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regarding disqualification u/s 274(1)(g)

Dipu Divakar (Accountant) (70 Points)

12 October 2010

i want to know whether director disqulified u/s 274(1)(g) can be reappointed in the same company / companies?

["a director disqualified u/s 274(1)(g) shall not be eligible to be appointed in any other public companies"- this is what mentioned in the text. ]

someone pls help

thanx in advance

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38 Replies

HARDIK (COMPANY SECRETARY NCFM (Corporate Governance )) (664 Points)
Replied 12 October 2010

It means he can be appointed in pvt company.

Max Payne (employed) (2569 Points)
Replied 12 October 2010

Yes, if it is a pvt co as pointed out earlier.

But he cannot be re-appointed in the public company in which he is director, till the period of disqualification of 5 years is over.

You can refer rule 3 of Companies (disqualification of directors u/s 274(1)(g) of the companies act) Rules for the same

Check out the proviso below:

https://sunilkhullar.com/default.asp?_mode=mn&_umid=6&_artid=8

Ajay Mishra (Company Secretary) (74332 Points)
Replied 12 October 2010

Dear Friend

· IMPLICATION OF DISQUALIFICATION OF DIRECTORS

Director of the defaulting public company cannot be appointed as a director of any other public company for a period of 5 years from the date on which the disqualification sets in, in case the disqualification is with reference to non filing of annual accounts and annual return and four years from the commencement of disqualification in the case of default in repayment of deposits, interest on deposits, debentures and dividend as the disqualification commences one year from the date of occurrence of the default.

Example 1: If the company fail to file annual accounts and annual return for financial years 2006-07, 2007-08 and 2008-09, he will be disqualified from being appointed as director in any other company for 5 years from the date the disqualification sets in, i.e. from the commencement of the financial year 2009-10 onwards.

Example 2: If a company fails to repay deposits for the financial year 2008-09, he will be disqualified from being appointed as director after one year from the date of disqualification sets in. i.e. from 2009-10 for four years there after.

He can continue as a director in other companies till the date on which he is due to retire. He can not be re-appointed in the vacancy caused on his retirement in the defaulting company.

He can appoint as director in the same company but he can not appoint in other company.

Regards

1 Like

Max Payne (employed) (2569 Points)
Replied 12 October 2010

But Ajay Sir, i Quote from the link i have given:

3. Disqualifications under clause (g) of sub-section (1) of section 274 of the

Companies Act, 1956.-

(a) Whenever a company fails to file the annual accounts and annual returns, as described in sub-clause (A) of clause (g) of sub-section (1) of section 274, persons who are directors on the last due date for filing the annual accounts and the annual returns for any continuous three financial years commencing on and after the first day of April, 1999, shall be disqualified.

(b) If a company has failed to repay any deposit, irrespective of the enactment, rules or regulations under which the deposits have been accepted by the companies, or interest thereon, or redeem its debentures, or pay any dividend declared on the respective due dates, and if such failure continues for one year, as described in sub-clause (B) of clause (g) of sub-section (1) of section 274, then the directors of that company shall stand disqualified immediately on expiry of that one year from the respective due dates:

Provided that all the directors who have been directors in the relevant year, from the due date to the expiry of one year after the due date, will be disqualified:

Provided further that disqualification on account of the reasons cited under this Rule shall also apply to the reappointment as a director.

In your example 2 also, you said he can't be re-appointed in the company once his term is over.

So could you please clarify....

sunil prakash jain (Sr.manager) (101 Points)
Replied 12 October 2010

Though the section 274(1)(g) is not applicable for the Private Limited Company but statutory auditor of the Company has to report in Audit Report about the disqualifcation of the Directors.

You see the Auditors report even of a private limited company, the auditors states like that

On the basis of the written representations received from the directors and taken on record by the board of directors of the Company on -----------------------, none of the Directors is disqualified as on -----------------------from being appointed as a Director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956.

So the conditions of 274(1)(g) automatically applies to Private Limited Company also,

Regards

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 12 October 2010

Yes a director disqulified u/s 274(1)(g) can be re-appointed in the same defaulting company whether it is public or private.

Reason being such defaulting public company does not qualify for the words "other public company" used in section 274(1)(g).

Best Regards

1 Like

harshshree jaiswal (CA Final) (56 Points)
Replied 12 October 2010

yes i agree with Ankur Sir,section does not prohibit the reappointment in the same company because as per the proviso of sec 274(1)(g) the appointment and reappointment is not allowed in'' other public company''for 5 years i.e other than defaulting public company.Section is silent about the reappointment in same defaulting company

CA bhargava (CA) (2017 Points)
Replied 12 October 2010

Yes,

as per one of dept. Clarification if the director of the defaulting company can be re appointed in that defaulting company because there may lead to asituation where if all the directors retire say U/s.255-256 and there are no other persons for appointment , there may lead to a situation of Director less company .

so the director of the defaulting company can be re appointed in only in that defaulting company but not any other company.

here all the companies are public

1 Like

Pulkesh Mehta (Chartered Accountant) (243 Points)
Replied 12 October 2010

The director is eligible to get reappointment in the same company when that default no longer exists i.e company fills it's pending returns or pay the deposits,interest thereupon & redeem the debentures & fulfills all such conditions due to which director/s get disqualified.

ARCHNA (Student) (160 Points)
Replied 13 October 2010

Written in Munish Bhandari book

1.A director of public co shall be disqualified for a period of 5 years from being appointed as a director in any Public Company if the public co in which he is already a director

. doesnt file the annual a/cs and annual returns for any continous 3 yrs or

. fails to repay its deposit or interest thereon on due dates or redeem its debentures on due dates or pay dividend and such failure continous for 1 yr.

2.No director of defaulting co. can be

appointed in any other public co. or

reappointed in the defaulting co.or

reappointed in any other public co in which he is already a director.

CONCLUSION

A is the director of ABC ltd. which failed to pay its deposit for continous 1 yr

Now A cant be

reappointed in ABC Ltd,

reappointed in any other public co where he is already a director

reappointed in any other public co

bt can be appointed in Private co.

The disqualification shall continue for 5 years and the director shall continue to remain disqualified even if default is made good

1 Like

ARCHNA (Student) (160 Points)
Replied 13 October 2010

Written in Munish Bhandari book

1.A director of public co shall be disqualified for a period of 5 years from being appointed as a director in any Public Company if the public co in which he is already a director

. doesnt file the annual a/cs and annual returns for any continous 3 yrs or

. fails to repay its deposit or interest thereon on due dates or redeem its debentures on due dates or pay dividend and such failure continous for 1 yr.

2.No director of defaulting co. can be

appointed in any other public co. or

reappointed in the defaulting co.or

reappointed in any other public co in which he is already a director.

EXAMPLE

A is the director of ABC ltd. which failed to pay its deposit for continous 1 yr

Now A cant be

reappointed in ABC Ltd,

reappointed in any other public co where he is already a director

reappointed in any other public co

bt can be appointed in Private co.

The disqualification shall continue for 5 years and the director shall continue to remain disqualified even if default is made good

1 Like

Dipu Divakar (Accountant) (70 Points)
Replied 13 October 2010

thank you all..

i am also confused with the words 'any other companies'.since Jairam sir told that director disqualified u/s 274(1)(g) can be reappointed in the same company(defaulting company).otherwise it would lead to a situation of no directors.(as ankur sir, harshshree, bhargava mentioned here). but munish bhandari has written specifically that he cannot be reappointed in any company including the defaulting company(see archana's reply)

my doubt is whether at the time of reappointment defaulting company is 'any other company'.