Appointment of director

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This query is : Resolved

Kamal Vyas (Querist)

13 September 2013 Could a director of a company may be appointed as diretor in other company considering that suit against whom is pending...?

Ajay Mishra

Ajay Mishra (Expert)

13 September 2013 Suit is not sufficient reason to restrict a person from being appointed. Before appointment a person should not covered under section 274 of the Companies Act, 1956.

Ajay Mishra

Ajay Mishra (Expert)

13 September 2013
Section 274(1) of the Companies Act, 1956 provides that a person shall not be capable of being appointed as a director in a public limited or private limited company if:—
(a) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
(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 involving moral turpitude and sentenced in respect thereof to imprisonment for not less than 6 months, and a period of five years has not been elapsed from the date of expiry of the sentence;
(e) he has not paid any call in respect of shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for payment of the call; or
(f) an order disqualifying him for appointment as director has been passed by a Court or the Tribunal in pursuance of section 203 of the Act and is in force, unless the leave of the Court or the Tribunal has been obtained for his appointment in pursuance of that section;
(g) such person is already a director in a public company which,—
(A) has not filed the annual accounts and annual returns for any continuous three financial years commencing on and after 1-4-1999; or
(B) has failed to repay its deposit or interest thereon on due or redeem its debentures on due date or pay dividend and such failure continues for one year or more:
Provided that such person shall not be eligible to be appointed as a director of any other public company for a period of 5 years from the date on which such public company in which he is a director failed to file annual accounts and annual returns under sub-section (A) or has failed to repay its deposit or interest or redeem its debentures on due date or pay dividend referred to in clause (B).

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