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Application to Registrar of Companies Regarding Disqualification

Corporate governance is important for a company to run well. The Companies Act of 2013 sets out the rules for removing directors who don’t meet the requirements or do something wrong. Directors who are kicked out of their positions can face fines, jail time, and limits on their ability to be directors in other companies. It is important to know how to remove disqualifications and file applications with the Registrar of Companies to ensure the company keeps growing and succeeding. In this piece, we’ll talk in detail about how to file an application to the registrar of companies regarding disqualification.

Application to Registrar of Companies Regarding Disqualification

What Is the Case for the Disqualification of Directors?

The Companies Act of 2013 specifies the circumstances for the disqualification of a director; This is a condensed version of Section 164 of the 2013 Companies Act, which addresses the same topic:-

  • They have been declared mentally unfit by a court of competent jurisdiction.
  • They remain undischarged bankrupt.
  • Where insolvency has been requested, but the request is still pending.
  • They have been convicted of a crime involving moral turpitude and sentenced to at least six months in prison.
  • He is ineligible if any court or tribunal has issued an order disqualifying him from being appointed as a director.
  • If they are a company shareholder and have not paid any such call, and six months have elapsed since the last date on which such payment was due, they are exempt.
  • In the preceding five years, they have been convicted of an offence involving related party transactions governed by Section 188 of the 2013 Companies Act.
  • They have not acquired a Director Identification Number (“DIN”).
  • Where they are the director of a company that has: a. Failed to file annual returns for three consecutive years; b. Failed to pay interest on/repay deposits for more than a year; c. Failed to pay any declared dividend for more than a year; d. Failed to redeem debentures or pay interest on debentures for more than a year.

Regarding this particular provision, the period of ineligibility for directorship will be five years from the date of the default, regardless of whether it occurred in the same company or another.

Effect of Director Disqualification

Since the mass disqualification march in 2017, the Ministry of Corporate Affairs (“MCA”) has been very careful to make sure that directors follow the rules and laws. Depending on the reason for the ban, a person can’t vote for five years or, as the case may be. The names of directors who have been kicked off will be posted on the MCA website. The DIN for that person will be turned off by the Registrar of Companies.

How to Remove the Disqualification of Directors under Section 164?

A person who has yet to file financial statements (eForm AOC-4) or annual reports (eForm MGT-7) for three fiscal years is unable to be appointed as a Director of that firm or any other company for the following five years.

For example, the list of disqualified directors for 2017 published on the Ministry’s portal included directors disqualified from 2016 to 2020 for failing to file financial statements or annual returns for fiscal years 2013-14, 2014-15, and 2015-16. Similarly, the list of Directors disqualified from 2017-2021 for failing to file for fiscal years 2014-15, 2015-16, and 2016-17 was published in 2018.

In several instances, consumers have submitted either eForm AOC-4 or eForm MGT-7. Notice is at this moment given that the word “or” has been used, and accordingly, failure to file either Form AOC-4 or Form MGT-7 will also render the individual disqualified under Section 164(2)(a).

Process: 

Directors dismissed under Section 164(2)(a) of the Companies Act 2013 have only two options upon disqualification:

1. Wait for ROC to get rid of the ban in five years.

2. Send a written plea to the High Court that has the power to take away the ban.

If the director chooses option no. 1, the required professional guidance will only be required once the five-year period has expired. Whereas, if the individual chooses option no. 2 to remove the disqualification immediately, they must file a petition in writing with the High Court with jurisdiction over the matter.

It is essential to note that each High Court has different views on removing Director disqualification; therefore, reviewing the precedents (i.e. previous judgements) in similar cases before filing the petition is crucial.

Before filing a petition, it is also important to make sure that the High Court has the power to hear the case. Otherwise, the petitioner’s time and effort will be totally wasted. As an example, the Honourable High Court in Jaipur would be in charge of Directors who have been kicked out by ROC Rajasthan. Also, let’s say that the ROC has removed the directors in Delhi and Haryana, but the company’s registered office is in Haryana. In that case, they would have to go to the Honourable High Court in Chandigarh to get their ban lifted.

How to Remove the Disqualification of the Directors Companies Act, 2013?

It can be done by petitioning the National Company Law Tribunal (NCLT). If a company’s status is changed to “Strike Off” due to non-compliance with filing returns, an application may be lodged with the NCLT to restore the company’s “Active” status. For certification of the “Strike Off” status, the NCLT and the Registrar of Companies may accept the required documentation.

At the time of the hearing, a practising professional (CA/CS/Advocate) may represent the business and present all pertinent case-specific facts. If the NCLT is satisfied with the presented information, it will adjudicate on the clearance for dismissal. Once the authorization for strike-off has been received and the company’s status has been restored to “Active”, the DINs of the directors may be reinstated.

FAQs: Application to Registrar of Companies Regarding Disqualification

How do you remove a disqualification of directors?

A disqualified director may apply for removal of disqualification with the National Company Law Tribunal (NCLT). The application must be submitted in the prescribed format and accompanied by supporting documents, such as evidence of compliance with filing requirements, payment of statutory fees, and resolution of legal disputes.

How do I report the disqualification of directors in an audit report?

According to applicable laws and auditing standards, the auditor must note this in the audit report if a director is disqualified. The auditor must also indicate whether the disqualification complies with the 2013 Companies Act.

What is the penalty for the disqualification of directors?

Penalties for director disqualification may include fines, imprisonment, and restrictions on holding directorships with other companies. In addition, a disqualified director cannot be appointed to any other board of directors.

What is the form for the disqualification of directors?

Form DIR-8 must be submitted to the Registrar of Companies within 30 days of becoming aware of a director’s disqualification.

What is the disqualification of directors section 274?

Section – 274 of the 2013 Companies Act outlines the criteria for director disqualification. A conviction for certain offences, non-compliance with filing requirements, failure to pay statutory dues, and failure to disclose an interest in related party transactions are some of the factors that can result in disqualification.

What if all directors are disqualified?

If all of a company’s directors are disqualified, the business may be able to operate once new directors are appointed and the disqualification is lifted. The company may need to obtain legal counsel and apply to the NCLT to appoint new directors.

Conclusion

In conclusion, if a director has been disqualified, they may file an application to the registrar of companies regarding disqualification with the National Company Law Tribunal (NCLT). The application must be submitted in the specified format and accompanied by supporting documentation. The penalties for disqualification can be severe, including fines, imprisonment, and restrictions on holding other directorships. Compliance with the provisions of the Companies Act, 2013 is necessary to avoid disqualification and ensure the company’s operations run smoothly.

Our experts at Instafiling will guide you through the entire procedure and clarify any doubts. Let us know.

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