DISQUALIFICATION OF DIRECTORS

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Sachin Kumar (Querist)

05 March 2018 Mr. A and Mrs. B (Husband-wife) are disqualified Directors for period 01.11.2016----31.10.2021 Mr. A is a director in 4 companies ( W,X,Y,Z Private Ltd) out of which W,X Pvt. Ltd is striked off by ROC due to non filing of annual returns. Mrs. B is a Director in Y,Z Private Limited whose status is active. Now Mrs. B wants to continue business and avail benefit of CODS, 2018. 1. Can Mrs. B appoint additional Director and conduct business…? 2. From which date additional Director is be appointed..? Should it be appointed before disqualification i.e. 1.11.2016 and we will say we have forgot to file DIR-12 for appointment of new director...? 4. Who will sign previous years balance sheet till 31.03.2017…Mr. A, Mrs. B or new director…? 5. What is the expenditure for CODS..? For Y,Z Pvt. Ltd we have to pay compounding fees of Rs. 30,000 individually…? Please clarify on this. Thanks in advance.

Sachin Kumar

Sachin Kumar (Querist)

05 March 2018 Dear Experts, Please revert. It's urgent.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

06 July 2024 Here are the clarifications and answers to your questions regarding the situation with Mr. A and Mrs. B, their disqualification as directors, and the implications for their companies:

1. **Appointment of Additional Director by Mrs. B:**
- Yes, Mrs. B can appoint an additional director to Y and Z Private Limited, the active companies where she is a director. This is allowed under the Companies Act, 2013.

2. **Appointment Date of Additional Director:**
- The appointment of the additional director should be made as per the procedures outlined in the Companies Act, 2013. It cannot be backdated to a date before Mrs. B's disqualification period (i.e., before 1st November 2016). If Mrs. B wants to appoint an additional director now, she should comply with current regulations and file the necessary forms (like DIR-12) promptly.

3. **Signing Previous Year's Balance Sheet (Till 31st March 2017):**
- During the disqualification period of Mr. A and Mrs. B (until 31st October 2021), they cannot sign the balance sheets of the companies. If an additional director is appointed now, that director can sign the balance sheet for the period from the date of appointment onwards. For the period before the appointment, the balance sheets should ideally have been signed by other directors who were not disqualified during those periods.

4. **Expenditure for CODS (Condonation of Delay Scheme), 2018:**
- For Y and Z Private Limited, if they wish to avail benefits under CODS, 2018, they can pay the prescribed compounding fees for the delays in filing annual returns and other forms. The compounding fee is Rs. 30,000 per form per company, as mentioned. This scheme allows companies to regularize their non-compliance by paying these fees and filing the necessary forms.

To summarize:
- Mrs. B can appoint an additional director in Y and Z Private Limited.
- The appointment should follow current regulations and cannot be backdated.
- Directors who were not disqualified during the relevant periods should sign previous years' balance sheets.
- CODS, 2018 allows for regularization of non-compliance by paying compounding fees, which in this case is Rs. 30,000 per form for Y and Z Private Limited.

It's advisable to consult with a company secretary or legal advisor to ensure compliance with all regulations and proper execution of the necessary procedures.

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