Removal of Disqualification of Directors

 removal-of-disqualification-of-directors

The Companies Act, 2013 comes into force with the aim of promoting the good corporate practices but in spite of that few companies are running for long and are allegedly used for illegal fund flows.

The government has also taken many steps to fight against the black money in September, 2017

  • Struck off of shell companies from MCA database

On 5th September, 2017 around 208,800 Companies were struck off from the database of the Registrar of Companies (RoC)

  • Cease Bank accounts

Government has directed the branches of all the banks of those companies to restrict/stop the operation of the bank accounts of all such companies by their directors and authorized representatives.

  • Disqualification of Directors

Directors has been barred to continue on the board of Directors of any company for the next five years as MCA has declare list of defaulting Directors of all Companies that did not filed their financial statements for the past three years. After this the directors are unable to file annual returns with ROC.

In this article we will discuss on the alternatives available to remove the disqualification of directors.

Scenario 1

Where the aggrieved person is a director in only one company whose status is “striked off” as per MCA database

Some people think that disqualification can be removed by filing of application in DIR-10 with Central Government but in actual application in DIR-10 can be file only at the end of the tenure of five years of his disqualification.

For this, a Writ Petition can be made by the aggrieved director under Article 226 of the Constitution of India.

Scenario 2

Where aggrieved person is a director in a company whose status of same is still active as per MCA database

A scheme called “The Condonation of Delay Scheme, 2018” announced by the Ministry of Corporate Affairs which is active from 1st January 2018 to 31st March 2018. The companies whose status is active can apply for this scheme.

Directors who were disqualified for failure to file the financials can file form e-CODS to regularize compliance. The fees applicable of eCODS form is Rs 30,000/-

Scenario 3

Where aggrieved person is a director in more than one company and the status of one company is active and other is striked off as per MCA database

In this case , a Writ Petition can be made by the aggrieved director under Article 226 of the Constitution of India as there is no alternate remedy available till now.

Hope this article helps you in understanding how important to remove the disqualification of directors is and what are the alternatives available for removal of disqualification.

Disclaimer – the above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.

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