{"id":27,"date":"2019-05-07T05:50:26","date_gmt":"2019-05-07T05:50:26","guid":{"rendered":"https:\/\/lawyerinc.net\/learning\/?p=27"},"modified":"2019-07-02T10:26:22","modified_gmt":"2019-07-02T10:26:22","slug":"frequently-asked-questions-related-to-director-disqualification","status":"publish","type":"post","link":"https:\/\/lawyerinc.net\/learning\/frequently-asked-questions-related-to-director-disqualification\/","title":{"rendered":"Everything Need To Know Related To Director Disqualification"},"content":{"rendered":"\n<p>A Company is a separate legal entity which can act through natural persons. Directors are the person who acts on behalf of company. These are the persons, hired by the company to direct and see day to day affairs of the company. There is no minimum qualification required for the post of Directors. But there are certain provisions, which lead to <a href=\"https:\/\/lawyerinc.net\/in\/removal-directors-disqualification\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Director Disqualification (opens in a new tab)\">Director Disqualification<\/a>. Here I am answering few queries related to director disqualification:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>If any person is convicted of an offence and sentenced for\nimprisonment of two years, can that person become director of the company?<\/strong><\/li><\/ol>\n\n\n\n<p>Yes, he can become the director of a company, if five years of period has been completed after the completion of sentence. According to the section164 (d) of <a href=\"http:\/\/ebook.mca.gov.in\/default.aspx\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Companies Act, 2013 (opens in a new tab)\">Companies Act, 2013<\/a>, a person is disqualified as director, if a person has been convicted by court for any offence which includes moral turpitude or any other offence and sentenced for that imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence. &nbsp;But if a person has been convicted for any offence and sentenced for imprisonment for a period of seven years or more, that person cannot become director and is disqualified.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>What are the criteria\u2019s on the basis of which a person is\ndisqualified to become director of the company? <\/strong><\/li><\/ul>\n\n\n\n<p>According to section\n164(1), a person is disqualified to become a director of the company if,<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>A person is not mentally\nfit or of unsound mind and if its proved in the court also<\/li><li>If the person is declared\nas insolvent<\/li><li>If the matter related to\ninsolvency is pending in the court<\/li><li>If the person has been\nconvicted by court on the ground of moral turpitude or any other offence and\nfor which that person has been imprisoned for not less than 6 months and period\nof 5 years has not been completed after completion of sentence. <\/li><li>If a person has been\nconvicted for any offence for which sentenced in respect of the offence is\nimprisonment for a period of 7 years or more<\/li><li>Any other order in force\npassed by the Court or Tribunal which disqualifying him to become director of\nthe company<\/li><li>If the person has not paid\nhis calls for shares of the company and if 6 months has already been expired\nfrom the last fixed day of payment of call<\/li><li>If the person has not\nreceived DIN<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/lawyerinc.net\/in\/removal-directors-disqualification\" target=\"_blank\" rel=\"noreferrer noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"728\" height=\"90\" src=\"https:\/\/lawyerinc.net\/learning\/wp-content\/uploads\/2019\/07\/Remove-Director-Disqualification-2.jpg\" alt=\"Director Disqualification\" class=\"wp-image-780\" srcset=\"https:\/\/lawyerinc.net\/learning\/wp-content\/uploads\/2019\/07\/Remove-Director-Disqualification-2.jpg 728w, https:\/\/lawyerinc.net\/learning\/wp-content\/uploads\/2019\/07\/Remove-Director-Disqualification-2-300x37.jpg 300w\" sizes=\"auto, (max-width: 728px) 100vw, 728px\" \/><\/a><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Whether a person can hold the position as director of the\ncompany, if he has not filed any financial statements or annual returns for 3\ncontinuous financial years?<\/strong><\/li><\/ul>\n\n\n\n<p>No, that person cannot\ncontinue as director of the company. According to the section 164(2), of\ncompanies act, a person is disqualified to become director of the company who has\nnot filed any financial statements and Annual Return for 3 continuous financial\nyear and defaulter in other payment also and cannot be reappointed in the same\ncompany as director for the next 5 years.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Whether Director has to vacate the office once he disqualified?<\/strong><\/li><\/ul>\n\n\n\n<p>Yes, according to 167 of\nthe act, director has to vacate the office if<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>the person is disqualified under section 164 <\/li><li>if he has not attended any board meeting without seeking leave\npermission, held during a period of twelve months <strong><\/strong><\/li><li>the person acts in contravention of section 184 related to contracts\nin which he has direct or indirect interests.<strong><\/strong><\/li><li>If he is disqualified by any order of the Court<strong><\/strong><\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Can a disqualified director hold share of a\ncompany?<\/strong><\/li><\/ul>\n\n\n\n<p>Yes, they are allowed to\ncontinue as shareholders of the company even if they are disqualified as\ndirector.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Whether a disqualified director can become\npartner in LLP?<\/strong><\/li><\/ul>\n\n\n\n<p>Yes, he is eligible for partner in LLP.&nbsp; Until unless he is,<strong><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Of sound mind<strong><\/strong><\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Not insolvent or matter related to it should be\npending in the court.