Removal of Directors Disqualification

Director Identification Number (DIN) is a unique number provided to existing director or a would be director of an existing company incorporated under section 153 and 154 of Companies Act, 2013. It was created with the sole purpose to check wrongdoing and if any such wrongdoings happen, it could be tracked.

After the Companies Act, 2013 came into existence, the Ministry of Corporate Affairs under section 164(2) and 167(1)(a) of the Act, disqualified many directors and we saw a complete removal of inactive companies. Lakhs of DIN all over India were deactivated leaving behind the company’s future in danger, which further hampered the corporate sector in India.

After this, many aggrieved directors were seeking for a solution. Hence, the government issued a circular for providing revival opportunity to the defaulting company and reactivation of DIN. It came out with Condonation of Delay Scheme, which gives the directors a chance to file the necessary documents and revive their company and start their business again.

Reasons Behind Striking off Companies and Director Disqualifications

Under the Law, the companies need to file their annual return and balance sheet with the ROC every year. They are liable to fine if not done properly. If the company fails to file statutory documents with ROC from last 3 years, the MCA will strike off the company from the register of Companies; additionally it blocked DIN of all the disqualified directors in order to take preventive measure.

Earlier provisions under Condonation of Delay Scheme (CODS) for Director Disqualification removal

The Ministry of Corporate Affairs (MCA) came up with Condonation of Delay scheme which came into force from 1st January to 31st March, 2018 but it was further extended through General Circular No. 02/2018 and General Circular No. 03/2018 till 1st May, 2018. It targets defaulting companies who have not yet filed annual returns and balance sheets.

Procedure after Condonation of Delay Scheme

After the expiration for CODS, 2018, many disqualified directors made proposition before the High Court and the National Company Law Tribunal to restoration of their DIN and revival of their companies. A Writ Petition was filed under Article 226 of the Indian Constitution for issuing Writ of Certiorari to set aside MCA notification stating about disqualification of directors and to revive the companies which were struck off and to reactivate DIN under section 252 of the Companies Act, 2013.

Notification clarifying relief to be provided to disqualified directors after expiration of CODS by MCA

The Ministry of Corporate Affairs gave clarifications in regards to the CODS vide general Circular No.5/2018 dated 17th May, 2018. Following are the main points

• If the defaulting companies are removed from the Register of the companies by MCA and a petition filed for the revival under section 252 is pending before the tribunal, then these companies can pursue CODS even after the scheme has expired.
• When the company has been struck off, the DIN can only be reactivated after getting NCLT order and after complying with the submission of all pending documents. The ROC has to do a proper scrutiny of NCLT orders and compliance of all overdue requirements.
• In such a case, after the NCLT order, the ROC is required to raise ticket on the MCA portal through the Change Requirement Form (CRF). ROC has to upload the copy of the copy on such portal. After the proper checking, the deactivated DIN will get reactivated.
• The disqualified director who’s DIN is to be reactivated through CRF must not be the director of any other company which is struck off.

Steps for DIN activation followed now after CODS

• Step-1

  Filing of Writ Petition- Disqualified Director is required to file a Writ petition under Article 226 of the Constitution of India before Hon’ble High Court. In the said writ petition Appellant is required to accompany following correspondence:

• Step-2

  Companies whose name has been struck off can also file an Appeal under Section 252 of the Companies Act, 2013 before the National Company Law Tribunal to restore the name of the company with ROC

• Step-3

  After getting orders of DIN reactivation and revival of struck off company from Hon’ble High Court and NCLT, Appellant is required to file Statutory documents with ROC and Annual returns of last 3 years with Income tax authority.

• Step-4

  After all the compliances and payment of penalty, if any imposed by Appellant, ROC is required to raise ticket on MCA21 portal through Change Requirement Form (CRF). ROC also needs to upload copy of the said order on the portal. After validation, the deactivated DIN will get reactivate.

If the Writ is filed, then it has to be accompanied with the following documents

• Urgent Application;
• Notice of Motion;
• Memo of parties: Parties to the petition i.e. Name, Address, Designation etc;
• Synopsis and list of date and events;
• Circumstances which lead to non-compliance of filing of statutory documents;
• Status of company and directors seeking restoration;
• Prayer clause for setting aside the publication issued by ROC i.e. Impugned List of Disqualified Directors under Section 164 (2) (a) of the Companies Act, 2013;
• Copy of press release/impugned notice issued by ROC listing disqualified directors;
• List of all companies in which Appellant is Director;
• Stay application under Section 151 of CPC;

Documents Required for DIN reactivation

• Application before the NCLT or the Petition before HC as the case may be
• Overdue Documents as per Section 403
• e-CODS on MCA 21 portal

Prescribed Forms for filing Annual return under CODS

• Form Number 208/MGT-7- this form is for filing annual return for companies having share capital.
• Form 21A/MGT-7-this form is for filing of annual returns of a company which don’t have a share capital
• Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC (XBRL) and AOC-4(non-XBRL) – these forms are used for filing financial statements.
• Form 66 – this form is for submitting the Compliance Certificate with the Registrar.
• Form 238/ADT-1- Form for is used for the intimation for Appointment of Auditors.

How does LawyerINC help?

• Removal of Directors Disqualifiaction
• Restoration of DIN
• Revival of Company struck off under Companies Act

Why choose LawyerINC? What are the services offered by LawyerINC for DIN activation?

• Free Consultation for enquiry
• Our team constitutes of lawyers, CA and CS. We will get in touch with you through renounced Inhouse lawyers and assit you in DIN Activation
• Expert Guidance will be given for document verification and procedural details
• We'll provide ongoing support and we'll be available at your service all the time and provide you assistance.
• Assitance in filing case

*Any fee, stamp duty and miscellaneous charges shall be payable extra.

Conclusion:

In order to provide remedy to disqualified directors and to revive struck off companies even after COD scheme, the Ministry of Corporate Affairs (MCA) has undertaken a remarkable step by issuing recent Circulars, which not only helped companies to restore their name with ROC by giving them more time but also giving opportunity to revive struck off companies by filing annual statements and other statutory documents.

Frequently Asked Questions