.

How We Help with Director Disqualification and Become a Director Again Services ?

Now, we are pleased to inform you that :

"MCA has notified the Condonation of Delay Scheme, 2018 (CODS), which shall come into force with effect from 1st January 2018 and shall remain in force up to 31st March 2018 to revive your Company and Directorship".