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Chapters30

Section 164Chapter 11

Disqualifications for appointment of director

(1)

A person shall not be eligible for appointment as a directorof a company, if —

(a)

he is of unsound mind and stands so declared by a competent court;

(b)

he is an undischarged insolvent;

(c)

he has applied to be adjudicated as an insolvent and his application is pending;

(d)

he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence:

Proviso

Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company;

(e)

an order disqualifying him for appointment as a director has been passed by a court or and the order is in force;

Tribunal

(f)

he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;

(g)

he has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or

(h)

he has not complied with sub-section ( 3 ) of section 152.

(i)

he has not complied with the provisions of sub-section (1) of section 165

(2)

No person who is or has been a director of a company which—

(a)

has not filed financial statements or annual returns for any continuous period of three financial years; or

(b)

has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debenture on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.

Proviso

Provided that where a person is appointed as a director of a company which is in default of clause (a) or clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment.

(3)

A private company may by its articles provide for any disqualifications for appointment as a director in addition to those specified in sub-sections ( 1 ) and ( 2 ):

Proviso

Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-section (1) shall continue to apply even if the appeal or petition has been filed against the order of conviction or disqualification.

Proviso

Provided that the disqualifications referred to in clauses ( d ), ( e ) and ( g ) of sub-section( 1 ) shall not take effect—

(i)

for thirty days from the date of conviction or order of disqualification;

(ii)

where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed off; or

(iii)

where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed off.

Notes, amendments & references (14)

Refer Rule 2(1)(s) of the Companies (Specification of Definition Details) Rules,2014. To view the rule, Click Here

Inserted vide the Companies (Amendment) Act, 2019 dated 31.07.2019 w.e.f., 02.11.2018. To view the Amendment Act, Click Here

Section 164 (2) shall not apply to a Government Company, vide notification no. G.S.R. 463(E) dated 5th June, 2015.

(The exceptions, modifications and adaptations provided above shall be applicable only to those Government Companies which has not committed a default in filing its financial statements under section 137 of the said act or annual return under section 92 of the said act with the registrar, vide notification dated 13th June, 2017)

To view the notification, Click Here

Clarification regarding filing requirements under e-CODS, 2018 vide General Circular No. O5/2018 dated 17.05.2018. To view the Circular, Click Here

The Condonation of Delay Scheme, 2018 is further extended till 01.05.2018 vide General Circular No. 03/2018 dated 27.04.2018. To view the Circular, Click Here

The Condonation of Delay Scheme, 2018 is further extended till 30.04.2018 vide General Circular No. 02/2018 dated 28.03.2018. To view the Circular, Click Here

MCA has issued Condonation of Delay Scheme, 2018 vide General Circular 16/17 dated 29.12.2017. To view the circular, Click Here

Provided that Inserted vide Companies (Amendment) Act, 2017 dated 03.01.2018 Effective from 07-05-2018

To view commencement notification, Click Here

To view the notification of Companies Amendment Act,2017 Click Here

Refer rule 14 of the Companies (Appointment and Qualification of Directors) Rules,2014.To view the rule, Click Here

Provided that Substituted vide Companies (Amendment) Act, 2017 dated 03.01.2018 Effective from 07-05-2018