Removal of Directors Disqualification
Directors Disqualification can occur due to non compliance of the Companies Act 2013. Directors Disqualification can be removed after fulfilling and adherence to rectification of non-compliance.
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Every Director needs to perform his/her duties and responsibilities professionally and diligently, In case wherein the director is found to contravene the provisions of Companies Act, then Registrar of Companies (RoC) is empowered to declare such directors as disqualified.
Directors Disqualification has severe effect; any Director who is declared disqualified cannot be served as director. Let’s understand it with the help of example, If any individual is serving as a Director in 15 companies then once it become disqualified due to any default in any one company, then such director ceases to become director in all 15 companies. Further, if in a company there are 2 directors and one of the director is disqualified then as per the Companies Act to maintain minimum 2 directors in a private limited company, such private limited company also becomes inactive due to non maintenance of minimum number of directors. Any Director who has been disqualified cannot become director in any company for the period of five years starting from the date of disqualification.
Conditions which attract Directors Disqualification:
- Any Director who fails to file Annual Financial Statement in the form of Annual Return to the Registrar of Companies consecutively for three financial years.
- Any Director who unable to repay deposits along with accrued interest thereon and such delay continues for more than one year.
- Any director who is declared as insolvent
- Any director who is declared as unsound mind
- Any director who has been sentenced for imprisonment for not less than six months by any competent court, shall be disqualified.
- Any director who has been sentenced for imprisonment for not less than seven years, shall be disqualified permanently.
- Any director who fails to pay call on the shares and such default continues for more than six months.
Procedure for removing Director Disqualification:
- The first step towards removing of director disqualification id to file a writ petition before the high court.
- Writ petition must comprises of memo of parties to petition, notice of motion, synopsis of list of date and events, stay application u/s 151 of CPC.
- Application shall be made before NCLT u/s 252 of the Companies Act 2013 for those companies whose name got struck off in disqualification.
- Application to RoC in CRF (Change Requirement Form) regarding activation of DIN.
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