sec 274(1)g

According to clause (g), inserted in section 274(1), a person would suffer from the disqualification mentioned in sub-clause (A) and (B) thereof only to the extent of his/her appointment or re-appointment in any public company (including the public company in respect of which either of the two defaults has occurred)

so it means that such director can't be reappointed in the defaulting company

>>he will cease to be reappointed of the defaulting public co. or any other co.
>>he would also not be appointed as director for any other co.
>>this disqualification will last for 5 years.
>>but he can continue in office until the expiry of his tenure.
 

A director disqualified u/s 274(1)(g) can not be appointed or reappointed in any public company (including defaulting company) but he can be appointed in private companies.

Indirectly we can say that section 274(1)(g) applies when both the companies (defaulting as well as appointing company) are public companies.........

Hi everyone,

I have a different opinion regarding this query.

Yes I agree with Nikita that Private Companies are outside the scope of Section-274(1)(g).

As we all know a person who is disqualified to become a director of a public company under section 274(1)(g) does not automatically vacates his office as section-283 is silent in this regard. So in my opinion he can continue to act as a director in all Public Companies (including the defaulting company) until the expiry of his respective term in each company.

Kindly note that he will not be eligible to be freshly appointed as a director of any other Public company.

Now observe carefully: However, the same does not apply in case of the defaulting company as the words used in section 274(1)(g) are:   “such person shall not be eligible to be appointed as a Director of any other public company”  Hence to conclude I would say he will be eligible to be re-appointed as a director of the defaulting company or any other public company of which he was a director.

In other words or may be other interpretation:

He may be appointed in the same defaulting company. Reason being he is no more a director of the same company. Law says he can not be appointed as a director of any 'other PLC'. 

However, if you go by the literal interpretation of the proviso to section 274(1)(g) then you’ll be surprised to know he may be appointed as a director of any other PLC if he leave the defaulting Co. before the default commence. Reason being it is mentioned in the proviso that such person shall not be allowed to appoint in other PLC for 5 years if he is still a director of a defaulting Co. (i.e. still working in the defaulting co. {Present tense}.

In simple words if he leave the company before default then there will be no question of application of the proviso.

Further note that proviso to Rule 3(b) of Disqualification of Director Rules, 2003 provides that both the disqualifications as mentioned in Section 274(1)(g)(A) & (B) would apply to the re-appointment of a director also. Here I would like to add that a rule can not provide a more stringent condition than under the Act and as such this rule is ultra-vires the powers of Government and Act and is bad in law.

Hope that the discussion would be off some help to you. Looking forward for more discussion on this topic. Please share your views.

Best Regards--Ankur Garg          ankur_gargcs @ rediffmail.com

So ankur you wanna say that director disqualified u/s 274(1)(g) can be reappointed in defaulting company and director diqualificaion rules doesn't make any difference in this regard ?????????/

Well, Nikita kindly appreciate i am not saying that Rules are 0 but definitely they are bad in law.  Share your views about rules read with section 274(1)(g). Anyways please let me know what do you think about the para mentioned below:

Now observe carefully: However, the same does not apply in case of the defaulting company as the words used in section 274(1)(g) are:   “such person shall not be eligible to be appointed as a Director of any other public company”  Hence to conclude I would say he will be eligible to be re-appointed as a director of the defaulting company or any other public company of which he was a director.

See Nikita Section 274(1)(g) is really a diecy area of law with various contradictory interpretations.

Finally i would say Yes as per my opinion director disqualified u/s 274(1)(g) can be reappointed in defaulting cvompany.

Looking forward for more specific answer to cross my previous interpretation. Look i am always ready to discuss and change my view as they are totally based on interpretation of law and nothing else.  Best Regards

Dear Ankur Garge,

As per my knowledge, Disqualified director u/s 274 (1) (g) cannot be reappointed  in defaulting  company. Kindly refer following provsions;  If I wrongly mentioned, kindly advised to me.

My opinion based on Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003.

Rule-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.

thanks

regards

manivannanjayaram

Hi,

I have seen so many replies , Before & after seeing that i have an opinion that while drawing interpretation of any section or provision of Companies act intention of the legislature should be seen, so in my opinion Director will be disqualified for appointment in defaulting Co. & any other public company.Intention while bringing this section into existence is to prevent some defaults  from happening so that public who is investing in public limited companies are not at loss or not being cheated to some extent by the same people.

Regards,

Teena

ACA, DISA

Dear Members,

Kindly views the attached file.

regards

Mani Vannan

Dear Friends,

When the provision of Act is not clear, we need to dig the intent behind the statute. We can clearly with out any dispiute conclude that the provision is introduced to bar director of defaulting public company from reappointment in Public Companies. Meaning of " Other Public ltd Company"  in Sec 274(1)(g) is "All Other Public Ltd Companies" i.e INCLUDING the existing Public Ltd Company.

So, Finally Director defaulted u/s 274(1)(g) is not eligible to be appointed in "Any Public Ltd Co"

      Eligible to be appointed in "Any Pvt Ltd Companies"

Teena's view is perfectly right.

Dear  All,

First of all 274(1)(g) does not apply to Private Companies thus Private Companies are outside the purview of this discussion. Disqualified directors too be appointed in the Private Companies.

Secondly, these rules apply in case of appointment and /or re-appointment, thus current tenure is outside the purview of this discussion. Disqualifed director has not to drop the current directorship.

Now, in case of defaulting company as he has not to drop his current directorships he is a director upto his tenure to all public companies and, according to the wording of Sec 274(1)(g), he may be re appointed in the defaulting company as he is disqualified from being appointed as a director of any other public company but he will not be re appointed in any other public company whether he is director in that company when he stands disqualified or not..

Thus, disqualified director can only be reappointed in the defaulting company.

Dear all members ,

i m Satisfied with with ankur Sir  regarding the  query of reaapointment of director in public limited co, recently i have cleared my cs. excecutive examination (inter)  .i also have the same query , but going thriugh manish bhandari, and our amit bachhawat sir, i m  sure that director can be reaapointed in the same defaulting co. but he can be appointed in any other public co. for 5 years.

instead of can it will be canot by mistake i have written it.