DISQUALIFICATIONS OF DIRECTOR

DISQUALIFICATIONS OF DIRECTOR

A Director is a person from a group of managers who supervises a particular area of a company. The role of a director is to determine and implement policies and to make decisions. Thousands of Directors have been disqualified in the years 2017 and 2018 all over India, because of the strictness of the Registrar of Companies. Accordingly, in this article we have mentioned and covered most of reasons that can lead to a director of company being disqualified for appointment as director under companies’ act 2013.

Reasons for disqualification of director under companies act 2013:

1. He is of unsound mind and it is declared by the court.
2. Fraudulent trading.
3. He is insolvent or unable to pay the debts.
4. He has applied to be adjudicated and his application is pending.
5. He has convicted by the court of any offence weather it involves or not the moral turpitude and has been sentenced for six months.
6. A Director is not eligible for appointment or reappointment in any company including LLP If the person has been convicted and sentenced for seven years or more.
7. If an order disqualifying has been passed by a court or Tribunal.
8. He has been convicted of an offence related to party transactions at any time during the last five years.
9. If share call money is not paid if it is called in respect of any shares held by him form past six month calculated from the date of call made for share application money.
10. He has been appointed without Director Identification Number (DIN).
11. He is a director in more than 20 companies violating the limit.
12. Non filling of DIR-3 NYC.
13. He is appointed as director in a company which has not filed financial statements of annual returns for three financial years.

Some more queries related to the disqualification of director under Indian companies act:

When the an order against the director convicting him of offences is in appeal, the director is continued to be disqualified every if the matter is in appeal once order is passed against such person by any tribunal, court or any such authority.

1. What is the remedy for the disqualification of the director?

In case of disqualification under companies act due to above mentioned cause , a director himself or via his representative can appeal to the National Company Law Appellate Tribunal (NCLAT). In case the director is disqualified due to non filing of financial statements and annual returns  under section 92 of Indian companies act 2013 or as per provision of companies Ac, 1956, then he can file a appeal with the high court against the Registrar of Companies (ROC) with cause and situation against such disqualification.