<strong><\/strong><\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Whether Non-filing of New DIR- 3 KYC Form leads\nto director disqualification?<\/strong><\/li><\/ul>\n\n\n\n<p>Any person who has been allotted \u201c<a href=\"https:\/\/lawyerinc.net\/in\/removal-directors-disqualification\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Director Identification Number (opens in a new tab)\">Director Identification Number<\/a>\u201d before 2018 needs to file form DIR-3 KYC to update KYC details in the system before 15th September 2018.<br> For the&nbsp; year 2019-20, e very Director who has been allotted DIN is required to file form DIR-3 KYC before 30th April of the immediately next financial year.<br> After expiry of the respective due dates, system will mark all non-compliant DINs \u2018Deactivated due to non-filing of DIR-3 KYC\u2019. It may lead to director disqualification.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>How a company will\nfunction if all the directors have to vacate the office?<\/strong><\/li><\/ul>\n\n\n\n<p>According to section\n167(3), required numbers of directors shall be appointed by promoter or in his\nabsence the central government, till the time directors are appointed in the\ngeneral meeting by the company.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Is there any remedy available\nfor directors who contend that his name has wrongly been removed?<\/strong><strong><\/strong><\/li><\/ul>\n\n\n\n<p>Under\nthe Companies act 2013, no such remedy is available but our constitutional law\nhas given right to aggrieved director to file writ petition.<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>What\nare the differences between provisions related to disqualification of director\naccording to the Companies Act 1956, and the Companies Act, 2013?<\/strong><strong><\/strong><\/li><\/ol>\n\n\n\n<table class=\"wp-block-table\" width=\"100%\" border=\"1\" cellpadding=\"10\"><tbody><tr><td>\n  <strong>Old Provisions<\/strong>\n  <\/td><td>\n  <strong>New\n  Provisions<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Section 274 (1) (g)\n  of Act 1956, the corresponding provision to Section 164 (2) of the Act 2013, was\n  not applicable to private companies<\/strong><strong>.<\/strong><strong><\/strong>\n  <\/td><td>\n  <strong>But according to the new provisions, it\u2019s\n  applicable on private companies also.<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>According to the\n  Companies Act, 1956, disqualification happens only if company is defaulter\n  for continuously 3 years in filling both Annual account and Annual return <\/strong><strong><\/strong>\n  <\/td><td>\n  <strong>But according to the\n  new provision, person will be disqualifying as director if he is defaulter\n  for continuously 3 years for non filing of either annual account or annual\n  return.<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>As per section 283 of companies act, 1956 director need not to vacate\n  his office if any default has been made of section 274(1)(g<\/strong>).\n  <\/td><td>\n  <strong>Section 283 has been replaced by\n  Section 167(1) of the act, 2013 which deals with vacation of office. Any director,\n  who is disqualified according to section 164, shall have to vacate his office<\/strong><strong>.<\/strong><strong><\/strong>\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>How can the director remove their name from the list of <a href=\"https:\/\/lawyerinc.net\/in\/removal-directors-disqualification\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"disqualified director (opens in a new tab)\">disqualified director<\/a>\u2019s post serving the punishment of 5 years ban?<\/strong><\/li><\/ol>\n\n\n\n<p>According to Rule 14 (5) of the Companies\n(Appointment and Qualification of Directors) Rules, 2014, the director can give\napplication to the RoC for the same but it can be made only at the end of the 5\nyears duration post his disqualification.<strong><\/strong><\/p>\n\n\n\n<p>For further details you can contact our team of expert lawyers at <a href=\"https:\/\/lawyerinc.net\/questions\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">LawyersINC<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Company is a separate legal entity which can act through natural persons. Directors are the person who acts on behalf of company. These are the persons, hired by the company to direct and see day to day affairs of the company. There is no minimum qualification required for the post of Directors. But there [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":41,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-27","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.8.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Frequently Asked Questions Related To Director Disqualification<\/title>\n<meta name=\"description\" content=\"In order to remove director disqualification, disqualified director need to file a writ petition before Hon&#039;ble HIgh Court\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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Mohi Kumari has got 9+ years of experience in practicing law independently all over India. She has completed her Master in Laws from Rajiv Gandhi National University Of law, as well she has done Post Graduate diploma in Cyber Laws from Asian School of Cyber Laws and Diploma in Corporate Laws from Bharati Vidyapeeth Deemed University.\",\"url\":\"https:\/\/lawyerinc.net\/learning\/author\/mohi\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Frequently Asked Questions Related To Director Disqualification","description":"In order to remove director disqualification, disqualified director need to file a writ petition before Hon'ble HIgh Court","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/lawyerinc.net\/learning\/frequently-asked-questions-related-to-director-disqualification\/","og_locale":"en_US","og_type":"article","og_title":"Frequently Asked Questions Related To Director 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