director

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sravan (Querist)
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20 October 2010 A director in a private company didnot hold any qualification shares though the articles of the company prescribes that the director has to hold. He was appointed as Director in 1993 and stil continuing.. Now whether the director has vacated office as per sec. 283 or he was not disqualified as per sections 270-273. Kindly advice me in all the respects.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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20 October 2010 Section 270(1)provides that it shall be the duty of every director who is required by the articles of the company to hold a specified share qualification and who is not already qualified in that respect, to obtain his qualification within 2 months after his appointment as director.

Failure to obtain within 2 months the qualification shares will result in vacation of the office of director by virtue of section 283 (1)(a)

If, after expiry of the said period of 2 months, any person acts as s director, he shall be punishable with a fine which may be extended to Rs. 500 for every day between such expiry and the last day on which he acted as a director (Section 272)

U/s 283(2A), if a person functions as a director when he knows that the office of director held by him has become vacant on account of disqulaification mentioned u/s 283(1)(a), he shall be punishable with fine which may extend to Rs. 5,000 for each day on which he so functions as a director

sravan

sravan (Querist)
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20 October 2010 Thank U Mr. Mithesh. But in sec. 273 it was mentioned that sec. 270 and 272 are not applicable for Private co. So as per sec. 273 the director is not disqualified. but sec. 283 says he will be automatically vacate his office. Kindly tell me which of these sections will prevail. Whether that director can take the advantage of sec. 273 and ignore sec. 283

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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20 October 2010 yes.

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