Removal of Director Disqualification

Removal of Director Disqualification

What are the reasons for the disqualification of directors?

There are many grounds under the Companies Act, 2013 due to which Director cannot be appointed as Director in the Company.

 

  • Unsound Mind;
  • Undischarged Insolvent;
  • Application for insolvent is pending;
  • Convicted by a court and sentenced to imprisonment for not less than six months and five years has not expired from the date of expiry of a sentence;
  • Order for disqualification passed by court or Tribunal;
  • payment of calls due for more than six months;
  • convicted of the offence dealing with Related Party Transactions during last preceding five years;
  • Appointed without having DIN;
  • Holding Directorship in more than 20 Companies at the same time;
  • Financial Statement and Annual Return not filed for consecutive three financial years
  • Failed to repay deposit, debentures or interest thereon or any dividend for one year or more.

What are the Consequences Of Disqualification

If the Directors of the Company fails to file Financial Statements and Annual Returns for continuous period of 3 Financial Years to the Registrar under Section 164(2) of the Companies Act, 2013 then he will be disqualified for 5 years. The following consequences of Disqualification are:

  1. Not eligible to appoint as Director in other Company;
  2. Not eligible to reappoint as Director in the existing Company;
  3. If he is already a Director of any Company then he has to vacate their office from all the Companies other than the Company in which he has made default.

Procedure For Removal Of Disqualification Of Director

  1. Drafting and filing of Writ Petition with High Court 

The first and foremost step is to draft and thereafter file the writ petition with the concerned High Court for removal of Disqualification under Article 226 of the Constitution of India. In case of revival of the Company, the application needs to be filed to National Company Law Tribunal for restoration of the name of the company with the effect of the same, Director can remove their disqualification.

  1. Final Order of the High Court

The High Court shall provide its final order after hearing the petition and the relevant facts of the case for removal of the Disqualification of Director and restoration of the Director Identification Number (DIN) and in case of revival, the final order will be received from the National Company Law Tribunal for the revival of the Company.

  1. Submission of the Final order of the High Court to the ROC

Thereafter, the final order of the High Court and National Company Law Tribunal will be submitted to the Registrar of the Companies for restoration of the name of the Company and DIN of the Director.

  1. Filing of Statutory Documents

As per the order of Hon’ble NCLT, Appellant is required to file pending Financial Statement and Annual Returns of the last Financial Years to the respective Registrar of the Companies in order to update the status of the company.

  1. Activation of the DIN

Lastly, the DIN of the director will be activated by the Registrar in their records and the Director become eligible for the appointment in any Company after removal of disqualification.

Documents Required For Filing Of Writ Petition To High Court

You have to file the writ petition with the help of professionals and the following are the documents required for filing the writ petition with the High Court.

  • Memo of parties to the petition
  • Reason and facts for disqualification or non-compliance.
  • Synopsis of a list of dates and events
  • List of Companies in which applicant is the Director
  • Evidence showing the Disqualification of the name of the Directors
  • Any other document is required to support the case.

HOW SMARTBIZGURU WILL HELP YOU

Firstly, we will need to coordinate for required documents and then start the below-mentioned steps.

  1. Drafting and filing of Writ Petition
  2. Filing of Order of High Court with ROC

  3. Submission of documents with concerned authorities

  4. Follow up with Authorities involved in the process

  5. Removal of disqualification and Activation of DIN

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