DISQUALIFICATION OF DIRECTORS
DISQUALIFICATION OF DIRECTORS
DISQUALIFICATION OF DIRECTORS
BACKGROUND
MCA has started to strike-off companies that are dormant and disqualify Directors of Companies that have not filed their MCA annual return continuously for over three years.
http://economictimes.indiatimes.com/markets/stocks/news/over-2-lakh-directors-to-be-barred-from-board-posts/articleshow/60370711.cms
A person can be disqualified from being a Director, if a company on which the person is a Director has not filed MCA annual return for a continuous period of three years. Hence, it�s important for all private limited company, one person company and limited company to file MCA annual return on time and maintain compliance under Companies Act, 2013.
Ministry of Corporate Affairs along with Ministry of Finance has taken actions against the Shell Companies i.e. those Companies which have not filed the Financial Statement and Annual Return with ROC.
Why were these directors barred?
� For not doing RoC filing and
� For not completing other formalities related to compliance after show-cause notice was served.
The Directors whose names have been barred:
� Cannot hold any board position in new ventures
� They will not have to step down from the board of other companies on which they are currently directors.
� The law allows the government to bar these directors from taking up any board position for five years
The steps taken are:
Before discussing the provisions with respect to Disqualification of Directors, let us have a look at a recent ruling in this regard;
Disqualified Directors of debarred company approach Courts:
The government move to debar directors of companies who have not filed Annual Returns for successive three years is being challenged in court of law citing retrospective application of Companies Act 2013.
It is settled position with several Supreme Court rulings wherein law is always applicable retrospectively unless any prior date is mentioned specifically. Sec 164 of Companies Act 2013 is applicable to all companies including Private Limited Companies w.e.f 1st April 2014.
Prior to the enactment of Companies Act 2013, the corresponding Section 274(1)(g) under Companies Act 1956 was applicable only to Public Companies. Subsequently, now when 3years be elapsed for non filing of Annual Returns would be for those companies whose AGM is due at the end of the month of Sep 2017 to which filing is due in October 2017. However MCA had debarred disqualified Directors at the starting of Sep 2017. Let�s understand it with Example;
| FY | Annual Filing Requirement Post Companies Act 2014 |
| 2014-15 | 30th October 2015 |
| 2015-16 |
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