The Companies Act, 2013 provides the grounds upon which a director may attract disqualification. Section 164 of the Companies Act, 2013 deals with the same, which states that a director can be disqualified:-

• Where the company director has either –
• Where he/she has not received a Director Identification Number (“DIN”).
• At any time during the final preceding five years, he/she has been convicted of an offense involving related party transactions which are governed under Section 188 of the Companies Act, 2013.
• Where he/she holds the shares of any company and has not made the payment of any such call, provided six months have passed since the last date to pay such call money.
• Any court/Tribunal has given an order that disqualifies him from being appointed as a director.
• When there is an offense involving moral turpitude that he/she has been convicted of and sentenced with imprisonment for not less than six months.
• Where insolvency has been applied for, but the application still stands pending.
• Where he/she is an undischarged insolvent.
• Where he/she has been declared as a person of unsound mind by a competent court.

a. Failed to file the annual returns for three years running

b. Missed to pay interest on/repay the deposits for over a year

c. Failed to pay any dividend for beyond a year

d. Neglected to redeem debentures or pay interest on debentures for over a year

Concerning this particular provision, non-eligibility for directorship will be for five years from the date of such default, be it in that particular company or any other company.

Effect of Disqualification of Director

Ever since the mass disqualification rally of 2017, the Ministry of Corporate Affairs (“MCA”) has been vigilant in keeping tabs on the directors concerning their regulatory and statutory compliances. Depending on the disqualification grounds in a particular scenario, a person is disqualified for five years or as the case may be. The names of the directors who get disqualified will get published on the MCA portal. Allotment of the DIN to that specific director gets deactivated by the Registrar of Companies.

Remedies against Disqualification

In disqualification, a director has the power to appeal to the National Company Law Appellate Tribunal (NCLAT). He/she can temporarily ask for a stay order. Under the Companies Act 2013, an order disqualifying a director does not occur until the next 30 days of being passed. When an appeal happens, the disqualified person will continue to be a director for the next seven days. In this period, he can file his annual returns to stay the order of disqualification. Though, there exists no procedure to reappoint a disqualified director. Reappointment can only be after five years have elapsed from the date of disqualification.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.