Disqualification of Directors

Disqualification of Directors - Section 164 of the Companies Act 2013 ("the Act")

A person shall be disqualified for appointment as a director of a company, if —
  1. he is of unsound mind and stands so declared by a competent court;
  2. he is an undischarged insolvent;
  3. he has applied to be adjudicated as an insolvent and his application is pending;
  4. 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 6 months and a period of 5 years has not elapsed from the date of expiry of the sentence: Provided that if a person has been convicted of any offense 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;
  5. an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;
  6. he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and 6 months have elapsed from the last day fixed for the payment of the call;
  7. he has been convicted of the offense dealing with related party transactions under section 188 at any time during the last preceding 5 years; or
  8. he has not complied with section 152(3) of the Act.
Provided that the disqualifications referred to in point (4), (5) and (7) above shall not take effect—
  • for 30 days from the date of conviction or order of disqualification;
  • where an appeal or petition is preferred within 30 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
  • where any further appeal or petition is preferred against order or sentence within 7 days, until such further appeal or petition is disposed off.

Disqualification due to non-filing of financial statements and non-repayment of deposits
 
No person who is or has been a director of a company which—
  • has not filed financial statements or annual returns for any continuous period of 3 financial years; or
  • has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for 1 year or more, 
—shall be eligible to be re-appointed as a director of that company or appointed in other company for 5 years from the date on which the said company fails to do so.
 
Additional provision in Articles of Association regarding disqualification

A private company may by its articles provide for any disqualifications for appointment as a director in addition to those specified above.