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Director Disqualification – Companies Act 2013
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Director Disqualification – Companies Act 2013
The Ministry of Corporate Affairs has begun to eliminate companies that are inactive and disqualify Company Directors who have not continuously filed their annual MCA return for more than three years. In this article, we discuss the provisions of the Companies Act 2013 related to the disqualification of the Director and their consequences.
Under the Companies Act 2013, the following conditions may be reasons to disqualify a Director.
As mentioned in point 8, a person may be disqualified from being a Director, if an enterprise in which the person is a Director has not filed the annual MCA return for a continuous period of three years. It is therefore important that all private limited companies, a single person and a limited company submit the annual MCA declaration on time and maintain compliance with the Companies Act 2013.
Once a person is disqualified as a Director, he/she will not be eligible to be appointed Director of that company or any other company for a period of 5 years from the date the company did not file annual compliance.
Until recently, the MCA has not strictly enforced this provision of the Companies Act. However, as of September 2017, the MCA has begun to strictly enforce these provisions of the Companies Act and has published names of disqualified directors on its website.
Therefore, it is important that all persons who are a Company’s Director ensure that compliance is maintained appropriately.
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